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The SEC charged former McDonald’s Corporation (MCD) CEO Stephen Easterbrook on Monday with making false and misleading statements to investors about his termination in November 2019. McDonald’s was also accused of failing to make adequate public disclosures about Easterbrook’s separation arrangement.
Easterbrook agreed to pay a $400,000 fine without acknowledging or contesting the findings. For the next five years, he is forbidden from functioning as an officer or director of any SEC-reporting corporation. Easterbrook was sacked by McDonald’s for having a personal relationship with a McDonald’s employee, which was against company rules.
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However, McDonald’s did not fire Easterbrook for this reason, allowing him to keep significant equity pay that would otherwise have been forfeited. Following that, in July 2020, McDonald’s determined, during an internal investigation, that Easterbrook had hidden, improper interactions with other McDonald’s employees.
According to the SEC decision, Easterbrook knew or should have known that failing to disclose these further violations of company policy prior to his termination would influence McDonald’s disclosures to investors regarding his departure and pay.
“When corporate officers violate their fundamental duty to shareholders, who are entitled to transparency and fair dealing from executives,” said Gurbir Grewal, Director of the Division of Enforcement. “By allegedly concealing the nature of his misbehavior during the company’s internal inquiry, Easterbrook allegedly violated and eventually misled shareholders.”
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