CEO of Equifax leaves his post; he’ll still get $18 million pension
WASHINGTON — Equifax announced Tuesday that its chief executive would leave his job effective immediately, weeks after the credit-reporting company disclosed a massive data breach.
Richard Smith, who also served as chairman of the Atlanta-based company’s board, is the latest casualty at Equifax as a result
of the breach, which exposed the Social Security numbers and birthdates of as many as 143 million people.
Equifax’s nearly six-week delay in notifying the public about the intrusion into its vast database of sensitive information — and the bungled handling of potential fixes — led to an outcry from consumers and lawmakers as well as state and federal investigations.
The breach has caused much more concern than previous incidents, such as those involving Target and Yahoo, because of the amount of consumer data warehoused by Equifax and the nation’s other two major credit
reporting companies.
“It’s one thing when you use your credit card and they get your credit card information and they can steal your number. You cancel that card,” said Michael Burg, founder of the Denver-based law firm Burg, Simpson, Eldredge, Hersh & Jardine.
“Here, the data that they have includes your Social Security number, includes where you shop, includes your credit history from all kinds of places,” he said. “It is so much more personal.”
Sen. Mark Warner, D-Va., on Tuesday called the Equifax breach “a travesty” and questioned “whether Equifax has the right to even continue providing these services with the level of sloppiness and lack of attention to cybersecurity.”
The company’s stock price has tumbled as it scrambled to control the damage, including backtracking on initially making consumers give up their right to sue if they wanted free credit monitoring and identity theft protection.
Adding to Equifax’s troubles was the revelation that three executives sold thousands of shares of company stock in the days after the breach was discovered on July 29 — long before the public was informed of the breach this month and the stock price nosedived.
Equifax has said the executives were unaware of the breach when they sold the shares.
Full pension
Smith’s abrupt departure came just days before he is scheduled to face angry lawmakers at two congressional hearings. He still will receive his full pension, which was valued at $18.4 million as of the end of last year, but he will not get a 2017 bonus or severance payment, Equifax spokeswoman Ines Gutzmer said.
The board appointed Paulino do Rego Barros Jr., a seven-year veteran of the company who most recently served as its Asia Pacific region president, as interim CEO. The board also appointed independent member Mark Feidler to serve as non-executive chairman.
Equifax said it would start a search for a permanent CEO and would consider candidates from outside the company.
“The board remains deeply concerned about and totally focused on the cybersecurity incident,” Feidler said in a written statement. “We are working intensely to support consumers and make the necessary changes to minimize the risk that something like this happens again. Speaking for everyone on the board, I sincerely apologize.”
Equifax, one of the nation’s three major creditreporting companies, revealed the data breach Sept. 7. The company said a website vulnerability led to an intrusion that lasted from mid-May through July.
Discovered July 29
The breach was discovered July 29, and Equifax said it spent the following weeks working with a cybersecurity consultant and authorities on an investigation.
Investigations have been launched by regulators, congressional committees and state attorneys general.
Smith was scheduled to testify at a House Energy and Commerce Committee hearing Oct. 3 and a Senate Banking Committee hearing the following day. He is still expected to testify at the House hearing.
“I look forward to hearing directly from Mr. Smith on this unprecedented breach impacting millions of Americans,” said Rep. Greg Walden, R-Ore., chairman of the House committee.
A Senate Banking Committee spokeswoman did not immediately respond to a question about whether Smith would still appear at the Oct. 4 hearing. But Sen. Sherrod Brown, DOhio, the committee’s top Democrat, said Tuesday that he expected Smith to testify.
Sen. Elizabeth Warren, D-Mass., said Smith should be joined by Feidler and Do Rego Barros at next week’s hearing.
“It’s not real accountability if the CEO resigns without giving back a nickel in pay and without publicly answering questions,” she said.
Smith earned $15 million in total compensation in 2016, including a $1.5 million base salary and $7.3 million in stock awards, according to the company’s securities filings.
As of Dec. 31, his pension was valued at $18.4 million, the filings showed. Smith is entitled to that pension “under any circumstances,” Gutzmer said.
Smith isn’t the first Equifax executive to step down since the breach. On Sept. 15, Equifax announced that its chief information officer and chief security officer were retiring effective immediately.