Ex-McDonald’s chief charged with misleading investors after sacking over romance

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.

Mr Easterbrook’s separation agreement was valued at more than 40 million US dollars (£32.8 million), the SEC said.

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 company wound up suing Mr Easterbrook in August 2020, claiming he covered up relationships with employees and destroyed evidence.

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 with failing to disclose it exercised its own discretion in terminating Mr Easterbrook without cause. But the agency did not fine the firm, citing its co-operation during its probe and its successful efforts to recover Mr Easterbrook’s compensation.

In late 2021, Mr Easterbrook agreed to return 105 million US dollars (£86.2 million) in cash and stock awards to the company.

“The SEC’s order reinforces what we have previously said: McDonald’s held Steve Easterbrook accountable for his misconduct,” the company said in a statement.

“We are proud of our strong ‘speak up’ culture that encourages employees to report conduct by any employee, including the CEO, that falls short of our expectations.”