Banc of California will pay Steven Sugarman more than $4 million following his abrupt resignation from the Irvine company.
The $11.2 billion-asset company announced Monday that Sugarman had left less than two weeks after the Securities and Exchange Commission launched a formal investigation into statements made last fall.
Banc of California disclosed in a regulatory filing late Wednesday that it will pay Sugarman about $4.3 million over the next year, including his $1.5 million annual bonus for last year. He will also receive a $1 million payment on Tuesday, along with another $1.7 million over the course of this year.
Sugarman’s outstanding unvested equity awards, options and stock appreciated rights will remain exercisable for their full terms.
In return, Sugarman signed a standstill agreement that limits his ownership of company shares until July 2018. Sugarman also agreed to limits on any efforts to influence the board to take over control of the company.
Sugarman’s departure comes three months after an anonymous blog post tied the former executive to Jason Galanas, a Los Angeles financier who was charged last year with defrauding investors. PL Capital, an activist investor, also criticized the company for paying for the naming rights of a soccer stadium that will host a team that counts Sugarman’s brothers among its investors.
Banc of California said in an Oct. 18 press release that it had launched an independent investigation and found the blogger’s claims to be groundless.
The problem, Banc of California disclosed on Monday, is that the October release contained “inaccurate” information, notably that management — and not the board — had authorized the investigation. The release also characterized the investigation as independent when the law firm involved had previously represented Sugarman and the company.
Banc of California also disclosed Monday that a separate investigation begun later by its board — and handled by a different law firm — has so far found no evidence that Galanas has had “any direct or indirect control or undue influence over the company.” That investigation has also found no indication that "any loan, related-party transaction or any other circumstance has impaired the independence of any director." The special committee expects the law firm to present its final report in coming weeks.
The SEC, meanwhile, notified Banc of California of the formal investigation, which includes a subpoena seeking more information, on Jan. 12.