Topline
Federal regulators fined former McDonald’s CEO Stephen Easterbrook $400,000 on Monday for charges related to the fallout from the sex scandal that resulted in his termination from the fast food giant.
Steve Easterbrook, right, pictured here in 2015.
Key Facts
Easterbrook, who was fired in 2019 for a consensual sexual relationship with an employee, knowingly misled investors by failing to disclose additional improper relationships in the workplace, the Securities and Exchange Commission said in a Monday announcement.
Without admitting wrongdoing, Easterbrook agreed to the penalty and a five-year ban from serving on the board of a public company or working as an officer at such firms.
Easterbrook breached his “fundamental duties to shareholders…by allegedly concealing the extent of his misconduct during the company’s internal investigation,” Gurbir Grewal, the SEC’s director of enforcement, said in a statement.
Regulators said McDonald’s improperly failed to initially communicate the nature of its termination settlement with Easterbrook, but the SEC did not levy any fine against the corporation following its “substantial cooperation” during the probe.
“McDonald’s held Steve Easterbrook accountable for his misconduct,” the company said in a Monday statement, pointing to its lawsuit and December 2021 settlement in which Easterbook agreed to return his $105 million severance package for misleading internal investigators about the extent of his misconduct.
Key Background
An internal investigation found Easterbrook exchanged messages containing sexual content and later tried to delete the offending messages. Easterbrook served as McDonald’s CEO from 2015 to 2019, earning praise for overseeing a strong improvement in the legacy restaurant chain’s financials. Shortly before his ouster, Forbes named Easterbrook one of the 20 most innovative American corporate leaders of 2019, accompanied by the likes of Elon Musk, Jeff Bezos and Tim Cook. McDonald’s is the 49th-largest company in the world by market capitalization, valued at $197 billion.
Tangent
McDonald’s shares have continued to perform better relative to the market since Easterbrook’s firing. The stock gained 99.6% during Easterbrook’s tenure, compared to the S&P 500’s 52% increase during the period, while McDonald’s shares are up 38% since November 2019, far better than the S&P’s 29% jump over the timeframe.
Further Reading
McDonald’s CEO Steve Easterbrook Fired Over Consensual Relationship With Employee (Forbes)
McDonald’s Recovers $105 Million Severance From CEO Easterbrook Fired For Hiding Relationships (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/01/09/sec-charges-former-mcdonalds-ceo-easterbrook-for-lying-about-extent-of-workplace-misconduct/