Equifax CEO retires amid fallout from cyberbreach
Personal data compromised for 143M
Equifax CEO and Chairman Richard Smith stepped down Tuesday, becoming the latest executive of the credit-reporting giant to step down after a massive cyberbreach that compromised personal information for 143 million U.S. consumers.
Announcing that Smith’s retirement would take effect immediately, the company named current board member Mark Feidler to serve as non-executive chairman. Paulino do Rego Barros, a seven-year Equifax veteran who most recently served as president of Asia Pacific, was appointed as interim CEO, pending a search for a permanent successor in that post.
Smith, 57, a former General Electric executive, exits after serving at Equifax’s chief executive since 2005. Despite the controversy surrounding his departure, he has won company plaudits for leading growth that produced total shareholder return of 294 percent compared with 145 percent for the S&P 500 Index, according to the preliminary 2017 proxy statement Equifax filed in March.
As of Dec. 31, 2016, the value of Smith’s accumulated retirement benefits stood at nearly $18.4 million, according to the proxy statement.
“The board remains deeply concerned about and totally focused on the cybersecurity incident,” Feidler said in a statement. “We are working intensely to support consumers and make necessary changes to minimize the risk that something like this happens again.”
Smith is the third executive whose Equifax career was ended by the cyberbreach and subsequent criticism of the company’s cybersecurity precautions — as well as its handling of consumer response after the hacking attack was discovered and announced.
The company announced on Sept. 15 that its chief information officer and the chief security officer were also retiring.
Carried out by what the company characterized as criminal hackers, the unauthorized access to personal information for nearly 44 percent of the U.S. population occurred from mid-May through July and primarily involved names, Social Security numbers, birthdates, addresses and, in some cases, driver’s license numbers, Equifax said.
Additionally, the hackers gained access to credit card numbers for roughly 209,000 consumers, plus certain dispute documents with personal identifying information for approximately 182,000 consumers.
Equifax also identified unauthorized access to limited personal information for certain residents of the United Kingdom and Canada.
The company has offered one year of free credit monitoring and identity theft protection to all consumers, regardless of whether they suffered specific financial damage after the cyberbreach.
However, the rollout of that offer was marred by electronic difficulties and other problems that made it difficult for consumers to determine quickly whether their personal data had been affected and slowed enrollments in the credit monitoring offer.
Equifax also has been peppered with questions about insider stock sales by three executives after the cyberbreach was discovered but before it was disclosed to consumers.
Regulatory filings show that On Aug. 1, Chief Financial Officer John Gamble sold shares with a market value of nearly $946,400, while Joseph Loughran, president of Equifax’s U.S. Information Solutions, exercised options to sell nearly $584,100.
Rodolfo Ploder, president of business unit Workforce Solutions, sold shares valued at nearly $250,500 on Aug. 2, the filings show. The three executives continued to hold tens of thousands of Equifax shares after the transactions.
Equifax said the officials “had no knowledge that an intrusion had occurred” at the time they sold their shares.
Despite Smith’s retirement, he is still expected to testify and answer questions about the cyberbreach and fallout during an Oct. 3 hearing by the House Subcommittee on Digital Commerce and Consumer Protection.
Smith’s departure was past due, but represents a “weak second step” after the earlier retirements of Equifax’s top information and security officials, said Jeffrey Sonnenfeld, the Yale School of Management’s senior associate dean for leadership studies.
“The buck stops in the corner suite,” said Sonnenfeld, who questioned why Equifax has not moved to claw back recent bonuses awarded to Smith and the other departed executives.