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The demise of Silicon Valley Bank amid a run on deposits has shined a light on stock sales carried out by officers at the bank’s parent, SVB Financial Inc., days before the bank failed.
But even before that, executives had enjoyed generous compensation since a rollback of Dodd-Frank banking regulations in 2018 that greatly favored the bank, according to Accountable.US, a liberal-leaning advocacy group, following a review of regulatory filings.
The rollback, in the form of the Economic Growth, Regulatory Relief and Consumer Protection Act, signed into law by then-President Donald Trump, increased the asset threshold at which point a bank is considered and regulated as a systemically important financial institution, or SIFI, to $250 billion from $50 billion.
That allowed Silicon Valley Bank
SIVB,
avoid some of the regulatory burden on big banks as it grew into an entity with about $209 billion in assets by the end of 2022.
“SVB’s C-suite wasted no time enriching themselves and investors after the Republican rollback of banking safeguards in 2018, including a new $500 million buyback program just months later, while executives gave themselves generous pay bumps,” said Liz Zelnick, director of economic security and corporate power at Accountable.US. “Republicans took a hatchet to reforms that likely could have prevented this crisis.”
Since 2018, Silicon Valley Bank’s chief executive, Greg Becker, and its chief financial officer, Dan Beck, have seen their compensation grow by 30%, filings show. Compensation for the bank’s president, Michael Descheneaux, has grown 20%. Becker’s total compensation for 2022 was more than $9.9 million, including a $1.5 million cash bonus.
Just hours before the California regulator closed the bank last Friday, SVB paid bonuses to managing directors, according to media reports, including one by NBC, which cited people with knowledge of the payments. Based on past data from Glassdoor.com, those bonuses range as high as $140,000.
Meanwhile, Becker cashed out stock and options for a $2.27 million net gain in the weeks before Friday’s collapse, public filings show.
Becker exercised stock options — meaning he paid money to convert his options into stock — and then immediately sold the stock on Feb. 27, filings show. That netted him $2.27 million in personal profits.
The sales were part of a prearranged executive stock sale, known as a 10b5-1 program, that Becker filed with the SEC as recently as Jan. 26, just six weeks before the bank collapsed.
He also sold stock on Jan. 31 for another $1.1 million, though the filings report that this was to cover a tax liability. The company has not responded to MarketWatch’s requests for comment.
While there was apparently nothing illegal about Becker’s corporate trading plan, it could be a problem if he sold stock while the bank was attempting to raise capital, according to Dan Taylor, a professor at the University of Pennsylvania’s Wharton School, as quoted by Fortune magazine last week.
Sen. Elizabeth Warren, a Democrat from Massachusetts, expressed her unease with that move in a letter to Becker on Tuesday.
“Rather than making the safety and soundness of your bank your primary priority, you spent the weeks in the lead up to SVB’s failure securing yourself $3.6 million by selling off company shares,” Warren wrote.
“You have nobody to blame for the failure at your bank but yourself and your fellow executives,” she added. “You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public — facilitating a near-economic disaster.”
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