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'Deceptive' Exec Comp Alleged at McDonald's

May 18, 2009
Related Topics: Miscellaneous Legal Issues, Compensation Design and Communication, Featured Article, HR & Business Administration
Alawsuit filed in March against McDonald’s by a former employee accuses the restaurant giant of fraud when it comes to executive compensation disclosures.

In the suit, former McDonald’s senior director of executive compensation Lisa Bridges says that McDonald’s fired her in retaliation for objections she raised to fraudulent practices, including alleged misrepresen- tations and omissions in an April 2007 filing with the Securities and Exchange Commission.

In a statement, McDonald’s said the case “has absolutely no merit and the claims are baseless.”

Bridges’ suit was filed March 26 in the U.S. District Court for the Northern District of Illinois, Eastern Division. Among her claims, Bridges says McDonald’s concealed that it paid for the use of two Hong Kong country clubs during 2006 by Tim Fenton, McDonald’s president of Asia, Pacific, Middle East and Africa markets.

Bridges also says McDonald’s created a “deceptive” policy for limiting executive severance compensation. She says the policy, called for by shareholders, included intentional loopholes, such as exempting “gross-up” payments. Gross-up payments cover taxes on benefits or compensation.

Bridges also says McDonald’s HR head Rich Floersch was present when the firm’s general counsel allegedly said the policy was being written in a manner so that its ostensible cap would apply to no one if a “change in control”—an event such as a hostile takeover—was to occur.

McDonald’s declined to answer a question asked of Floersch about the alleged incident. In its statement, McDonald’s said: “We will vigorously defend against these claims and we remain confident that the court will rule in our favor.”

Workforce Management, May 18, 2009, p. 22 -- Subscribe Now!

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