McDonald’s board fired its chief executive, Steve Easterbrook, in 2019 for having an inappropriate relationship with an employee. But she was not the only one. The 55-year-old British manager hid that he had had sexual relations with more of the company’s workers to maintain his high compensation. He lied when they specifically asked him about it and it has been expensive. He first had to repay his multi-million dollar settlement and now he will have to pay a fine to the Securities and Exchange Commission (the SEC) for his lies.
McDonald’s fired Easterbrook for lack of judgment and for having an inappropriate personal relationship with a McDonald’s employee, in violation of company policy. However, McDonald’s and Easterbrook entered into an agreement concluding that his termination was without cause, allowing him to keep significant stock compensation that he would otherwise have lost. “In reaching this conclusion, McDonald’s exercised discretion that was not disclosed to investors,” the SEC says.
in your resolution the moment in which the former boss of the fast food company lied in the internal investigation that took place in October 2019 is collected: “When asked if he had ever had a physical or non-physical sexual relationship with any other McDonald’s employee Easterbrook said no. In July 2020, McDonald’s learned that Easterbrook had in fact had other relationships with McDonald’s employees, in violation of the company’s standards of business conduct.
That finding, stemming from an anonymous tip and a second internal investigation, led the company to sue Easterbrook in the Delaware Court of Chancery to recover severance pay he received as part of the termination agreement. The lawsuit alleged breach of fiduciary duty and fraud in the course of the internal investigation.
On December 16, 2021, McDonald’s announced that it had reached a settlement with the fired executive withdrawing his lawsuit in exchange for Easterbrook returning to McDonald’s its cash severance, prorated bonus, certain proceeds from the sale of securities that resulted from his exercise of options and attorneys’ fees incurred by the company, plus the relinquishment of further shares and options to be exercised thereafter. The agreement was estimated at about 105 million dollars, although the SEC now places the compensation that had already been made at about 44 million.
The SEC considers that both the company and the manager broke the law with the management of the dismissal and confused investors. The agency implies that from the beginning the dismissal of the British manager should have been considered appropriate and, therefore, without the multimillion-dollar compensation, especially in shares and options, that he received.
Neither admitting nor denying the supervisor’s findings, Easterbrook has accepted a cease and desist order, which imposes a five-year disqualification as an executive and director and a $400,000 fine. The supervisor also considers that McDonald’s breached the regulation, but exempts him from the fine for the cooperation provided in the investigation of the case and because he has recovered the compensation paid to Easterbrook. Two commissioners of the organization, in addition, have issued a dissenting vote in which they disagree that the company has violated the regulations.
“When company managers corrupt internal processes to manage their personal reputations or line their pockets, they are failing in their fundamental duties to shareholders, who have a right to transparency and fair treatment from executives,” Gurbir S. Grewal, head of the SEC’s Division of Enforcement, 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,” it added.
“Public issuers, such as McDonald’s, are required to disclose and explain all material elements of their CEO’s remuneration, including factors relating to any termination agreement,” said Mark Cave, deputy director of the Division of Compliance. “Today’s order concludes that McDonald’s failed to disclose that the company exercised its discretion in treating Easterbrook’s firing as without cause in conjunction with the execution of a termination agreement valued at more than $40 million.”
THE COUNTRY of the morning
Wake up with the analysis of the day by Berna González Harbor
RECEIVE IT
#McDonalds #boss #fined #hiding #sexual #relations #multiple #female #employees