Former McDonald’s CEO charged with misleading investors over affairs

Former McDonald’s CEO Stephen Easterbrook has been charged by federal regulators with making false and misleading statements to investors about the circumstances of his firing by the burger giant in November 2019.

Easterbrook was ousted for engaging in an inappropriate, consensual personal relationship with a McDonald’s employee in violation of company policy, the Securities and Exchange Commission said in its order Monday. But the separation agreement with McDonald’s concluded that his termination was without cause, which allowed him to keep substantial compensation in McDonald’s stock that he otherwise would have forfeited, the agency said.

The SEC said Easterbrook’s separation agreement was valued at more than $US40 million ($58 million).

Easterbrook told the Chicago company at the time that there were no other similar instances. But in July 2020, McDonald’s found through an internal investigation that Easterbrook had engaged in other undisclosed, improper relationships with additional McDonald’s employees.

The company wound up suing Easterbrook in August of that year, claiming he covered up relationships with employees and destroyed evidence.

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The SEC said that Easterbrook knew or was reckless in not knowing that his failure to disclose additional violations of company policy before his firing would influence McDonald’s disclosures to investors related to his exit and compensation.

“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, the SEC director of the 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, who has not admitted or denied the SEC’s findings, has agreed to the agency’s cease-and-desist order, which imposes a five-year ban on him serving as a corporate officer or director ban and a $US400,000 civil penalty.