The U.S. Securities and Exchange Commission (SEC) charged Stephen J. Easterbrook, the former CEO of McDonald‘s Corporation, with making false and misleading statements to investors about the circumstances surrounding his November 2019 dismissal. McDonald’s was also charged with deficiencies in its public disclosure of Easterbrook’s separation agreement.
According to the SEC order, McDonald‘s fired Easterbrook for poor judgment and an inappropriate personal relationship with a McDonald‘s female employee, in violation of company policy. However, McDonald‘s and Easterbrook entered a separation agreement that concluded his termination was without cause, allowing him to retain a substantial equity interest that otherwise would have been forfeited. In making this decision, McDonald‘s exercised discretion that was not disclosed to investors.
In July 2020, McDonald‘s discovered through an internal investigation that Easterbrook had other undisclosed improper relationships with additional McDonald‘s employees. According to the SEC order, Easterbrook knew that failing to disclose these further corporate policy violations before his termination would affect McDonald‘s disclosures to investors regarding his departure and compensation, or he was reckless in not knowing this.
The SEC‘s order states that Easterbrook violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Easterbrook has consented to the entry of the SEC’s cease-and-desist order without admitting or denying its findings, which imposes a five-year officer and director bar and a $400,000 civil penalty.