Equifax, home of the hack that compromised over 145 million Americans’ data, is just saying no to executive bonuses this year — and scrapping buybacks.
The move comes as Equifax braces itself for an oncoming wave of lawsuits and a potential pile of regulatory investigation and fines in the not-too-distant future.
It will mean a significant pay cut for some of Equifax’s top leaders. According to Financial Times reporting, five senior managers have collected $17 million worth of incentive awards in the last year alone. It will also mean quite a cutback for investors. Equifax has bought back $77 million worth of its shares since June, but has now canceled plans for more repurchases this year.
“We just don’t think it’s appropriate,” said John Gamble, chief financial officer.
Plus, Equifax’s revenue stream, once fairly well assured, is now in some jeopardy as corporate clients are delaying resigning existing contracts until they are reassured that Equifax’s systems are secure.
There have reportedly been several demands for full IT audits.
“We’re hoping to win back their trust,” Gamble said.
It may be a bit of a long road.
“Equifax’s negligence put half of the American population at serious risk of identity theft, yet its business model continues to churn out big profits,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.
Others, like Lisa Donner, executive director of Americans for Financial Reform, noted that the breach and Equifax’s subsequent earnings report — which actually saw revenue grow — demonstrated that “consumers aren’t the customer for companies like Equifax; consumers are the product.”
But even accepting that premise as true, how well they will be able to work that product going forward remains a bit of a mystery, since a host of regulators — including the Securities and Exchange Commission, Federal Trade Commission and Financial Industry Regulatory Authority — are probing the firm to determine what went so wrong. That effort is joined by 50 state attorneys general, not to mention the 240 class actions against Equifax that have been filed by consumers.
There are also reports, according to the FT, of unnamed financial institutions filing against Equifax alleging negligence and breach of contract.