Benefits & Executive Compensation News

Ex-BankAtlantic Executives’ Golden Parachutes Properly Capped

April 7, 2020, 5:35 PM

Five former executives of a bank acquired by BB&T Corp. in 2012 won’t receive severance payments that are significantly higher their former annual salaries, after the Eleventh Circuit on Tuesday rejected the bank’s lawsuit against the Federal Deposit Insurance Corp.

The FDIC reasonably determined that these proposed payments to former BankAtlantic Bancorp Inc. executives were impermissible golden parachutes under federal banking law, the U.S. Court of Appeals for the Eleventh Circuit ruled. It affirmed the FDIC’s decision to approve severance payments of no more than 12 months’ salary for the executives.

The bank argued that the golden parachute rules didn’t apply to these severance payments, which were authorized by the bank’s stock purchase agreement with BB&T.

The court disagreed, saying the stock purchase agreement falls within the plain language of the statutory scheme, because it’s an agreement to pay severance to executives of an institution in troubled condition.

The bank also argued that the allowed payments shouldn’t have been capped at 12 months’ salary, because the executives in question “steered the bank through the Great Recession” and weren’t engaged in fraudulent conduct.

But that argument misunderstands the regulatory framework and overlooks the fact that the FDIC considered the executives’ good behavior when approving the limited payments, the court said.

The court also rejected the bank’s claims against the Board of Governors of the Federal Reserve, saying the bank hadn’t been injured by any conduct of the board and therefore lacked standing to pursue these claims.

The unpublished opinion was joined by Judges Robin S. Rosenbaum, Jill A. Pryor, and Elizabeth L. Branch.

Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson PA represented the bank. The defendants represented themselves.

The case is BBX Capital v. FDIC, 11th Cir., No. 19-11172, unpublished 4/7/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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