Dive Brief:

• The Securities and Exchange Commission on Monday fined McDonald’s ex-CEO Steve Easterbrook $400,000 on charges Easterbrook misrepresented his 2019 firing over an inappropriate sexual relationship with an employee.
• As a result, Easterbrook cannot hold officer or director positions for any SEC-reporting businesses for five years. Easterbrook did not confirm or deny the SEC’s claims, according to an SEC press release, though he did agree to entry of the SEC’s cease-and-desist letter.
• The SEC also charged McDonald’s for “shortcomings in its public disclosures related to Easterbrook’s separation agreement,” per the release, but will not fine the chain because of its “substantial cooperation” throughout the SEC’s investigation of Easterbrook. 

Dive Insight:

The SEC’s charges against Easterbrook put a years-long McDonald’s scandal to bed after much criticism from shareholders and corporate culture experts. These actors were angered that the burger chain granted Easterbook a severance package worth $105 million, though McDonald’s clawed back this bundle of cash and equity awards in December 2021 after suing him in 2020. 

McDonald’s long claimed that Easterbrook was dishonest during the company’s internal investigation of his relationship with an employee. This investigation unearthed evidence of three additional sexual relationships Easterbrook had with female staff members, as well as evidence he attempted to destroy records of these relationships, McDonald’s alleged. Easterbrook’s attorney, however, argued that this information was “not new at all.”

McDonald’s wrote in a press release Monday that the SEC’s charges against Easterbrook — including that he “concealed the extent of his misconduct during the company’s internal investigation” and “misled” shareholders — affirm its position throughout its clawback battle with the ousted executive. 

“The SEC’s Order reinforces what we have previously said: McDonald’s held Steve Easterbrook accountable for his misconduct,” the company wrote. “The Company continues to ensure our values are part of everything we do, and 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.”

But the SEC still had criticism for how the Golden Arches handled Easterbrook’s firing. 

"Today’s order finds that McDonald’s failed to disclose that the company exercised discretion in treating Easterbrook’s termination as without cause in conjunction with the execution of a separation agreement valued at more than $40 million,” Mark Cave, associate director of the SEC’s Division of Enforcement, said in a statement.