Proxy adviser Institutional Shareholder Services is urging shareholders to overhaul Target’s board in the wake of last year’s wide-scale data breach.
In a report, ISS recommended a vote against seven out of 10 directors “for failure to provide sufficient risk oversight” as members of the audit and corporate responsibility committees, said Fox News.
The firm, whose advice can influence the way shareholders vote, also backed a proposal to mandate a separation between the roles of chairman and chief executive, said Fox News.
ISS is telling shareholders to vote against the election of Austin, Mary Minnick, Anne Mulcahy, Derica Rice, Calvin Darden, Henrique De Castro and James Johnson, while Wells Fargo chief John Stumpf, Douglas Baker and former U.S. Secretary of the Interior Kenneth Salazar received the firm’s support, said Fox News.
“The Data Breach revealed that the company was inadequately prepared for the significant risks of doing business in today's electronic commerce environment,” ISS wrote in its report. “It appears that failure of the committees to ensure appropriate management of these risks set the stage for the data breach, which has resulted in significant losses to the company and its shareholders.”
In a statement, Target said its board considers risk oversight to be a responsibility of the full board, and oversight occurs as a “continuous part of the board’s review of Target’s strategy and specific initiatives that support the strategy.”
Target also said its directors are re-examining the entire risk oversight structure after the cyber-attack, since the company was certified as PCI-DSS compliant prior to the breach.
According to the ISS report, the retailer held discussions with ISS and acknowledged the need for more stringent internal capabilities to find possible security risks, instead of relying on external evaluations, said Fox News.
Target reiterated its opposition to mandating an independent chair, saying the board prefers to maintain flexibility and has other governance practices in place to prevent a concentration of authority.
“The board has not made a decision at this time on whether continue with an independent chair and will re-assess its leadership structure once a new CEO is announced,” Target said.