Target Corp. Chairman, President and CEO Gregg Steinhafel is stepping down “after extensive discussions” following the large retailer’s massive data breach late last year, the company’s Board of Directors announced.
The third-largest retailer in the US had its point-of-sale systems hacked from November 27 to December 15. The breach exposed debit and credit card data of as many as 40 million customers, plus an additional 70 million records with other customer information.
“[Steinhafel] held himself personally accountable and pledged that Target would emerge a better company,” the board’s statement said. Nevertheless, the board said it and Steinhafel “decided that now is the right time for new leadership at Target.”
Steinhafel, a 35-year employee of Target, was CEO since 2008.
CFO John Mulligan – who faced intense questioning by Congress about the retailer’s response in the weeks after the breach – has been named interim president and CEO.
A Senate Commerce Committee staff report suggested Target missed a number of opportunities to stop the attackers and prevent the massive data breach. During a hearing Mulligan told the committee the retailer was “asking hard questions regarding the judgments that were made at that time and assessing whether different judgments may have led to different outcomes.”
The breach, along with other high-profile retail breaches at Neiman Marcus and Michaels, has rekindled federal notification laws and has sparked debate over which regulatory body could oversee and police companies’ responses.
Roxanne S. Austin, a member of the board, was named interim non-executive chair of the board.
Mulligan and Austin will serve until permanent replacements are found.
On December 18, a day before the data breach disclosure, shares of Target were selling at $63.55. During the afternoon of May 5, shares were selling at $60.08.
Target said net earnings were $520 million in the fourth quarter of 2013, down 46 percent from the same period the year before.
The third-largest US retailer said fourth-quarter expenses related to the breach stood at $61 million. It expects $44 million in insurance payments.
But more is at work than just the breach. Analysts have said the retailer’s expansion into Canada has not met expectations.
Target is expected to release first-quarter earnings in about two weeks. The retailer told investors in February that future costs related to the breach could include payments to payment-card networks for alleged fraud and other expenses as well as costs related to civil litigation, government actions and enforcement proceeding.
“These costs may have a material effect” on Target’s first-quarter and full-year earnings, the corporation said.
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
