With data breaches at Yahoo, Equifax, and seemingly every other company plugged into the internet, who hasn’t had their personal information compromised? If fines, lawsuits, and the stock market aren’t enough to compel companies to improve security, activist stockholders have another idea—hitting executives in their wallets. Today, shareholders in Verizon filed a proposal for the company’s May 3 annual meeting requesting the board to consider tying the compensation of “senior executives” to the company’s security performance.
The effort is led by social- and environmental-oriented investment management firm Trillium Asset Management, and by the New York State Common Retirement Fund, a behemoth with about $192 billion in assets.
The proposal cites some of the more recent Verizon data breaches: info on 1.5 million customers in 2016 and 6 million in 2017. But it also notes the elephant in the mergers and acquisitions room: Verizon’s recent purchase of both AOL and Yahoo—the latter company infamous for hackers compromising the data of a billion users. Rolling these companies together, Verizon plans to massively extend its digital advertising business to reach up to 2 billion additional people, the proposal states. And advertising partnerships will mean sharing information with more third parties.
Tying pay to something beyond financial performance wouldn’t be unprecedented, argue the shareholders, as Verizon already links senior executive compensation to diversity and carbon-intensity metrics. And Verizon has some experience calculating the value of data loss, as it did when renegotiating the price for Yahoo after its data breach was revealed to the public.