McDonald's ex-boss Stephen Easterbrook charged with misleading investors after sacking over romance with employee

The British former boss of McDonald's has been charged in the US with making false and misleading statements to investors over relationships he had with employees at the fast food giant.

Stephen Easterbrook, 56, was sacked as chief executive officer in November 2019 after having an inappropriate personal relationship with a McDonald's employee in a violation of company policy.

The separation agreement with McDonald's, however, allowed him to keep millions of dollars of substantial equity compensation, which otherwise would have been forfeited, as it said his termination was without cause.

The Securities and Exchange Commission (SEC) said that Mr Easterbrook's separation agreement was valued at more than $40m (£32.8m).

Through an internal investigation, McDonald's later found that Mr Easterbrook had other undisclosed, improper relationships with additional McDonald's workers in July 2020.

The burger chain sued him in August 2020, claiming he covered up relationships with employees and destroyed evidence.

Mr Easterbrook was either aware or was reckless in not knowing that his failure to disclose additional violations of company policy before his sacking would influence McDonald's disclosures to investors related to his exit and compensation, the SEC said.

Gurbir Grewal, director of the SEC's enforcement division, 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.

"By allegedly concealing the extent of his misconduct during the company's internal investigation, Easterbrook broke that trust with - and ultimately misled - shareholders."

Mr Easterbrook has not admitted or denied the SEC's findings, but has agreed to the agency's cease-and-desist order, which imposes a five-year officer and director ban as well as a $400,000 (£328,000) civil penalty.

The SEC also charged McDonald's with failing to disclose it exercised its own discretion in terminating Mr Easterbrook without cause.

But the US federal regulator did not fine the fast-food chain, citing its cooperation throughout its investigation and its successful efforts to recover Mr Easterbrook's compensation.

In late 2021, Mr Easterbrook agreed to send back $105m (£86.2m) in cash and stock awards to the company.

"The SEC's order reinforces what we have previously said: McDonald's held Steve Easterbrook accountable for his misconduct," the SEC said.

"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."