Mostly Economics

The US Senate Committee on Banking, Housing and Urban Affairs has been holding multiple hearings to examine the recent banking crisis in US.

• Full Committee Hearing: Holding Executives Accountable After Recent Bank Failures
• Full Committee Hearing: Examining the Failures of Silicon Valley Bank and Signature Bank
• Subcommittee Hearing: Strengthening Accountability at the Federal Reserve: Lessons and Opportunities for Reform
• Full Committee Hearing: Oversight of Financial Regulators: Financial Stability, Supervision, and Consumer Protection in the Wake of Recent Bank Failures

These are useful references to understand the US banking crisis from multiple perspectives.

Mr. Gregory W. Becker, Former CEO of Silicon Valley Bank discusses his stock options in SVB crisis:

My expiring SVB stock options and compensation have been the subject of much speculation over the past few weeks. A large portion of my compensation, as well as other SVB executives’ compensation, was in the form of stock that vested over time, as is typical in the banking industry. I believed very strongly in SVB and was heavily invested in SVB’s stock. As a result, I held nearly five times the amount of shares required by the Board, and I planned to hold the vast majority of my SVB stock until after I retired.

During my tenure as CEO, I regularly sold the underlying shares of my stock options before they expired through 10b5-1 plans. I believed that using 10b5-1 plans to sell my stock options was the most ethical means to manage this part of my compensation, and I required the rest of our executive team to do the same.

My stock option exercise and sale in February 2023 followed a similar pattern. Once the trading window opened after SVB announced its financial results for the fourth quarter and fiscal year of 2022, I entered into a 10b5-1 trading plan on January 26, 2023, to exercise and sell options granted in 2016 that were set to expire on May 2, 2023. SVB’s legal team approved that plan on the basis that I was not in possession of any material non-public information at that time, which I also believed. The trade executed on February 27 pursuant to pre-determined stock price and date triggers—I did nothing to accelerate that trade and only learned that it had executed after the fact.

Similar to my stock sales, SVB’s incentive compensation was determined in the normal course of business. Bonuses for 2022 performance were paid to all U.S. bank eligible employees and were part of SVB’s regular, annual incentive compensation program. The payment date was set by our Human Resources department in advance and to my knowledge underwent the normal approval process. There was nothing irregular or accelerated about these payments, and at the time the payments were made I was focused on ensuring the survival of SVB.