Verizon Shareholders Want to Tie Executive Pay to Cybersecurity

Verizon Shareholders Want to Tie Executive Pay to Cybersecurity

Trillium Asset Management, an activist investment fund focused on social and environmental responsibility, has filed a shareholder proposal at Verizon that would tie executive compensation at the telecommunications giant to its performance against cybersecurity and data privacy goals:

Verizon shareholders request the appropriate board committee(s) publish a report (at reasonable expense, within a reasonable time, and omitting confidential or propriety information) assessing the feasibility of integrating cyber security and data privacy metrics into the performance measures of senior executives under the company’s compensation incentive plans. …

Currently, Verizon links senior executive compensation to diversity metrics and carbon intensity metrics. Cyber security and data privacy are vitally important issues for Verizon and should be integrated as appropriate into senior executive compensation as we believe it would incentivize leadership to reduce needless risk, enhance financial performance, and increase accountability.

The proposal points to several data breaches in the company’s recent history, including one that affected 1.5 million customers in 2016 and another affecting 6 million last year. It also expresses concern about the growing number of users whose data the company is now responsible for safeguarding following its acquisition of Yahoo and AOL, which will expand Verizon’s digital advertising reach to 2 billion people.

Trillium’s proposal, which Fast Company reports is also backed by the massive New York State Common Retirement Fund, comes amid mounting concern over large, high-profile breaches that have affected companies with massive data collections in recent years, such as last year’s breach at the credit reporting agency Equifax, which affected over 145 million US consumers.

Investors and directors are notion of restricting or clawing back executive compensation to hold corporate leaders accountable for data security is. Former Yahoo CEO Marissa Mayer, who stepped down last year as part of its integration into Verizon, had her 2016 bonus rescinded by the internet company’s board after an investigation into a 2014 security breach that compromised hundreds of millions of user accounts found that her executive team did not respond appropriately to the incident. Equifax investors also pressed for changes to the agency’s clawback and bonus policies after last year’s breach.