Trying to Stem Fallout From Breach, Equifax Replaces C.E.O.
Wednesday, September 27, 2017
Extract from Ron Lieber and Stacy Cowley's article "Trying to Stem Fallout From Breach, Equifax Replaces C.E.O." posted in The New York Times
When the board of Equifax convened last week to discuss the company’s response to an enormous data breach, the 10 outside directors concluded that it was time for their hard-driving chief executive to step down.
There was a problem, though. The roster of possible replacements had been depleted by the fallout from the cyberattack, which had compromised the personal information of much of the adult population of the United States.
Some top contenders were considered tainted, according to two people briefed on the board’s deliberations. Three of the company’s senior executives, including the head of its largest division and the chief financial officer, are under scrutiny for selling stock after the breach was discovered but before it had been disclosed to the public.
Equifax spent five more days limping through the crisis before announcing on Tuesday that the chief executive, Richard F. Smith, would retire.
The shake-up is the culmination of weeks of mounting public and legal pressure on the Atlanta-based data clearinghouse from citizens, politicians and investors. The company’s lackluster response to the breach has prompted consumer outrage, while lawmakers have begun pushing for tougher oversight of the industry.
Although Mr. Smith retired, the board took an unusual step that reflected the damage from the breach. The board said it could retroactively classify Mr. Smith as having been fired for cause. If that were to happen, Mr. Smith would probably be required to forgo or repay certain compensation.
Mr. Smith will be replaced on an interim basis by the company’s head of its Asia-Pacific region, Paulino do Rego Barros Jr. One of Equifax’s outside board members, Mark Feidler, will succeed Mr. Smith as nonexecutive chairman. The company is now conducting a search for a permanent chief executive that includes internal and external candidates.
“Speaking for everyone on the board, I sincerely apologize,” said Mr. Feidler, an Atlanta-based private equity executive.
But management changes alone are unlikely to quell the complaints of critics.
Multiple congressional committees are planning hearings into the breach and Equifax’s response to it. More than 30 state law-enforcement authorities have opened inquiries, as has the F.B.I.
Senator Elizabeth Warren, Democrat of Massachusetts, said Tuesday that it is “not real accountability if the guy promoted to chairman is an Equifax board member who served on the committee that was responsible for overseeing data security.”
Read the full article here