- After around four years on the job
- Laud, praise, thanks and good wishes for Sugarman
- Separation Agreement
- Position is currently not filled
- Responsibilities redistributed
- Search for a successor
(management-change.com) — Irvine, California, January 25, 2017 — Steve Sugarman, chief executive of Banc of California, leaves. It is an abrupt change. As announced by Banc of California, Inc. in a news release on Monday, January 23, 2017, and in a regulatory filing published on Wednesday, January 25, 2017, Steven (Steve) Sugarman leaves the post as Chief Executive Officer at the bank after around four years on the job, effective immediately.
Banc of California will undertake a search for a successor.
The position of Chief Executive Officer is currently not filled. Steve Sugarman’s responsibilities are redistributed.
No reason given
In the announcement, Banc of California did not explicitly explain the obviously compelling reason for Sugarman’s sudden move, leaving room for speculation.
Banc of California said: “On January 23, 2017, Steven Sugarman resigned from his position as President and Chief Executive Officer of Banc of California, Inc. … He also resigned from the Company’s Board of Directors and from all of his positions with the Company’s wholly-owned subsidiary, Banc of California, N.A.”
Precise information about the future plans of Sugarman was not immediately available.
Robert D. Sznewajs, current Chair of the Joint Audit Committee of the Board of Directors, will assume the role of Chairman of the Board.
Share price decline
The change follows a decline in the share price of Banc of California, Inc. since September 2016.
Banc of California said in a regulatory filing: “On January 23, 2017 (“Effective Date”), the Company, the Bank and Mr. Sugarman, entered into an Employment Separation Agreement and Release effective as of the Effective Date (“Agreement”). Under the terms of the Agreement, as negotiated between the Company and Mr. Sugarman, Mr. Sugarman resigned from all positions he held with respect to the Company, the Bank and their respective affiliated entities (collectively, the “Bank Affiliated Entities”), and resigned from the Board of Directors of the Company and the Bank. The Agreement provides that the Company will pay or provide to Mr. Sugarman (a) his 2016 annual bonus in the amount of $1,500,000, payable on January 31, 2017; (b) a payment of $1,040,000 on January 31, 2017; (c) a payment of $360,000, payable on the first payroll date after the six month anniversary of the Effective Date; (d) a payment of $1,350,000, payable in equal installments commencing on the first payroll date following the six months anniversary of the Effective date and continuing through the twelfth month following the Effective Date; (e) medical and dental benefits to Mr. Sugarman and his eligible dependents, as if he were an employee, for three years following the Effective Date; and (f) any other amounts or benefits required to be paid or provided or which Mr. Sugarman has a right to receive under any plan, program, policy, practice or contract of the Bank Affiliated Entities through the Effective Date. In addition, Mr. Sugarman’s outstanding unvested equity awards will vest and his options and stock appreciation rights will remain exercisable for their full terms. Mr. Sugarman is not entitled to any other severance payments or benefits.
The Agreement contains mutual general releases of claims arising out of acts or omissions occurring on or before the Effective Date, with customary exceptions for obligations arising from the Agreement, vested benefits, indemnity rights and matters that cannot be released by private agreement. Mr. Sugarman agrees to cooperate in providing information for operational, financial and other reports relating to the period of his employment and agrees to remain bound by the clawback and confidentiality provisions of his Amended and Restated Employment Agreement. The Agreement contains a provision for a Standstill Period from the Effective Date through July 1, 2018, during which Mr. Sugarman agrees to limit his ownership of Company shares, his efforts to influence its Board and his efforts to acquire control of the Company.”
On the job as CEO since 2012
Sugarman served as the Chief Executive Officer of Bank of California, Inc. since September 21, 2012.
Sugarman was the Chair, President and Chief Executive Officer of the Company.
Sugarman has served as a director of the Company and the Bank since November 2010, Chief Executive Officer of the Company since September 2012 (and for a month prior, acted as co-Chief Executive Officer of the Company) and President of the Company and President and Chief Executive Officer of the Bank since November 2013.
Sugarman served as the Chief Executive Officer and director of COR Securities Holdings Inc., the parent company of COR Clearing LLC (of which he was Chair of the Board), a national securities clearing firm. He also served as Managing Member of COR Capital LLC.
Prior to that, Sugarman was a founding partner of GPS Partners LLC, a $2 billion investment firm.
Previously, Sugarman worked at Lehman Brothers; founded and serves as Chief Executive Officer of Sugarman Enterprises, Inc.; and founded The Law Offices of Steven Sugarman, Inc.
Sugarman began his career as a management consultant at McKinsey & Company and is a graduate of the Yale Law School and Dartmouth College.
Update on the independent investigation into previously disclosed blogger allegations
In a separate release published on Monday, January 23, 2017, Banc of California issued an update on the independent investigation into previously disclosed blogger allegations.
Robert D. Sznewajs, current Chair of the Joint Audit Committee and new Chairman of the Board said: “The matters which were the subject of the Special Committee investigation do not bear upon the Company’s operating results or financial condition, and Banc of California remains well positioned to continue to fulfill its mission and vision as California´s Bank.”
Anonymous blog post raised questions
Banc of California said: “On October 18, 2016, an anonymous blog post raised questions about related party transactions and other issues with respect to the Company. As previously disclosed, in response to these allegations, the Board formed a Special Committee which commenced a process to review the allegations. Shortly thereafter, on October 27, 2016, the Company’s independent auditor, KPMG, sent a letter to Mr. Sznewajs in his capacity as Chair of the Company’s Joint Audit Committee (the ‘KPMG Letter’) raising concerns about allegations of ‘inappropriate relationships with third parties’ and ‘potential undisclosed related party relationships.'”
Read the full story in the management-change.com report 05.2017 ($).