Former McDonald’s CEO Stephen Easterbrook agreed to pay $52.7 million to settle investor fraud accusations with the SEC.
The agency claims Easterbrook cheated the company’s investors by lying about sexual interactions with subordinates while he was CEO, resulting in separation pay he shouldn’t have received.
McDonald’s board fired him in November 2019 over a connection that breached company policy.
McDonalds said Easterbrook reported one personal relationship with a subordinate in an internal probe the following year. The company’s research found three more ties that broke its regulations.
The SEC says McDonald’s and Easterbook settled on his termination being “without cause.” The SEC stated Monday that Easterbrook erroneously kept equity compensation he should have forfeited.
Easterbrook agreed to pay $52.7 million to the company as disgorgement, pre-judgment interest, and agency fines. Former CEO, who neither accepted nor denied the charges, agreed to a $400,000 civil penalty and to not operate as a company officer or director for five years.
Easterbrook’s repayments to McDonald’s to settle the company’s case against him satisfy all disgorgement and prejudgment interest, the SEC stated. McDonald’s sued Easterbrook in Delaware Chancery Court in August 2020 to get back his separation pay. They said he lied to them when they asked him about the three other intimate relationships he had with his subordinates.
McDonald’s required Easterbrook to refund more than $105 million in equity and cash rewards in a December settlement.
“When company officers corrupt internal systems to manage their personal reputations or line their own pockets, they breach their fundamental duty to shareholders,” the SEC’s enforcement division head stated. Easterbrook reportedly deceived shareholders by concealing his misbehavior during the company’s internal investigation.
McDonald’s allegedly violated securities laws by concealing Easterbrook’s alleged misbehavior from investors.
Due to the company’s cooperation, the SEC won’t seek fines. McDonald’s agreed to the ruling and to take remedial measures without admitting or rejecting the claims, the SEC said.