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Steve Easterbrook, the former CEO of McDonald’s, left the company under a cloud of questions about his behavior and relationships with employees. After a brief investigation, Mr. Easterbrook left with a severance package worth about $40 million. The board found no breaches of his contract in the behaviors. After his departure, three employees came forward and indicated that they had relationships with Mr. Easterbrook. A deeper investigation following these employees’ reports also revealed some e-mails and photos that had been deleted from Easterbrook’s phone but were still on the company server. The board filed suit against Mr. Easterbrook, seeking the return of his severance package. The second investigation concluded that there was moral turpitude involved in Mr. Easterbrook’s conduct and that Mr. Easterbrook did not tell the board the truth about his conduct. Mr. Easterbrook denies the employees’ allegations and wants to keep his severance package. The shareholders have now filed suit against the board for its failure to adequately supervise the management team and take proper steps upon learning of issues with the CEO. Discuss the rights of the shareholders and the rights and liabilities of the board and Mr. Easterbrook.
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