According to the Securities and Exchange Commission, McDonald’s ex-CEO Stephen J. Easterbrook had been fired by McDonalds. However, only Easterbrook is now facing legal consequences.
McDonald’s fired Easterbrook abruptly in 2019. However, investors were not briefed on key facts that led to this decision. He was terminated by the company for having a mutually beneficial relationship with a subordinate, but he did not mention this in his separation agreement.
Eastbrook was originally dismissed “without cause”, but he still has the right to equity compensation. An internal investigation found that Easterbrook had been involved in a series of unreported, inappropriate relationships with McDonald’s workers for more than half a decade after his firing. These additional violations against company policy were not disclosed by Easterbrook. Interdictions The accuracy of fast food giant’s information to investors regarding his resignation and severance package was affected by the dating and sexual relationships among employees who have a direct or indirect reporting relationship.
Yesterday, Jan. 9, the SEC charged Easterbrook for “making false statements and misleading statements about investors” regarding the events that led to Easterbrook’s November 2019 firing. McDonald’s was also accused of making holes in the public disclosures it made about its termination.
Easterbrook accepted the cease-and-desist order of the SEC without admitting to or denial that fraud was acquired by the SEC. Easterbrook must pay $400,000 in civil penalties and is prohibited from holding officer or director roles at any company for the next five years.
The SEC declares that McDonald’s former CEO broke trust with investors and misled them.
Corporate officers who corrupt their internal processes in order to protect their reputations and line their pockets are violating their fundamental duty to shareholders. They breach their basic duties. Shareholders have the right to fair dealing and transparency from their executives. By allegedly concealing the extent of his misconduct during the company’s internal investigation, Easterbrook broke that trust with-and ultimately misled-shareholders.” Director of Enforcement Division at the SEC, Gurbir S. Grewal.
By the numbers, Easterbrooks’ exit from McDonalds.
$41.8 million: Easterbrook’s Package for severance Include six months’ pay and shares that he can cash in later.
$23.8 million: Stock options that he could use at time of firing
$12.37: The average hourly wage for McDonald’s staff workers in the US is $18
$105 million: Easterbrook’s cash and stock repayments in December 2021, to pay off a McDonald’s lawsuit against him from August 2020. It was alleged that he had in-appropriate relationships with his subordinates, and covered it up.
McDonald’s is not getting a fine.
In many cases, if executives are found to be violating anti-fraud regulations, they can also face a fine. Here are a few examples:
The SEC was founded in September 2001. levied penalties $1 million each on Boeing and the then-CEO Muilenburg for misleading information regarding Boeing 737 Max, which led to some fatal crashes.
The federal authorities were abolished in May 2022. Charged New York-based SCWorx imposed upwards of $600,000. In penalties and disgorgement. They sought an officer or director bar against Schessel for lying about their planned distribution of covid-19 rapid test kits.
Medley Management, a publicly traded asset manager, and its co-CEOs Brook B. Taube (and Seth B. Taube) were once together Telled to pay After the SEC charged them with “making false representations to investors and clients which created the illusion that Medley’s future growth was likely,” they were fined $10 million total in April 2022.
The key difference in McDonald’s’s is that it wasn’t the company itself who was misrepresented. It could not reveal Easterbrook’s consensual relationships to subordinates for certain incidents because it was unaware of them. It tried to rectify the situation.
We fired him and sued him after learning that he had lied about his conduct.” The company stated in a statement.
After taking all of this into account, the SEC then rebuked McDonald’s but did not impose any financial penalties.