SEC charges former McDonald’s CEO with misleading investors

Jan 8, 2023, 4:56 PM | Updated: Jan 9, 2023, 1:00 pm
FILE - McDonald's CEO Steve Easterbrook is interviewed at the New York Stock Exchange, July 26, 201...

FILE - McDonald's CEO Steve Easterbrook is interviewed at the New York Stock Exchange, July 26, 2017. The former CEO has been charged by federal regulators with making false and misleading statements to investors about the circumstances leading to his firing in November 2019. (AP Photo/Richard Drew, File)

(AP Photo/Richard Drew, File)

Former McDonald’s CEO Stephen Easterbrook has been charged by federal regulators with making false and misleading statements to investors about the circumstances of his firing by the burger giant in November 2019.

Easterbrook was ousted for engaging in an inappropriate personal relationship with a McDonald’s employee in violation of company policy, the Securities and Exchange Commission said in its order Monday. But the separation agreement with McDonald’s concluded that his termination was without cause, which allowed him to keep substantial compensation in McDonald’s stock that he otherwise would have forfeited, the agency said.

The SEC said Easterbrook’s separation agreement was valued at more than $40 million.

Easterbrook told the Chicago company at the time that there were no other similar instances. But in July 2020, McDonald’s found through an internal investigation that Easterbrook had engaged in other undisclosed, improper relationships with additional McDonald’s employees.

The company wound up suing Easterbrook in August of that year, claiming he covered up relationships with employees and destroyed evidence.

The SEC said that 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.”

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 ban on him serving as a corporate officer or director ban and a $400,000 civil penalty.

The SEC also charged McDonald’s with failing to disclose that it exercised its own discretion in terminating Easterbrook without cause. But the agency didn’t issue a financial penalty against McDonald’s, citing the company’s cooperation during its investigation and its successful efforts to recover Easterbrook’s compensation. In late 2021, Easterbrook agreed to return $105 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.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

In this photo provided by the U.S. Coast Guard Pacific Northwest, a Coast Guard rescue swimmer reac...
Associated Press

Man rescued by Coast Guard wanted in ‘Goonies’ fish incident

A man who was saved by a Coast Guard rescue swimmer at the mouth of the Columbia River as a massive wave rolled the yacht he was piloting Friday was wanted for a bizarre incident in which police said he left a dead fish at the Astoria, Oregon, home featured in the classic 1985 film, "The Goonies."
20 hours ago
FILE - An Amazon company logo on the company's building in Schoenefeld near Berlin, Germany, March ...
Associated Press

Amazon violated labor law with delivery app

A Spanish court has ruled that Amazon broke labor laws by forcing more than 2,000 delivery drivers to use an app that the company controlled for scheduling work and payments and requiring them to use their own cars and cellphones on the job.
20 hours ago
Associated Press

Saturday’s Scores

GIRLS PREP BASKETBALL= Bellarmine Prep 54, Olympia 43 Chiawana 76, Hermiston, Ore. 41 Hazen 40, Liberty 36 Kamiakin 77, Pasco 17 Orcas Island 67, Concrete 13 South Kitsap 39, Bethel 37 ___ Some high school basketball scores provided by Scorestream.com, https://scorestream.com/ Copyright © The Associated Press. All rights reserved. This material may not be published, […]
20 hours ago
Associated Press

Saturday’s Scores

BOYS PREP BASKETBALL= Adna 66, Raymond 47 Goldendale 56, Kittitas 33 Issaquah 65, Newport-Bellevue 46 Klahowya 79, North Mason 50 Lummi 65, Lopez 25 Mount Vernon Christian 81, Shoreline Christian 33 Neah Bay 91, Taholah 36 Orcas Island 82, Fellowship Christian 36 Puyallup 63, Emerald Ridge 52 Woodinville 73, North Creek 49 ___ Some high […]
20 hours ago
Associated Press

Crash averted at Austin airport; FAA, NTSB to investigate

AUSTIN, Texas (AP) — A FedEx cargo airplane attempting to land at Austin-Bergstrom International Airport on Saturday morning had to reverse course after a second plane was cleared to depart from the same runway, according to the Federal Aviation Administration. “The pilot of the FedEx airplane discontinued the landing and initiated a climb out,” the […]
20 hours ago
Skateboarders skate in front of city hall in remembrance of Tyre Nichols, who died after being beat...
Associated Press

Tony Hawk to donate photo proceeds to Tyre Nichols fund

NASHVILLE, Tenn. (AP) — Skateboard legend Tony Hawk says he will donate half of the proceeds of autographed photos of himself and BMX rider Rick Throne to the memorial fund for Tyre Nichols. “My proceeds from these will go to the Tyre Nichols Memorial Fund, which includes plans to build a public skatepark in his […]
20 hours ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
SEC charges former McDonald’s CEO with misleading investors