Former McDonald’s chief executive officer Stephen Easterbrook has been charged by US federal regulators with making false and misleading statements to investors about the circumstances of his firing by the burger giant.
Mr Easterbrook, from Watford in Hertfordshire, was ousted in November 2019 for engaging in an inappropriate personal relationship with a McDonald’s employee in violation of company policy, the Securities and Exchange Commission (SEC) said on Monday.
But the separation agreement with McDonald’s concluded his termination was without cause, which allowed him to keep substantial equity compensation which otherwise would have been forfeited.
McDonald’s found through an internal investigation that Mr Easterbrook had engaged in other undisclosed, improper relationships with additional McDonald’s workers in July 2020.
The SEC said Mr 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.”
Mr 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 officer and director ban and a 400,000 US dollar (about £328,000) civil penalty.
McDonald’s was also charged by the SEC over the incident, it said on Monday, but due to the company’s co-operation during the ensuing investigation, there is no financial penalty.