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May 6, 2014

After Massive Data Breach, Target CEO Exits As Retailer Upgrades Payment System

Enid Burns for - Your Universe Online

Target removed its chief executive Gregg Steinhafel on Monday in the wake of the massive data breach the company suffered in late 2013. The company also said it plans to upgrade its payment system to a chip-based smartcard standard.

Long-time Target CEO Gregg Steinhafel will leave the retailer immediately, after 35 years of service and six years as the company's chief executive. Target appointed its chief financial officer, John Mulligan, as the interim president and chief executive.

"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," said a Target corporate statement from the board of directors.

Target has struggled since the holiday 2013 shopping season, when the company suffered the massive data breach that gathered credit card data and other financial information from over 70 million shoppers. "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," according to the Target statement.

Weak sales for Target add to the troubles the company continues to battle following the data breach, the Wall Street Journal reports. "The embarrassing computer attack and weak sales at a critical time shined a harsher light on other stumbles under Mr. Steinhafel's six years as CEO, including a money-losing expansion into Canada and a persistent weakness in traffic as shoppers moved online," Paul Ziobro from the Wall Street Journal wrote.

Recent difficulties with Target’s expansion into Canada were also cited by the Associated Press (AP). "But the company recently has been faced with fiercer competition from and Wal-Mart Stores Inc. Recently, difficulties with expansion in Canada, Target's first foray outside the U.S., has hurt profits. But the breach was the biggest black eye on Steinhafel's tenure," wrote AP reporter Anne D'Innocenzio.

At the same time that Target is shuffling its upper management posts, the company is upgrading its payment system, Bloomberg News reports.

"To tighten security, retailers are upgrading their systems to comply with a chip-based smart-card standard known as EMV -- named for Europay-MasterCard-Visa, the companies that first backed the technology. Credit card networks have set an October 2015 deadline for most U.S. merchants to upgrade their payment systems," wrote Bloomberg's Lindsey Rupp and Lauren Coleman-Lochner.

Target's CIO Beth Jacob left amidst the fallout of the data breach. The company hired a new technology chief, Bob DeRodes, last month, Bloomberg reports. DeRodes was mostly recently an adviser for the Department of Homeland Security, the Justice Department and the Secretary of Defense.