October 2023 (Revised January 2024)
Case
HBS Case Collection

McDonald's Board of Directors (A)

By: Lynn S. Paine and Will Hurwitz

Format:Print
| Language:English
| Pages:20

Abstract

In October 2019, the McDonald’s Corporation board of directors, chaired by Enrique Hernandez, Jr., gathered to learn the results of their outside counsel’s investigation into the conduct of the CEO. On the surface, the iconic fast-food chain was thriving as growing profits translated into share price gains. But unbeknownst to the public, a drama was unfolding that threatened the company’s success and brand value. Hernandez and other directors listened intently as counsel explained their findings that the CEO had engaged in an inappropriate consensual relationship with an employee, in violation of the company’s code of conduct. As directors grappled with the situation, they faced a litany of difficult questions. What action should they take with a CEO some were calling McDonald’s “savior,” credited with revitalizing the business and doubling its share price in under five years? Should they sanction him or possibly even remove him from office? And, if they did remove him, should he receive his potentially substantial severance package? How might shareholders, employees, and customers react—and to what extent should the directors consider stakeholder reactions in their deliberations?