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In the Matter of Stephen J. Easterbrook and McDonald's Corporation

Exchange Act Release No. 11144 (2023)

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In the Matter of Stephen J. Easterbrook and McDonald’s Corporation

United States Securities and Exchange Commission
Exchange Act Release No. 11144 (2023)

Facts

McDonald’s Corporation (McDonald’s) (defendant), a public company, initiated an internal investigation following allegations that its chief executive officer, Stephen J. Easterbrook (defendant), had an inappropriate personal relationship with a McDonald’s employee. Easterbrook initially denied any misconduct but later admitted to having a consensual relationship with the employee in violation of company policy. McDonald’s and Easterbrook entered into an employment-separation agreement providing that Easterbrook was terminated without cause, thereby allowing Easterbrook to receive a postseparation compensation package subject to shareholder approval. Thereafter, McDonald’s learned that Easterbrook had had improper relationships with other employees. McDonald’s filed a Form 8-K with the Securities and Exchange Commission (SEC) and a proxy statement seeking shareholder approval of the separation agreement without disclosing Easterbrook’s other improper relationships. The improper relationships would have constituted grounds for terminating Easterbrook’s employment with cause and would have required Easterbrook to forfeit the compensation package. The SEC instituted cease-and-desist proceedings against McDonald’s and Easterbrook.

Rule of Law

Issue

Holding and Reasoning ()

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