Former McDonald’s Corp. Chief Executive Officer Stephen Easterbrook agreed to pay $400,000 over allegations from US regulators that he failed to disclose improper relationships with employees at the company.
The Securities and Exchange Commission said on Monday that Easterbrook didn’t fully disclose violations of company policy leading up to his termination in 2019. The terms of his departure let him maintain “substantial equity compensation,” the agency said in a statement. Lawyers for Easterbrook, who didn’t admit or deny the SEC’s allegations as part of the settlement, didn’t immediately respond to an emailed request for comment.
The penalty is the latest twist in a yearslong saga over Easterbrook’s tenure. In late 2021, he agreed to return $105 million in cash and equity awards to settle a lawsuit by the fast-food chain. The amount is what Easterbrook would have forfeited had he been forthcoming about his actions and been fired for cause, the Chicago-based company said at the time.
The SEC said that it wasn’t imposing a financial penalty on McDonald’s “in light of the substantial cooperation” and remedial measures that the fast-food giant has taken.
“By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with – and ultimately misled – shareholders,” Gurbir Grewal, the SEC enforcement head, said in a statement.
In addition to his financial penalty, as part of the settlement, Easterbrook agreed to a five-year ban from serving as officer or director. Two Republican SEC commissioners objected to the resolution, saying the decision to examine the “hiring and firing discussion and analysis” goes beyond the agency’s mandate.
“The SEC’s order reinforces what we have previously said: McDonald’s held Steve Easterbrook accountable for his misconduct,” the fast-food chain said in a statement. “We fired him, and then sued him upon learning that he lied about his behavior.”
McDonald’s shares fell 0.4% at 10:37 a.m. in New York trading.
Easterbrook’s messy exit more than three years ago remains a legal headache for McDonald’s. Three pension funds which hold shares of the fast-food company have sued, saying in court last month that it didn’t get nearly enough from Easterbrook when he agreed to return $105 million to settle claims that he was sexually involved with subordinates. The investors contend McDonald’s also should have dunned Easterbrook for the tens of millions of dollars in legal fees the company spent on the case.
The judge in the case hasn’t yet ruled on whether their lawsuit can proceed.
Easterbrook still had a net worth of about $40 million after he handed over the $105 million, which included nearly $40 million in McDonald’s stock options, according to published reports.
–With assistance from Stephanie Stoughton and Leslie Patton.
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