The Securities and Exchange Commission Monday charged former McDonald’s CEO Stephen Easterbrook with making “false and misleading statements” to investors about the circumstances leading to his 2019 termination because of a consensual relationship with an employee.
The SEC charged Easterbrook Monday with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Easterbrook has been fined $400,000 by the agency.
The SEC also charged McDonald’s for shortcomings in its public disclosures about Easterbrook’s termination, although the company was not fined due to its “substantial cooperation” during the agency’s investigation and because it had already recovered compensation Easterbrook received from his original separation agreement.
Easterbrook was fired “without cause” by McDonald’s in November 2019 in a deal that allowed him to hold onto equity compensation he would have otherwise been forced to forfeit. In 2020, McDonald’s sued Easterbrook after it found via an internal investigation that the former CEO had misled the company about the extent of his misconduct, which involved two sexual relationships with other employees.
In a statement Monday, McDonald’s said it had held Easterbrook accountable for his misconduct.
“We fired him, and then sued him upon learning that he lied about his behavior,” the company said. “As a result of that lawsuit, Mr. Easterbrook last year returned equity awards and cash then valued at $105 million which he would have forfeited had he been truthful about his misconduct at the time of his termination and, as a result, been terminated for cause.”
According to the SEC, neither Easterbrook nor McDonald’s have either admitted or denied the agency’s findings. Both parties have consented to a cease-and-desist-order, which bars Easterbrook from holding officer or director positions for five years.