Consumers, but Not Executives, May Pay for Equifax Failings<br />Over the last three years, when Equifax determined its top executives’ incentive compensation, it has used a performance measure<br />that excluded the costs of legal settlements made by the company.<br />If it follows this practice after dealing with the costs of settling legal claims arising from the security<br />breach, Equifax’s top managers will essentially escape financial accountability for the blunder.<br />In regulatory filings, Equifax said its exclusion of legal charges from certain financial results “provides meaningful supplemental information regarding our financial results”<br />and is consistent with the way management reviews and assesses the company’s historical performance.<br />Roughly one-fifth of the companies in the Standard & Poor’s 500-stock index excluded legal settlements<br />and fees in their non-GAAP earnings measures in 2016, according to Jack Ciesielski, publisher of The Analyst’s Accounting Observer and a close follower of companies’ financial reporting.<br />These folks take home all of the upside and want none of the down.”<br />I asked Equifax whether its board would stop excluding legal settlement costs from executive compensation calculations so<br />that management would be required to absorb some of the pain.
