WASHINGTON. The bonuses to executives – associates and managers – of Silicon Valley Bank arrived on time just minutes before the bank led by Greg Becker passed under the control of the FDIC, the federal institution that protects deposits. On Friday, the CEO spoke to employees with a two-minute video message in which he announced that the bank had failed to meet the massive demand for withdrawals and that the market had not responded to the request for a capitalization of 2.25 billion dollars to meet the demand. Then the announcement: «It is my last message from CEO».
Awards based on previous year’s performance are always paid out on the second Friday in March. This year the bonuses on 2022 fell exactly on the day that marked the crash. A mocking coincidence. But the procedure had been, as expected, started weeks ago once the calculations on the closing balance sheet were completed.
The bankruptcy of Silicon Valley Bank bends the markets, stock markets plunge and Piazza Affari is the worst
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Employee bonuses range from $12,000 for associates to $140,000 for executives. SVB has always been a “generous” bank, for example in 2018 the average salary was around $250,000, excluding bonuses. In total, SVB has 8,528 employees in 17 American subsidiaries and offices in the UK, India, Canada and Southeast Asia. On the other hand, managers abroad will not have access to the bonuses, because these are usually paid at the end of March. But since Friday at noon the SVB has been under the control of the FDIC and therefore the bonus freeze has been triggered.
CNBC yesterday also revealed that Becker and the directors of finance and management, Beck and Draper, have sold SVB stock options starting December 1, 2022 for a total value of $5.1 million. The CEO in particular raised $3.57 million from the market. The sale of the shares was budgeted for and took place in full compliance with the rules and deadlines, and was budgeted at the end of February even if the timing raised some doubts about how much the bank’s pillars – which many analysts have defined as a sort of of “Country club bank” for Silicon Valley – were solid. And how much the fragility was known. On Thursday in a conference call with investors Becker had invited “to stay calm” but the announcement that he was trying to find 2.25 billion dollars to guarantee cash flow had not given any reassurances. The bank was overwhelmed by the assault on deposits and collapsed in less than 48 hours. And yet, on Wednesday 8 March, the analysts who had seen the updates on the quarterly had highlighted that there were guarantees on solidity and capitalization.
Branches will reopen this morning, many employees will continue to work remotely. The FDIC ensured, following established practice, that staff were offered 45-day employment at 1.5 times the pay. The Moffett-Nathanson division of SVB securities holding yesterday issued a statement to highlight that it expects that “the work will proceed normally” and that “the activities of the parent company have no impact on the division because the units are separate”. Guaranteeing a future for SVB and basically confirming the unexpected and lightning-fast default is an appeal from over 300 Venture Capital companies ready to continue working with SVB once it has passed to a new owner.