McDonald’s former CEO Stephen Easterbrook agreed to pay more than $52.7 million in settlement with Securities and Exchange Commission of US over investor fraud allegations.
The agency alleges that Easterbrook defrauded company’s investors by lying about sexual relationships with company subordinates while he was CEO of McD, resulting in separation compensation that he should not receive because of alleged fraud.
The conflict is that the company at the time said was related to a single relationship that violated company policy led MCD’s board to oust him from the company in November 2019. In an internal investigation was conducted by MCD’s the following year, Company said that Stephen Easterbrook originally disclosed one intimate relationship with the company subordinate. But through its investigation, Company said it was discovered three additional relationships that similarly violated its rules.
According to the Securities and Exchange Commission of US, McD’s and Stephen Easterbrook entered into the settlement agreement that characterized his termination as “without cause.” That characterization, the Securities and Exchange Commission said in their announcement, wrongfully allowed Easterbrook to retain equity compensation that otherwise would have been required to forfeit.
In its order, the Securities and Exchange Commission said that Stephen Easterbrook agreed to repay 52.7 million USD to the company, representing disgorgement and pre-judgment interest on his ill-gotten gains, along with interest and agency fines. Stephen Easterbrook, who neither admitted nor denied the charges and they agreed to a penalty of $400,000 and to refrain for five years from acting as a company officer or director.
The full amount of disgorgement and prejudgment interest, the Securities and Exchange Commission said, deemed satisfied by Stephen Easterbrook’s pay back to McD’s in resolution of the company’s lawsuit against him. In August 2020, McD’s sued Stephen Easterbrook in Delaware Chancery Court in an effort to claw back separation compensation, alleging that he lied to the company when specifically asked about three additional intimate relationships with his subordinates. In month of December, McD’s reached a settlement with Stephen Easterbrook in matter, requiring the former CEO to return more than $105 million in combined equity and cash awards.
In a statement, The Securities and Exchange Commission’s enforcement division director Gurbir Grewal said, “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.”
McD’s was charged with violating securities laws for allegedly withholding from investors extent of Stephen Easterbrook’s alleged wrongdoing. However, the Securities and Exchange Commission said due to the company’s substantial co-operation with agency, it would not seek to impose fines. Securities and Exchange Commission said Without admitting or denying the charges, McDonald’s agreed to the order and to undertake remedial measures such as seeking and ultimately recovering the payments it made under Stephen Easterbrook’s separation agreement.
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