Payments

Bank CEO pay in focus following SVB, Signature, First Republic collapses

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May 16, 2023

CEO compensation is under focus, as executives from failed banks Silicon Valley Bank, Signature Bank and First Republic gained millions from the planned sales of their banking shares prior to the banks' collapsing. Regulators will also apply pressure as well, as Signature Bank and SVB executives will appear before Congress this week, according to a report by AP News.

Greg Becker, former CEO of SVB, received roughly $9.9 million in compensation in 2022 and he sold stock a few weeks before SVB failed. Elizabeth Warren, Democrat representative from Massachusetts, wrote letters to First Republic Bank about its compensation practices for executives.

"The recent bank failures prove yet again that banker compensation is at the core of causing banks to take too much risk, act irresponsibly if not recklessly and blow themselves up," Dennis Kelleher, co-founder of Better Markets, said in the report.

Two Republican and two Democrat senators have introduced legislation to give the Federal Deposit Insurance Corp. authority to take away pay from executives in the five years leading up to a bank's collapse. The White House has called on Congress to pass laws to reform CEO bank pay in the aftermath of a failure.

"Bank executives who make risky investments with customers' money shouldn't be permitted to profit in the good times and then avoid financial consequences when things go south," Josh Hawley, Republican representative from Missouri and a co-sponsor of the bill, said in late March.