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Businesses The Almighty Buck

Equifax CEO Richard Smith Who Oversaw Breach To Collect $90 Million (fortune.com) 170

An anonymous reader shares a report: The CEO of Equifax is retiring from the credit reporting bureau with a pay day worth as much as $90 million -- or roughly 63 cents for every customer whose data was potentially exposed in its recent security breach. Richard Smith, 57, is the third Equifax executive to retire under pressure following the company's massive data breach revealed earlier this month, putting the personal information of as many as 143 million people at risk. Equifax said Tuesday that as a condition of Smith's retirement, he "irrevocably" forfeits any right to a bonus in 2017, an amount that under normal circumstances would have totaled more than $3 million -- the bonus he received in 2016 -- according to the company's retirement policy. But the CEO is still set to collect about $72 million this year alone (including nine months' worth of his $1,450,000 salary), plus another $17.9 million over the next few years. That's when the rest of Smith's stock compensation hits a few important milestones or "vests," allowing Smith to essentially put it in his bank account. Altogether, it adds up to a total potential paycheck of more than $90.1 million, according to Fortune's calculations based on Equifax securities filings.
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Equifax CEO Richard Smith Who Oversaw Breach To Collect $90 Million

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  • He would have cleared probably over $200K if he retired normally. Now he is in the poor house with only $90 million.
    • by Hognoxious ( 631665 ) on Friday September 29, 2017 @10:10AM (#55276255) Homepage Journal

      Imagine if someone get his details, pretends to be him and steals it all. While that would be very very naughty I fear I might laugh a little bit.

      • Laugh a little bit? More like offer praise to the perp.

        These guys belong in jail and all their ill-gotten gains taken from them

      • Do we not have SOX [wikipedia.org]?

        Criminal Penalties.— Whoever— (1) certifies any statement as set forth in subsections (a) and (b) of this section knowing that the periodic report accompanying the statement does not comport with all the requirements set forth in this section shall be fined not more than $1,000,000 or imprisoned not more than 10 years

        Did he not sell his shares with insider information? Why is he not under indictment?

    • by Anonymous Coward

      People were yelling 'we are the 99%', but so what?

      We can't do shit about scams cooked up by the ultrarich 0.1%

      Not only they handed over our IDs, our credit info, our address, our property list, and so on to the hackers (by employing a music major overseeing online security, thanks to Political Correctness), they still get to get tens of millions of rewards doing such a criminal thing !

      Go fuck yourself, you motherfucking 0.1% fuckers !

      • People were yelling 'we are the 99%', but so what?

        We can't do shit about scams cooked up by the ultrarich 0.1%

        Not only they handed over our IDs, our credit info, our address, our property list, and so on to the hackers (by employing a music major overseeing online security, thanks to Political Correctness), they still get to get tens of millions of rewards doing such a criminal thing !

        Go fuck yourself, you motherfucking 0.1% fuckers !

        I still grieve over the 99% falling to identity politics. As long as identity politics dominate don't expect any economic justice. Bernie and Bannon are the only two really trying to get the average American to a better spot. As both are largely outside circles of influence that tells you our odds.

    • by Anonymous Coward on Friday September 29, 2017 @10:22AM (#55276361)

      This is exactly why these breaches occur and will continue to occur. When there is no penalty for incompetence and the worst that can happen to you is that you get to "retire" with a huge payout, then there is zero incentive to actually run your business properly.

      • by cayenne8 ( 626475 ) on Friday September 29, 2017 @11:13AM (#55276739) Homepage Journal
        Man, after reading the retirement deals these guys got.....I have GOT to work on my contract negotiating skills and try to get better terms for 'my' retirement.

        I wonder who their advisers are....? Anyone got a number?

        ;)

      • I'm sure there will be consequences for someone. Probably for the poor developer who wanted to update the buggy Struts module, but wasn't told not to by upper management because it would delay some new marketing roll out.

      • This is exactly why these breaches occur and will continue to occur. When there is no penalty for incompetence and the worst that can happen to you is that you get to "retire" with a huge payout, then there is zero incentive to actually run your business properly.

        Exactly. Perhaps if allow each victim to hit him exactly once, with no weapons allowed. Given 90 million people he won't last. Better yet, maybe we keep finding upper managers until all 90 million have had their chance.

  • Stock recovering (Score:4, Interesting)

    by 110010001000 ( 697113 ) on Friday September 29, 2017 @10:09AM (#55276241) Homepage Journal
    The stock is recovering nicely. This would probably be a good time to invest as it is selling at about a 40% discount.
  • by Anonymous Coward
    Hm. Could someone post his social security # and personal information for us all to see... If only, you know, there were some way that such info had been, how do you call it.. hacked somewhere?
  • [snark]Business as usual in Americana.[/snark] Not saying his transactions are or aren't overtly suspicious, but significant profits amidst potentially massive losses for so many make one look like a complete douche.
    • Oh, but wait! He apologized! Free pass because:

      https://www.wsj.com/articles/o... [wsj.com]
      https://arstechnica.com/tech-p... [arstechnica.com] (doesn't have full text or anything, but wsj's paywalls are mildly annoying)
    • by PolygamousRanchKid ( 1290638 ) on Friday September 29, 2017 @10:23AM (#55276377)

      Not saying his transactions are or aren't overtly suspicious, but significant profits amidst potentially massive losses for so many make one look like a complete douche.

      But that's the gag with totally royal douchebags . . . they don't really care if they look like one.

      See Darl McBride for an excellent example. If Microsoft pays you a pile of cash in the Cayman Islands, what do you care what other folks think of you . . . ?

    • [snark]Business as usual in Americana.[/snark] Not saying his transactions are or aren't overtly suspicious, but significant profits amidst potentially massive losses for so many make one look like a complete douche.

      Meh, if I had $90 million I don't think I'd care if people thought I was a douche. My friends at the country club likely wouldn't care if the peasants thought so either. It most certainly is business as usual in Americana.

      • by DarkOx ( 621550 )

        Totally agree for $90M anyone can call me whatever names they'd care to. I'll laugh all the way to the bank, than a little more after, and probably a lot from the deck of my paid for mountain top estate; eating the pizza paid for with interest and dividends on the rest of the money.

      • Meh, if I had $90 million I don't think I'd care if people thought I was a douche. My friends at the country club likely wouldn't care if the peasants thought so either. It most certainly is business as usual in Americana.

        What if it mean you could never, again, walk safely down a public street, or go to a beach without a team of 'muscle' security following along. Never go to a concert except in antiseptic 'box' seats.

        Yeah, that has some appeal, for awhile.

        • by Known Nutter ( 988758 ) on Friday September 29, 2017 @12:14PM (#55277219)

          What if it mean you could never, again, walk safely down a public street, or go to a beach without a team of 'muscle' security following along. Never go to a concert except in antiseptic 'box' seats.

          What are you talking about? It's not like he is Osama Bin Laden for God's sake. He's yet another corporate white dude that probably only 100 people in America could pick out of a photo array right now.

          This is Normal Shit.

        • If you have $90m, you can build your own private streets to walk down, buy your own private beach, and afford private concerts. They have this figured out...at least up to the point where they're hiding from pretty much everyone. Then their plan is to flee to remote properties on New Zealand, plug their ears and yell "LALALA I'M SAFE IN THIS INHABITED LOWISH-INCOME ISLAND!"

  • That's all
  • by sinij ( 911942 ) on Friday September 29, 2017 @10:25AM (#55276389)
    I don't think there is a business case for CEOs, obviously they don't benefit shareholders in a long term. The CEO position should be eliminated in favor of inside-track promoted Director drawing a salary tied to a fixed multiplier of average worker's salary. No pension or retirement contributions and no stock options.

    We need to get away from bonus and stock manipulation culture that creates direct incentives to CEOs that conflict with long-term shareholder interests.
    • Re: (Score:2, Informative)

      by dknj ( 441802 )

      Bonus and stock manipulation does not cause incentive for CEOs to conflict with shareholder interests. That is literally the opposite of what CEOs are supposed to do. They are supposed to follow the interests of shareholders or face rejection and replacement, and the interest of shareholders is to squeeze out another penny of profit wherever possible. Companies were not always like this, they acted in the best interest of the CEO and chairman of the board. But then a lawsuit set case law which forced c

    • You do know what the letters in CEO stand for? Fire the top guy and whoever is next is now the chief executive.

      And the entire point of long term stock options was to get companies thinking long term instead of per quarter profits only. If your stock only vest after 5 years, you have to think 5 years. Of course it was rapidly abused... The creative opportunity thinking people that make the best company leaders are good at finding compensation loopholes.
      • And the entire point of long term stock options was to get companies thinking long term instead of per quarter profits only. If your stock only vest after 5 years, you have to think 5 years.

        But the difference is that if I have RSUs/options that have not yet vested and leave the company, I no longer have that stock. If executives do the same thing, they keep their non-vested shares and often get the vesting accelerated. Maybe if they actually enforced the vesting period on departing execs, having long vesting periods might make a difference in long-term thinking at the top, but since boards are made up of executives from other companies (who also want their boards to give them sweetheart deal

    • by DarkOx ( 621550 )

      I don't think there is a business case for the 'Celebrity CEO' You look at the relative performance gains some of this big name WSJ presser article guys get compared to lessor known peers at similar corporations not drawing nearly as much salary and I agree it just isnt there.

      There is something to be said for strong leadership and vision. You cant always get that from some inside tracker. Sometimes you only need a caretaker to keep on keeping on if the company is doing well. Sometimes you need a strong

    • by swb ( 14022 ) on Friday September 29, 2017 @11:28AM (#55276843)

      I think there are two main problems with CEOs in the US.

      1) Imperial CEO myth -- the idea that a single, all-powerful CEO is somehow the sole source of company success (and failure). I don't quite understand how this became true -- it's possible there are some corner cases where a change in CEO resulted in a significant company turnaround (like maybe Jobs at Apple). But for the most part, corporations are huge organizations that rise and fall based on group effort and lots of externalities beyond their control. Too many people are over-invested in the idea that a CEO is singularly responsible for a corporation.

      2) Closed-loop compensation committees. Executive compensation committees wind up being board members of other firms, and many of them are executives at other companies are members of these committees. It's an conflict of interest and they use the Imperial CEO concept to justify ridiculous compensation packages.

      • The other problem is, if you want a CEO with a proven track record, then you're looking for someone with enough money to retire and never work again (otherwise he/she didn't prove their record). Somehow, you have to convince that person to come back into the workforce and not sit on the beach enjoying life. How do you do that?

        Either pay them a lot, hire a psychopath, or both.
        • by swb ( 14022 )

          I'm always curious about the so-called shortage of CEOs. It's true there's a lack of CEOs with a proven track record within given business sectors, but that's mostly because there's a lack of CEOs in a given business sector, fewer still that are "successful" because by definition every business that's not #1 in its industry isn't as successful.

          Even corporations don't believe that someone running a hospitality business is the right choice to run a vehicle manufacturer, no matter how successful they were in

          • Well, I definitely wasn't making an argument that there is a shortage of CEOs.

            I think there's an analogy to NFL quarterbacks. Because there is competition between companies, you want to have a better CEO than your competition. For example, if K-mart had gotten a better CEO, maybe they would have beaten Walmart (I don't know, but there is definitely that perception).

            So every NFL team wants the best quarterback, but there is only one best. There are a lot of really, really good quarterbacks, in fact eve
      • They are granted institutional power which people over-value. By that standard, CEOs do set the "tone at the top" which washes down through the company almost like an electrical current travels through a complex circuit. If he is a micro-manager who values "yes-men" then the culture of the entire company will become that. CEOs affect and influence the company because enough employees let them.

      • by uncqual ( 836337 )

        The CEO is the most highly leveraged decision maker in the organization. A small error by a janitor in making the most important difficult decision they are tasked with making will probably never be noticed by anyone, let alone result in a company going bankrupt. A small error by a CEO in making the most important difficult decision they are tasked with making may ultimately sink the entire company - costing shareholder billions of dollars and tens or hundreds of thousands of employees their jobs.

        This motiv

        • by swb ( 14022 )

          What you're describing is the other problem of the Imperial CEO -- investing a single person with life or death, bet-the-firm decision-making authority.

          I think there's two problems here. One, it's kind of a fallacy -- no CEO has the ability to ingest the mass of data that exists to rationally make these decisions. They have armies of support professionals who analyze and summarize data in ways that allow CEOs to make "the decision". So the Imperial CEO isn't really some super-human making amazing rationa

          • by uncqual ( 836337 )

            Somehow big and sometimes bold decisions must be made in a company and direction and culture must be set. If not a CEO or other single human, how would this work? Some group of humans must make "life or death, bet-the-firm" decisions -- what is the advantage of that group having a cardinality greater than one? The more people in a group, the less likely it is to make bold decisions -- the larger the group, the more likely decisions will be "safe" (in the short term) watered down compromise decisions which w

    • That did great things for their economy and productivity.

      The Soviet people loved their economy so much, they overthrew their government. [wikipedia.org]

    • by ceoyoyo ( 59147 )

      CEOs certainly do benefit shareholders. It's generally advantageous to have a single person who bears final responsibility for making day to day decisions.

      The problem is, all these companies keep paying their CEOs too much. Research shows that the less you pay your CEO the better they perform.

    • by uncqual ( 836337 )

      The CEO position should be eliminated in favor of inside-track promoted Director drawing a salary tied to a fixed multiplier of average worker's salary. No pension or retirement contributions and no stock options.

      That would be fine in an employee owned company where each employee owns a share of the company proportional to their salary -- they, of course, would then be called "shareholders". For a company owned by outsiders (i.e., individuals who put their money, directly or indirectly, at risk by investing

  • by rsilvergun ( 571051 ) on Friday September 29, 2017 @10:26AM (#55276399)
    a 90% marginal tax rate on income over $1 million a year (note, that's _marginal_, meaning you don't pay it until you hit that threshold, before that you're paying the same as folks in the lower brackets).

    The 1%ers take care of each other and make sure that wealth accumulates at the top. Then that wealth is turned into power so they can get away with stuff like this. Money is power and we've let about 20,000 people have nearly all that power because we're not comfortable with taking it away from them. This stuff is gonna keep happening until we do.
    • by DarkOx ( 621550 )

      Money is power and we've let about 20,000 people have nearly all that power because we're not comfortable with taking it away from them. This stuff is gonna keep happening until we do.

      We could separate money and power though. 2 term limits for EVERY POLITICAL office. Candidates should be DRAFTED, except for an incumbent who is seeking a second term, rather than self selected group of office seekers.

    • Starting in 1940 (it was lower before 1940) the top marginal tax rate was 81%, and it stayed high, as high as 92%, through 1980 at 70%, quickly dropped to 50% in 1982, and has been low since then. http://www.taxpolicycenter.org... [taxpolicycenter.org] Note this doesn't say what income the rate was calculated against ($1M? $500K?). My understanding is that in the late '70s and early '80s there was a shift in policy favoring keeping wealth from the evil government that was just going to spend it on stuff you didn't care about.
    • Re: (Score:2, Troll)

      ...and we need to charge everybody a $10,000 tax every time they buy a new car worth more than $5,000. After all, nobody needs a car that is more reliable than the junker I drove back in college and I sold for $800 when I was done, right? Of course, there would not be any unintended consequences to this radical tax policy, right? Everyone would gladly pay it and our streets would not start to look like Cuba where 80% of the cars are rusted junkers built 50 years ago. Right?
      • by Anonymous Coward

        We would be going back to 1940-1970 tax policy, you remember, the time and place in all of history that had the greatest economic and technological progress.

        The unintended consequences might be that we get permanent colonies off world, them expected lifespan of citizens increases 25% and technologies we can't even dream of will be commonplace new product releases every year.

        Doesn't sound so bad.

    • a 90% marginal tax rate on income over $1 million a year (note, that's _marginal_, meaning you don't pay it until you hit that threshold, before that you're paying the same as folks in the lower brackets).

      That's one for you, nineteen for me ... TAXMAN ...

    • by rycamor ( 194164 )

      You really think that would change anything? Hey, let's take Mr. Evil Corporate Guy's money and give it to the government! Who do you think runs the government? Who do you think Equifax is? It's essentially a wing of the government already, and it was intended that way from the start.

      Ask yourself why an Equifax should have such a say in the average American's life? Why do we live in a society where 99% of the people are in debt their whole lives?

      • we had the single greatest growth in middle class incomes in history while the rates were that high. That wasn't a coincidence.
        • by rycamor ( 194164 )

          You could easily argue that it was a coincidence. This was also the post-WWII period, when much of Europe's industrial capability had been blasted to smithereens. There was a huge boost in demand and we were the country with the infrastructure in place to handle it.

          Anyway, my point is not about the income tax rate. It's about the laughable idea that it punishes Mr. Big at the top. $90 million is nothing to the real players in and out of government who pull the strings. An absolute joke. And giving the money

    • This ladies and gentlemen is why I favor a 90% marginal tax rate on income over $1 million a year (note, that's _marginal_, meaning you don't pay it until you hit that threshold, before that you're paying the same as folks in the lower brackets).

      So under that logic you also advocate punishing success for the rest of the CEOs who are ethical and who create the jobs that supply the government revenue rolls. I don't see that as a solution.

  • by Anonymous Coward

    Crime and corruption pays and it seems to be getting easier to get away with it too!

  • by rickb928 ( 945187 ) on Friday September 29, 2017 @10:26AM (#55276411) Homepage Journal

    It's cheaper than keeping him.

    • I'd like to let the equifax board know - that I'd be more than willing to fuckup their company for 1/100th the amount this guy is making.

  • ..would behave like an actual golden parachute. Some landing that'd be if they still took it anyway.

    Whatever happened to Captains going down with their ship?

  • NOT! Gee, I wonder why companies like this don't take cyber security seriously? If there is a massive breach like this one, do those responsible feel the slightest bit of personal pain from it? No. Just rake in the bucks and let everyone else suffer the collateral damage.
  • CLAW BACK (Score:2, Interesting)

    by Anonymous Coward

    Claw back the bonuses for the last several years.
    If the stock tanks, he should not get any benefits!

  • Seems that appearing incompetent and compromising the privacy information for millions at $0.63 a head is the way to go.

    Why didn't I think of this????

    I, wish I could sell snake oil this well.

  • There's no income inequality in this country.
  • by gillbates ( 106458 ) on Friday September 29, 2017 @10:52AM (#55276607) Homepage Journal

    This is what I call a Perfect Failure - an incident, which in spite of being considered a failure by all parties involved, still leaves the party responsible better off than they were before.

    From the perspective of the CEO, the "failure" was purely cosmetic. If only I could collect $90 million when I made a mistake..

    • by ceoyoyo ( 59147 )

      I doubt he's better off. He has $90 million, most of which is probably in the form of Equifax stock (is that $90 million at current stock price, or pre-incident price?).

      Before he had a job that paid him millions per year, like a better payout if he retired with honour, and the guarantee of the golden parachute if he got ousted.

      Poor guy probably lost at least $100 million in all this.

      This isn't an example of someone being better off for royally screwing up. It's a particularly infuriating example of just h

  • If you only made 50k a year and didn't have a "C" as the first letter of your title.

  • When you can get a bullet for a few cents and someone to use it for a couple thousands...

  • While I don't feel he should get this kind of compensation after such a major screwup, it makes no difference to those affected. Distributed among all of those affected, 63 cents will not fix any thing. Even if the $90M was distributed to 1% of those affected, it amounts to $63 and again wouldn't repair the harm done ($90M divided by 1.4M (thats ~1 percent of 143M). And taking away his severance or whatever its called, I highly doubt it will stop the next executive from thinking he/she can get away wi
    • by djinn6 ( 1868030 )
      By that logic, prisons shouldn't exist, because jailing a murderer is not going to bring the victim back. In fact, it would cost taxpayers a whole lot of money to keep the murderer locked away. Might as well let them walk free right? They might even pick up a job and contribute to society.
  • Conservatives often say that huge inequality is necessary to motivate people to work hard, grow companies, and create jobs. However, golden parachutes like these do just the opposite. The "punishment" for screwing up is a luxurious quiet retirement.

  • by Anonymous Coward

    For any of us pissants making less than a million a year, once we quit, retire, or are terminated, our "vesting" in whatever our stock options are is over and done and we can cash out at our current vested rate. So this ass-hat gets to "retire," take in around as much as he would have made had he continued to work this year, take in funds for the next several years (though not at the rate he would have if he had stayed, poor thing) AND continues to vest his stock options?

    I need to find me a company to run

  • How is he going to provide for his family now that no one will want to hire him again?
  • I would think there would be a clause putting his equity in jeopardy in the case of malfeasance.
    Oh wait, he probably has the overriding indemnification-for-all-things clause in his agreement as well.
    My mistake.
  • by rbrander ( 73222 ) on Friday September 29, 2017 @12:04PM (#55277123) Homepage

    A bank head was just sentenced to death for a fraud involving less money than this guy's payout. "Dozens" of former employees of the bank have received long jail terms.

      http://www.bbc.com/news/world-... [bbc.com]

    Now on the one hand, while Vietnam is on one of its periodic anti-corruption sweeps, this is mostly about the guy being a political opponent.

    But, really, it's the very idea of the senior officials of a bank showing up in a criminal court at ALL, receiving jail time at ALL (rather than the bank paying a highly-affordable fine) that's the remarkable sight, here. Western culture can offer no comparable example.

  • Customers??? (Score:5, Interesting)

    by jenningsthecat ( 1525947 ) on Friday September 29, 2017 @12:10PM (#55277179)

    ... roughly 63 cents for every customer whose data was potentially exposed in its recent security breach.

    A customer is someone who purchases a commodity or service [merriam-webster.com]. The vast majority of those put at risk by Equifax's fuckup were in no way "customers". Unless they were capable of purchasing EVERYTHING using cash, or opting out of mainstream society and living off the grid altogether, they had no true choice in the matter of whether or not their personal data was under Equifax care. Calling them customers implies that they were partly responsible for their misfortune because in having chosen to deal with an irresponsible vendor; the fact is that they are simply victims of a too-powerful company's careless disregard for its responsibilities and obligations.

  • There is NO WAY IN HELL this jackass should be allowed to keep that money, and furthermore he should also have the money from the Equifax stock he dumped confiscated. He clearly waited to tell the public about the breach until after he'd arranged for his 'golden parachute', so I say that should qualify as insider trading. There should also be a criminal investigation. Someone (or many someones) should have their heads on a pike for this. It may be DECADES before the full consequences of the breach are known
    • He clearly waited to tell the public about the breach until after he'd arranged for his 'golden parachute', so I say that should qualify as insider trading.

      Hate to break it to you dude, but just because you believe something doesn't make it true. There's zero evidence of this. Insider trading however would apply on the stock he sold the day before the breach was announced. But golden parachutes are not negotiated at the time of a disaster. They are negotiated long before (i.e. when you're hired) and then re-negotiated as the board asks you to leave.

      • Hate to tell you dude, but just because you believe something DIDN'T happen, doesn't mean it's NOT true. The son of a bitch needs to have his head cut off and placed on a pole on Wall Street as a warning to not be an incompetent idiot when it comes to the lives of hudreds of millions of people. So STFU, whose side are you on?
        • Hate to tell you dude, but just because you believe something DIDN'T happen, doesn't mean it's NOT true

          Indeed. That's why we have tests that we apply to these thought experiments. Occam's razor is a good start, as is reading the law you're actually accusing him of breaking despite negotiation of salaries having zero to do with insider trading.

          So STFU, whose side are you on?

          Neither. Notice how I made no comment on the person's character and didn't express any opinion on the situation at hand other than tell you how these contracts are typically negotiated and what would constitute insider trading. If I had to pick a side it would be the on

          • Yeah sure because people in the finance industry in this country are just so kind and thoughtful and concerned about the average citizen and their well-being, they're never greedy bastards who would steal their grandmothers Social Security checks if they thought it would benefit them. Are you really so blind that you think these people are blameless? Or are you a Trump-supporting Republican and really believe that whatever makes Big Business more money is a good thing? Get real. These people are pieces of c
  • by Timothy2.0 ( 4610515 ) on Friday September 29, 2017 @12:46PM (#55277557)
    Since it's likely that $90 mil is linked to the stock price of Equifax, a concerted effort to erode the stock value of the company seems to be in order. Cost the shareholders that supported such a shoddy corporate culture to allow such a breach.
  • by Anonymous Coward

    Great minds discuss ideas

The time spent on any item of the agenda [of a finance committee] will be in inverse proportion to the sum involved. -- C.N. Parkinson

Working...