Equifax Investors Told to Boot Directors After Data Breach

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By Andrea Vittorio

Equifax Inc. shareholders should push out several directors who sat on the credit bureau’s board at the time of its massive data breach, according to two prominent proxy advisers.

Glass, Lewis & Co. recommended April 15 that investors vote against re-electing the board’s new chair and two other directors who are members of a technology committee tasked with overseeing cybersecurity risks. Fellow proxy adviser Institutional Shareholder Services Inc. is recommending votes against those directors plus two more technology and audit committee members.

Both firms criticized Equifax’s handling of the 2017 breach, in which hackers were able to access the personal data of more than 145 million U.S. consumers. The company has reshuffled its leadership since then, appointing a new chief executive officer and board chairman.

“The severity of that breach and the company’s failures to promptly notify the public suggest a failure to adequately oversee some of the most significant risks facing the company,” ISS said in a report issued April 14. Equifax detected the breach in July of last year but didn’t disclose it until September.

Glass Lewis likewise called Equifax’s response to the breach “problematic” and said it indicates the board’s and the company’s “unpreparedness to deal with cybersecurity risk.”

Concerns Over Pay

The San Francisco-based firm also suggested that investors voting at Equifax’s annual meeting May 3 oppose the pay package for newly appointed chief executive officer Mark Begor due to concerns over his one-time special equity award.

The $10-million award won’t be covered by the company’s clawback policy, which allows for incentive pay to be recouped if there’s financial or reputational harm from an employee’s misconduct or oversight failures, Glass Lewis said.

ISS says investors should give the pay package “cautionary support.”

Begor became CEO as part of a reshuffling of Equifax’s management and board in the wake of the breach. Equifax also replaced its chief information and chief security officers. Its board has since appointed a new chairman, a role that used to be combined with the CEO, and added two members with technology or cybersecurity expertise.

The board’s new chair, Mark Feidler, is facing a negative recommendation from both proxy advisers, as is John McKinley, who chairs the board’s technology committee, and Mark Templeton, who’s sat on that committee since it formed in 2010.

ISS is targeting those directors plus G. Thomas Hough and Elane Stock, both of whom were part of a committee the board created to investigate stock sales that Equifax officers made before the breach became public and other aspects of the hack.

Three other long-tenured Equifax directors aren’t seeking reelection this year.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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