It would appear that CEOs benefit from cybersecurity breaches and rather than being fired for allowing their companies to be hacked.
Daniele Bianchi, assistant professor of finance at Warwick Business School has found that far from being fired, CEOs of breached firms were found to be more likely to receive an increase in total and incentive pay several years after an incident.
Average CEO pay at firms that were not targeted by hackers fell by more than $2 million per year over the same five year period, according to the study.
What this study showed was that firms that suffer a data breach do not typically respond by firing the management, but by investing more in the existing CEO.
Bianchi said the results were consistent with the idea that the average response is to invest more in the management to address possible structural flaws, as well as maintaining the integrity of the firm in response to the reputational damage it has suffered.
“In the long run security breaches appear to have a more significant impact on firms’ strategies and policies than their cash flow.”
