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Target announced Monday that Chairman, President and CEO Gregg
Steinhafel is out nearly five months after a data breach affecting 40
million customers during peak holiday shopping was disclosed.
NEW YORK — Target's massive data breach has now cost the company's CEO his job.
Target announced Monday that Chairman, President and CEO Gregg Steinhafel is out nearly five months after the retailer disclosed the breach, which has hurt its reputation among customers and has derailed its business.
The nation's third-largest retailer said Steinhafel, a 35-year veteran of the company and CEO since 2008, has agreed to step down, effective immediately. He also resigned from the board of directors.
A company spokesman declined to give specifics on when the decision was reached.
The departure suggests the company is trying to start with a clean slate as it wrestles with the fallout from hackers' theft of credit and debit card information on tens of millions of customers. The company's sales, profit and stock price have all suffered since the breach was disclosed.
Target, based in Minneapolis, said Chief Financial Officer John Mulligan has been appointed interim president and CEO. Roxanne S. Austin, a member of Target's board, has been named as interim nonexecutive chair of the board. Both will serve in those roles until permanent replacements are named.
Steinhafel will serve in an advisory capacity during the transition. Jim Johnson remains lead independent director on the board.
Steinhafel's tenure has been rocky. The company has struggled with its expansion into Canada, its first foray outside of the U.S. The company, known for its cheap chic clothing and home decor, also has seen uneven sales since the recession ended as it confronts fierce competition.
Under Steinhafel's leadership, the company has expanded into fresh groceries and offered a 5 percent discount to customers who use its branded debit and credit cards. But clearly the breach was a big black eye on Steinhafel's term.
"The last several months have tested Target in unprecedented ways," Steinhafel wrote in a letter to the board that was made available to The Associated Press. "From the beginning, I have been committed to ensuring Target emerges from the data breach a better company, more focused than ever on delivering for our guests."
Steinhafel's departure comes two months after the company announced that Chief Information Officer Beth Jacob resigned and outlined a series of changes it was making to overhaul its security systems and its security department.
Last week, Target named Bob DeRodes, who has 40 years of experience in information technology, as its new chief information officer. Target said it is continuing its search for a chief information security officer and a chief compliance officer.
Target also said last week that MasterCard Inc. will provide branded credit and debit cards with a more secure chip-and-PIN technology next year. That will make Target the first major U.S. retailer that will have store cards with this technology.
Steinhafel has been facing increasing pressure since it was revealed on Dec. 19 that a data breach compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15. Then on Jan. 10, the company said hackers also stole personal information — including names, phone numbers as well as email and mailing addresses — from as many as 70 million customers.
The company's board has been meeting with Steinhafel monthly instead of quarterly to oversee Target's response to the breach.
When the final tally is in, Target's breach may eclipse the biggest known data breach at a retailer, one disclosed in 2007 at the parent company of TJ Maxx that affected 90 million records.
Target reported in February that its fourth-quarter profit fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers.
Target's sales have been recovering as more time passes, but it expects business to be muted for some time: It issued a profit outlook for the current quarter and full year that missed Wall Street estimates because it faces hefty costs related to the breach.
Target's shares have been volatile and are down 2.5 percent since the breach was disclosed. The shares are now trading at about $62.
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FILE - In an undated file photo providedby Target Corp., Gregg Steinhafel is shown. Target said Monday, May 5, 2014, that Chairman and
CEO Steinhafel is out, nearly five months after the retailer disclosed a
massive data breach that hurt its reputation. The nations third-largest
retailer says Steinhafel has agreed to step down as the,-companys,-chairman,-president and CEO, effective,immediately. He also has resigned from its board of directors(APPhoto/TargetCorp., Johansen,Krause,
File)Photo:
Krause,Johansen/AP
Target CEO Gregg Steinhafel Resigns In Data Breach Fallout
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On Monday, the Minneapolis-based retail chain announced that 35-year company veteran Gregg Steinhafel had stepped down effective immediately.
Target’s CFO John Mulligan will lead the $40 billion (market cap) discount giant until a replacement is named.
Target’s statement referred to Steinhafel’s handling of the disastrous data breach that unfolded in December, when it became apparent that as many as 40 million shoppers’ credit card details and 70 million customers’ personal data, like addresses and numbers, had been compromised:
“He held himself personally accountable and pledged that Target would emerge a better company,” said the statement. “We are grateful to him for his tireless leadership and will always consider him a member of the Target family. ”
Steinhafel will remain on board in an advisory capacity.
Here’s the full statement:
“Today we are announcing that, after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target. Effective immediately, Gregg will step down from his positions as Chairman of the Target board of directors, president and CEO. John Mulligan, Target’s chief financial officer, has been appointed as interim president and chief executive officer. Roxanne S. Austin, a current member of Target’s board of directors, has been appointed as interim non-executive chair of the board. Both will serve in their roles until permanent replacements are named. We have asked Gregg Steinhafel to serve in an advisory capacity during this transition and he has graciously agreed. The board is deeply grateful to Gregg for his significant contributions and outstanding service throughout his notable 35-year career with the company. We believe his passion for the team and relentless focus on the guest have established Target as a leader in the retail industry. Gregg has created a culture that fosters innovation and supports the development of new ideas. Under his leadership, the company has not only enhanced its ability to execute, but has broadened its strategic horizons. He also led the company through unprecedented challenges, navigating the financial recession, reacting to challenges with Target’s expansion into Canada, and successfully defending the company through a high-profile proxy battle. Most recently, Gregg led the response to Target’s 2013 data breach. He held himself personally accountable and pledged that Target would emerge a better company. We are grateful to him for his tireless leadership and will always consider him a member of the Target family. The board will continue to be actively engaged with the leadership team to drive Target’s future success and will manage the transition. In addition to the appointments of the exceptional leaders noted above, we have also retained Korn Ferry to advise the board on a comprehensive CEO search. The board is confident in the future of this company and views this transition as an opportunity to drive Target’s business forward and accelerate the company’s transformation efforts.”
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