Steve Easterbrook, the former CEO of McDonald’s, was fined $400,000 by the US regulator for “concealing the extent of his misconduct” regarding 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, 55, of Watford, walked away from McDonald’s with more than $40 million in a “separation agreement,” according to the SEC. “In reaching this conclusion, McDonald’s used discretion that was not disclosed to investors,” the company 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,” said Gurbir Grewal, director of the SEC’s division 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.”
Easterbrook was found to have violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, according to the SEC. “Without admitting or denying the SEC’s findings, Easterbrook has consented to the entry of the SEC’s cease-and-desist order, which imposes a five-year officer and director bar and a $400,000 civil penalty,” the SEC said.
The SEC’s order also found that McDonald’s violated Exchange Act Section 14(a) and Exchange Act Rule 14a-3, and the company has agreed 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”.
(Adapted from TheGuardian.com)