Equifax CEO Retires with $18.4 million After Data Breach

Equifax reported on Tuesday that Richard Smith, the company’s Chief Executive, would resign and forgo this year’s bonus as the massive cyber-attack which resulted with the credit-monitoring firm fall into crisis continues to be criticized.

A few observers deemed the move as a positive first step, though several U.S. senators looking into the cyber-attack contradicted the statements, saying the departure failed to remedy the damage which compromised up to 143 million American’s data.

On Sept. 7, Equifax suffered a data breach which has prompted investigations by multiple federal state agencies. Smith’s departure is the latest development following this incident that involved a criminal probe by the U.S. Department of Justice.

"A failure of this magnitude must have consequences," stated Paul Rosenzweig, a former Department of Homeland Security official.

"If the Equifax CEO had retained his job, cyber security would be seen as a joke everywhere in corporate America," he added as he also advise companies on cyber-security.

Smith is still eligible for 18.4 million in retirement benefits, regardless of the investigative results. Other than him, the breach has already prompted both Equifax’s chief information and chief security officer’s resignation.

The company issued a statement confirming Smith’s retirement, though he and the company representatives did not disclose the reasons for his departure.

Smith was quoted in a statement saying, "At this critical juncture, I believe it is in the best interests of the company to have new leadership to move the company forward."

There is a possibility that Equifax will retract some of Smith’s compensation for this year as it states in a regulatory filing. This will depend on the board’s investigation results. The company said that the data breach occurred between mid-May and July.

The changes could lead to more changes to the company’s structure, corporate governance experts studied.

Brent Longnecker, head of compensation and corporate-governance consulting Longnecker & Associates, has shared his insight regarding the issue, saying that the board of directors and leadership has to figure out the extent of damage and the next step to recovery. Furthermore, he hinted that a removal from someone from the board might help.

The Cost of Smith’s Departure

Equifax’s shares have fallen around 30 percent which translates to a loss of about $4.5 billion in market value, closing nearly 1 percent higher at $106.05. The decline was influenced by the attack’s disclosure to consumers, politicians and security experts over the company’s response to the hack

amid criticisms.

It is rare, but not uncommon for a CEO to depart following an incident like a massive attack. In this situation, the company and Smith agreed to let the company comply with decisions related to “any obligations or benefits” owed to him until the review of the breach by the board is complete.

Smith’s earning last year was $14.96 million in total compensation.