Steven Sugarman, the former Banc of California chief executive, received $10.05 million in compensation in 2016, roughly four times the amount he was paid in 2015, and a severance package of $8.1 million, according to documents filed April 17 with the Securities and Exchange Commission.
On Jan. 12, the Securities and Exchange Commission launched a probe of the Santa Ana-based bank, which has assets of roughly $11 billion. Sugarman resigned shortly afterward.
His $10.05 million in compensation last year came largely from stock and bonuses.
Sugarman joined the bank in 2010 and became CEO in 2013, helping to recapitalize the company and grow its assets. In 2014, the bank acquired Popular Community Bank’s branch network in California, creating the largest Orange County-based bank.
Under his leadership, Banc of California paid $100 million for the naming rights on Los Angeles’s new soccer stadium, one of the richest prices ever in Major League Soccer. Additionally, its market-beating returns have come despite concerns raised about deals benefiting Sugarman’s family and board members. Sugarman’s brother is a minority investor in the soccer team.
William Black, a former regulator who’s now an economics and law professor at the University of Missouri-Kansas City told Bloomberg these types of transactions should be warning signs for investors.
“These kinds of conflicts of interest, we have known for millennia, are associated with a dramatically increased risk of failure, and an amazingly increased risk of loss upon failure,” Black told Bloomberg.
In 2014 the California Reinvestment Coalition also expressed concerns about “related-party” deals.
Also in 2014 one of the bank’s largest shareholders, Richard Lashley, a principal at activist investor PL Capital LLC, sent Sugarman a letter according to Bloomberg.
“I understand that independent members of the board reviewed and approved them but the issue is not mooted by that form because the substance, and taint, remains,” Lashley wrote. “Related-party transactions should be avoided going forward.”
In February the bank sold its home loan division to Texas-based Caliber Home Loans, which will cut its employee count by half.
Caliber is buying the bank’s “Banc Home Loans.” Banc of California will receive a $25 million cash premium payment. The transaction is expected to close March 30.
The bank also sold its mortgage servicing rights to Caliber for $36 million.
Earlier this month Mary Curran and Bonnie Hill were appointed the bank’s board, while Eric Holoman resigned in yet another shakeup for the beleaguered bank.
Holoman said he left the board to focus on his new role as the chief executive officer of EquiTrust Life Insurance Co. The $17 billion life insurance company was acquired by Magic Johnson Enterprises in 2015.
In March Banc of California agreed to expand the size of its board after reaching a deal with Legion Partners Asset Management to avoid a…