The former boss of McDonald’s, Steve Easterbrook, has been fined $400,000 (£328,000) by the US regulator for “concealing the extent of his misconduct” over a relationship with an employee.
McDonald’s fired Easterbrook in 2019 after directors discovered he had been having a secret relationship with a senior female employee, which it said showed “poor judgment” and “violated company policy”.
The US Securities and Exchange Commission (SEC) announced on Monday it had “charged” Easterbrook, who is British, with making “false and misleading statements to investors about the circumstances leading to his termination”.
The regulator said Easterbrook and McDonald’s were not honest with investors about the reason that led to Easterbrook’s termination, and this “allowed him to retain substantial equity compensation that otherwise would have been forfeited”.
Easterbrook, who is 55 and from Watford, walked away from McDonald’s with more than $40m in a “separation agreement”, the SEC said. “In making this conclusion, McDonald’s exercised discretion that was not disclosed to investors,” it added.
Gurbir Grewal, the director of the SEC’s division of enforcement, said: “When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives.
“By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with – and ultimately misled – shareholders.”
The SEC said it found that Easterbrook violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. “Without admitting or denying its findings, Easterbrook has consented to entry of the SEC’s cease-and-desist order, which imposes a five-year officer and director bar and a $400,000 civil penalty,” it said.
The SEC’s order also found that McDonald’s violated Section 14(a) of the Exchange Act and Exchange Act rule 14a-3, and the company has consented to the SEC’s cease-and-desist order.
The commission said it did not fine McDonald’s “in light of the substantial cooperation it provided to SEC staff during the course of its investigation, including voluntarily providing information not otherwise required to be produced in response to the staff’s requests, as well as the remedial measures undertaken by McDonald’s, including seeking and ultimately recovering the compensation Easterbrook received pursuant to the separation agreement”.