After accusing him of misleading investors in connection with his termination in 2019, US authorities on Monday fined former McDonald’s CEO Stephen Easterbrook and banned him from holding an executive position with a public firm for five years.
In a settlement deal announced by the US Securities and Exchange Commission, Easterbrook agreed to pay a $400,000 fine without admitting or disputing the allegations made against him.
“When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders,” said Gurbir Grewal, the SEC’s head of enforcement.
“By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with — and ultimately misled — shareholders.”
A convoluted corporate drama that started as a corporate sex scandal and turned into an executive clawback action has now settled, and this is only the latest development.
Easterbrook was initially hired in 2015 and praised for improving McDonald’s operations up until his abrupt departure in November 2019 due to a consensual relationship with an employee that was against company policy.
According to the terms of their separation agreement, Easterbrook’s firing was “without cause,” making him eligible for millions of dollars in compensation.
However, after learning that Easterbrook had participated in other, unreported illegal connections with McDonald’s employees, in August 2020, McDonald’s launched a lawsuit against him.
The investigation revealed damaging evidence of numerous contacts, including nude images and films of women transmitted from Easterbrook’s work email to his personal email account. Easterbrook had claimed to McDonald’s investigators that he had only had one inappropriate relationship.
McDonald’s declared in December 2021 that it had settled with Easterbrook, taking back $105 million of his severance payment. Easterbrook expressed regret for his deeds as well.
Due to “deficiencies in its public disclosures connected to Easterbrook’s separation agreement,” the SEC issued a cease-and-desist order against McDonald’s in addition to sanctioning Easterbrook, the federal agency claimed in a statement.
However, the SEC did not fine McDonald’s, citing the company’s cooperation in the investigation.
McDonald’s said the SEC’s order “reinforces” the company’s actions to hold “Steve Easterbrook accountable for his misconduct.”
Attorneys for Easterbrook did not immediately respond to a request for comment.