Governance in Brief
August 1, 2019 | Editor: Martin Wennerström
Equifax reaches USD 700 million settlement over 2017 data breach
US credit agency Equifax has reached a settlement with the Federal Trade Commission (“FTC”), valued at up to USD 700 million, concerning a 2017 incident in which the sensitive data of around 147 million individuals in the US, UK, and Canada was exposed. The company has established a USD 300 million restitution fund, which could increase to USD 425 million, in order to compensate users affected by the data breach, capped at USD 20,000 per individual. Other settlement terms provide for up to 10 years of free credit monitoring services or the payment of up to USD 125 to each existing subscriber of such services. In addition, Equifax will pay USD 175 million in civil penalties and USD 100 million to the Consumer Financial Protection Bureau. The company also agreed to establish an information security program, overseen by a designated employee and assessed biennially by a third party. Additionally, Equifax is required to invest USD 1 billion in data security improvement over a five-year period.
On July 24, the Federal Trade Commission (“FTC”) announced another settlement concerning data privacy, its largest so far, as Facebook was fined USD 5 billion over Cambridge Analytica’s alleged unauthorized access to 87 million Facebook users’ data. The tech company violated a previous agreement with the FTC, under which consumers should be informed when a third party has access to their personal information.
BMW names new CEO
German carmaker BMW AG has announced the appointment of Oliver Zipse as its CEO, effective August 16. Zipse replaces Harald Krüger, who departs his role following a four-year term. The new CEO, as the current head of production, has been a member of BMW’s management board since 2015, having joined the company in 1991. Following the news, some media reports have been questioning Zipse’s qualifications for the new role. As BMW maintains its practice of naming its production heads to the top position, critics claim that the vehicle manufacturers should plan succession around emerging fields such as software. The company’s management succession planning is led by the board’s personnel committee, chaired by Norbert Reithofer, another former BMW CEO.
Pfizer to merge Upjohn with Mylan
On July 29, Pfizer announced that it will divest its off-patent business Upjohn and merge it with Netherlands-incorporated generic pharmaceutical producer Mylan NV. The agreement is expected to close in mid-2020 and requires the approval of Mylan shareholders. Pfizer shareholders will have no vote on the deal. The latter will own 57% of the merged entity. The new company will be incorporated in Delaware and is expected to drive USD 20 billion in annual sales. Mylan’s Chairman will assume the executive chairmanship in the combined company, while Upjohn’s Group President will take over as CEO. The two will also hold seats in the 13-member board, which will comprise eight Mylan designees and three Pfizer designees.
Hudson’s Bay investors oppose privatization
Several investors have expressed dissatisfaction with Canadian retailer Hudson’s Bay Chairman Richard Baker’s proposal to take the company private. Baker and a group of affiliated shareholders, together controlling a 57% stake in the company, had made a buy offer at a 48% premium over the pre-offer share price. Canadian investor Catalyst Capital Group opposes the deal and has launched a tender offer for around 8% of the company’s common shares, at a share price 7% higher than the buy offer. Activist investor Jonathan Litt has also criticized the offer, citing claims that the company is significantly undervalued based on its real estate value. The company has formed a dedicated committee to review the offer.