US authorities on Monday fined former McDonald’s CEO Stephen Easterbrook and barred him from serving as a public company officer for five years after accusing him of defrauding investors in connection with his termination in 2019.
Easterbrook agreed to a $400,000 fine, without admitting or denying the claims against him, under a settlement announced by the US Securities and Exchange Commission.
“When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders,” said Gurbir Grewal, the SEC’s head 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.”
The settlement is the latest ripple from a messy corporate saga that morphed from a corporate sex scandal into an executive clawback case.
Originally appointed in 2015, Easterbrook was credited with boosting McDonald’s operations until his sudden November 2019 departure following a consensual romantic relationship with an employee that violated company policy.
The separation agreement between McDonald’s and Easterbrook determined that his termination was “without cause,” which meant Easterbrook was entitled to millions of dollars in compensation.
However in August 2020, McDonald’s filed suit against Easterbrook after discovering that he had engaged in other, undisclosed improper relationships with McDonald’s staff.
Easterbrook had told McDonald’s investigators that he only had one inappropriate relationship, but the probe turned up damning evidence of other encounters, including nude pictures and videos of women sent from Easterbrook’s work email to his personal email account.
In December 2021, McDonald’s announced that it reached a settlement with Easterbrook, clawing back $105 million of his severance package. Easterbrook also apologized for his actions.
In addition to penalizing Easterbrook, the SEC issued a cease-and-desist order against McDonald’s due to “shortcomings in its public disclosures related to Easterbrook’s separation agreement,” the government agency said in a statement.
However, the SEC did not fine McDonald’s, citing the company’s cooperation in the investigation.
McDonald’s said the SEC’s order “reinforces” the company’s actions to hold “Steve Easterbrook accountable for his misconduct.”
Attorneys for Easterbrook did not immediately respond to a request for comment.