Medibank bonus threat
Watchdog warns executives after data breach
MEDIBANK could be forced to slash executive bonuses under potential regulatory action from the financial services watchdog after a cyber attack exposed the health records and other sensitive data of almost 10 million customers.
The Australian Prudential Regulation Authority said on Monday that it had “intensified its supervision of Medibank” in the wake of the nation’s biggest cyber assault.
APRA executive Suzanne Smith said the regulator was considering taking further regulatory action against the health insurer and expected to take “appropriate consequence management”, highlighting the company’s executive remuneration.
Ms Smith’s comments come less than two weeks after Medibank chairman Mike Wilkins said executives – including chief executive David Koczkar – would keep this year’s bonuses, totalling more than $7.5m. He said the board would not consider adjusting remuneration until next year after an external review of the attack was completed.
This is despite cyber criminal publishing five tranches of customer data concerning abortion, and drug and alcohol abuse on the dark web.
“While APRA notes Medibank’s constructive response to date, APRA will consider whether further regulatory action is needed when findings of the report become clear,” Ms Smith said. “APRA expects Medibank to undertake any recommended remediation actions and ensure there is appropriate consequence management, including impacts to executive remuneration where appropriate.”
Mr Koczkar – who acknowledged Ms Smith’s comments – received $1.1m in bonuses last financial year, bringing his total remuneration to $2.59m. He also received $2.33m – or 150 per cent of his fixed salary – in shares under the company’s longterm incentive plan.
Mr Wilkins told shareholders at the health insurer’s annual meeting this month that it “aims to reward executives fairly for delivering the company’s strategy in a manner that meets community and customer expectations and delivers sustainable shareholder returns”.
Despite the criticism, shareholders earlier this month overwhelmingly supported Medibank’s remuneration report and Mr Koczkar’s performance rights.