Former McDonald’s CEO Stephen Easterbrook accused of defrauding investors

The U.S. Federal Securities and Exchange Commission accused former McDonald’s Corporation president Stephen Easterbrook of deceiving investors about the circumstances of his firing in 2019, as well as the company itself of violating disclosure rules related to its former CEO.

The charges against Easterbrook are for making “false and misleading” statements to investors about the circumstances that led to his dismissal in November 2019. The commission also filed charges against McDonald’s for failing to disclose information related to Easterbrook’s termination.

He was fired for a number of “poor decisions” made, violations of company rules, including “inappropriate personal relationships with an employee” of McDonald’s. However, the termination agreement between the corporation and Easterbrook stated that there was no reason for the resignation, allowing the former executive to retain significant stock compensation that would have been lost under other circumstances. “In taking such a step, McDonald’s exercised its authority that was not communicated to investors,” the commission said in a statement.

In July 2020, an internal McDonald’s investigation revealed that Easterbrook’s “inappropriate personal relationships” were not limited to just one company employee. The information was not disclosed before the former president was fired because it was known that it would affect corporate board decision-making, the regulator’s documents noted. “When corporate officers corrupt internal processes to manage their personal reputations or to line their own pockets, they violate their fundamental duties to shareholders, who have a right to transparency and fair dealing on the part of executives,” Gurbir Grewal, the commission’s director of enforcement, stressed.

The regulator accused Easterbrook of violating anti-fraud provisions of U.S. securities and exchange laws. Easterbrook agreed to five years out of executive positions and to a $400,000 fine, while he and McDonald’s did not admit or deny the charges against them. The commission decided not to fine the company due to the fact that it cooperated with the regulator during the investigation, returned the funds spent on compensation.