Target's CEO, Gregg Steinhafel, resigned today in the wake of a massive data breach over the holidays that may have affected almost 100 million customers.
Steinhafel, who spent 35 years at the company, will be replaced on an interim basis by Chief Financial Officer John Mulligan, and has agreed to stay on as an adviser during the transition, according to a statement from the company's board Monday morning.
The executive is entitled to severance payments under Target's "Income Continuance Plan," according to a filing today. That would be $11 million in payments over 12 to 24 months, as per Target's proxy last year, which stated the policy is only provided to executive officers "who are involuntarily terminated without cause to provide continued income to assist in their occupational transitions." That suggests Target and Steinhafel came to some sort of mutually-agreed upon settlement tied to his exit.
Target's mid-December data breach was the biggest retail hack in U.S. history. A Bloomberg Businessweek cover story in March suggested that the company was alerted to the presence of hackers weeks before any credit card information was stolen, but failed to respond appropriately.
Both sales and profit have been hit by Target's attempts to contain the fallout from the incident. The retailer is facing more than 80 related lawsuits and federal and state investigations into how it dealt with the attack.
"Most recently, Gregg led the response to Target's 2013 data breach," the board said in today's statement. "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."
Former Chief Information Officer Beth Jacobs resigned in early March and was the first high-profile executive to depart after the breach.
Steinhafel outlined his accomplishments at Target in a resignation letter today, citing the introduction of fresh food in stores, new store formats, the enhancement of its credit and debit programs, and international and digital expansion. He acknowledged that "the last several months have tested Target in unprecedented ways" and that now "is the right time for new leadership at Target."
Update - May 5, 11:52 a.m., ET: This post was updated with details of the CEO's severance package and comments from his statement this morning.
Full statement from Target:
MINNEAPOLIS — (BUSINESS WIRE) — May 5, 2014 — Target's board of directors issued the following statement today:
"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."