Executive pay rules are getting new scrutiny after Silicon Valley Bank’s collapse — but still they may not change.
“‘I just can’t believe we never finished this,” said Michele Alt, who led the legislative and regulatory activities department at the Office of the Comptroller of the Currency and now works at the Klaros Group, a financial technology firm. “It’s a scandal this never got done.”At SVB, former employees say, executives were determined to deliver ever-increasing profits, and the bank pursued a strategy designed to achieve this even at a time of rock-bottom interest rates.
The sales also coincided with a new SEC rule that went into effect the same day, requiring a “cooling-off” period of 90 days between adopting a trading plan and selling shares. Becker sold stock options that were due to expire in May, and waiting longer could have made it trickier to unload the shares.“If he waited, the options would expire before he’s allowed to sell,” said Ben Silverman, the director of research at VerityData. “I don’t see anything particularly fishy there.
Meanwhile, federal banking authorities are investigating whether “unsafe or unsound” practices contributed to the bank’s collapse, after which they may assess potential civil penalties or ban executives from working in the industry. “Even if they get, let’s say $10 million back from him — and that’s really a best-case scenario — that’s not really going to do much for the $20 billion the FDIC had to spend, or change incentives for executive compensation,” said Bhagat, the professor who made a presentation to the SEC.There is one outcome that could make an immediate difference. Lawmakers in Congress have unveiled bipartisan proposals to expand federal authority to claw back bonuses, a measure backed by President Biden.
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