A former chief executive of McDonald’s has been charged by America’s federal regulator for making “misleading” claims about his sacking from the company in 2019.
Steve Easterbrook has been fined $400,000 for charges related to his termination from the burger giant. While he has agreed to a five-year ban from serving on the board of a public company and paying the penalty, Mr Easterbrook has not admitted or denied the findings.
The fast-food chain fired Mr Easterbrook in November 2019 after finding that he allegedly engaged in an inappropriate personal relationship with an employee at McDonald’s in violation of company policy, said the Securities and Exchange Commission (SEC) in its order.
But the separation agreement with McDonald’s concluded that his termination was without cause, which allowed him to keep a substantial compensation in McDonald’s stock that he otherwise would have forfeited, the agency said.
At the time, he told the company that there were no such similar instances, with the company finding otherwise in their internal investigation.
In July 2020, McDonald’s reportedly found through an internal probe that Mr Easterbrook had engaged in other undisclosed relationships with additional employees, prompting the company to sue him.
The regulator said that Mr Easterbrook knew or was reckless in not knowing that his failure to disclose an additional violation of company policy before his firing would influence McDonald’s disclosures to investors related to his exit and compensation.
Mr Easterbrook breached his “fundamental duties to shareholders… by allegedly concealing the extent of his misconduct during the company’s internal investigation”, Gurbir Grewal, the SEC’s director of enforcement, said in a statement, reported Forbes.
“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,” he said.
“By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with – and ultimately misled – shareholders.”
The financial regulators have also charged the fast-food giant for failing to disclose that it exercised its own discretion in terminating Mr Easterbrook without cause.
But the SEC has not issued a financial penalty against McDonald’s, citing the company’s cooperation during its investigation and its successful efforts to recover Mr Easterbrook’s compensation. In late 2021, the former CEO had agreed to return $105m in cash and stock awards to the company.
“The SEC’s order reinforces what we have previously said: McDonald’s held Steve Easterbrook accountable for his misconduct," the company said in a statement. “We are proud of our strong ‘speak up’ culture that encourages employees to report conduct by any employee, including the CEO, that falls short of our expectations.”
Additional reporting from the wires
