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‘Golden parachute’ at issue in Security Bank lawsuit

Attorneys for both Security Bank and a former bank executive who has sued the bank met in a Bibb County judge’s chamber Monday to discuss the lawsuit.

Much of the discussion centered on the federal government’s regulations of the bank and its involvement in the case.

Former Security CEO H. Averett “Rett” Walker filed a lawsuit last month against the Macon-based bank alleging breach of contract and that the bank owes him nearly $600,000 in unpaid compensation.

Walker resigned from the bank in mid-September, and according to documents filed at the time with the U.S. Securities and Exchange Commission, Walker would receive as separation pay twice his base salary and incentives — or $845,932, less taxes and other withholdings — in a lump sum by April 1. The agreement is signed by Walker and Alford Bridges, chairman of the bank’s board. As an advance on the severance, the bank loaned him $250,000.

Near the end of March, the bank notified Walker that the bank would not be making the severance payment because it had been informed by the Federal Reserve System that the severance payment “is a golden parachute payment” as defined by the Federal Deposit Insurance Corp.

But the complaint says that part of the description of a golden parachute requires that the bank be in a “troubled condition.” However, the bank wasn’t notified by the FDIC it was in a troubled condition until Dec. 19 — three months after Walker left the bank.

“The regulations, in our view, say that this payment, which was committed before the bank situation had deteriorated in the eyes of the feds ... does not constitute a golden parachute under these complicated regulations,” said Walker’s lawyer, Hubert “Hu” Lovein Jr. with Macon-based Jones, Cork & Miller LLP.

The lawsuit asked that the balance of the severance payment be paid to the court, but a legal document presented Monday by the bank’s attorney, Bill Larsen, disputes that. Larsen, with Macon-based Martin Snow LLP, presented several statutes and prior cases that support his claim that what Walker is asking for is an injunction by ordering the bank pay the money to the court.

“There may be a rush of claims tomorrow to file claims and seek injunctions that money they claim is owed them as unsecured creditors be paid into the court, and that’s contrary to law, it’s punishing and it could possibly render the defendant (Security Bank) insolvent without the defendant having their day in court,” Larsen said Monday. “We submit that’s improper and should not be allowed.”

However, Lovein disagreed, saying the law allows the payment to the court. Lovein told Bibb County Superior Court Judge Lamar Sizemore Jr. he would file his response this week citing the law that supports his position.

Lovein, Larsen and Sizemore discussed the federal government’s input in the case.

“There is a cloud of federal government hanging over us,” Lovein said. “We can’t get a ruling ... that’s why we think it’s a ruling for this court. This case should be decided on its merits. It should not be based on inaction by the federal government.”

Lawyers for both sides and Sizemore discussed whether the FDIC and the Federal Reserve should be made parties to the lawsuit.

“They don’t have a claim on any money, so they wouldn’t likely intervene,” Sizemore said.

Larsen said he “would not anticipate we would have any objection” if the federal government was added as parties to the suit.

After the meeting, Lovein said, “We have not made a decision on whether we are going to do that — whether it will be helpful to resolve the dispute or not helpful to resolve the dispute.”

To contact writer Linda S. Morris, call 744-4223.

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