The fast-food giant fired Easterbrook for violating company policy by engaging in a “nonphysical, consensual” relationship with an employee that involved texts and video calls. But his separation agreement from the company said his firing was without cause, allowing him to walk away with a multimillion-dollar compensation package he otherwise would have forfeited, the agency said.
A McDonald’s investigation after Easterbrook’s firing found he had engaged in physical sexual relationships with three other employees while leading the company. The SEC said Easterbrook knew — or should have known — that his failure to disclose those relationships shaped what the company chose to tell investors about his termination and pay package.
“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,” SEC enforcement director Gurbir S. Grewal said in a statement. “By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with — and ultimately misled — shareholders.”
An attorney for Easterbrook did not immediately respond to a request for comment.
McDonald’s went on to sue Easterbrook, and the former executive in 2021 agreed to pay back $105 million in cash and stock to resolve the matter, one of the biggest clawbacks in U.S. corporate history. Easterbrook acknowledged then he had “failed at times” to uphold the company’s values. “I apologize to my former co-workers, the board and the company’s franchisees and suppliers for doing so,” he said in a statement at the time.
The SEC also charged McDonald’s for failing to fully disclose the matter to investors. But it declined to impose a financial penalty in light of the company’s cooperation with the agency’s investigation and the action McDonalds took to recover Easterbrook’s exit package, the agency said Monday.
The company in a statement said the SEC’s order “reinforces what we have previously said: McDonald’s held Steve Easterbrook accountable for his misconduct. We fired him, and then sued him upon learning that he lied about his behavior.”