April 21, 2012 in City

Bank sued over firing

Sterling rejects ex-CEO Stanley’s claim
By The Spokesman-Review
 
Competing lawsuits

The dispute unfolded this week in competing lawsuits: The bank struck first Thursday in federal court; Stanley filed her complaint in state court Friday.

Heidi Stanley, the ousted chief executive of Sterling Savings Bank, claims in a $7.8 million lawsuit against her former employer that she was fired because of her gender and health condition as she recovered from breast cancer.

The Spokane-based bank rejected Stanley’s allegations as an attempt to collect undeserved “golden parachute” payments.

The dispute unfolded this week in competing lawsuits: The bank struck first Thursday in federal court; Stanley filed her complaint in state court Friday.

In a March 30 demand letter that Stanley sent to Sterling, she recounts her firing from the bank she had worked for since 1985, rising through the ranks to become its CEO – effectively becoming one of the top leaders alongside the parent company’s chairman and founder Harold Gilkey.

As the bank neared collapse in 2008 under the weight of too many bad construction and real estate loans, Stanley signed a new five-year employment contract.

As the bank’s financial condition worsened and it was unable to raise necessary investment capital, executives sought rescue by turning to the federal government’s emergency Troubled Asset Recovery Program. In February 2009 Sterling accepted the TARP funds. In its lawsuit, the bank claims that one of the trade-offs was a ban on severance payments to senior executives.

Stanley remained employed by Sterling but said in court documents that she was diagnosed in May with breast cancer. She underwent breast surgery June 3, and 27 days later underwent an emergency hysterectomy.

Even while undergoing radiation therapy until mid-September, Stanley said she worked dutifully – exceeding 40 hours per week – to help the bank, including preparing herself to go on a “roadshow” with other executives in hopes of securing outside investment to recapitalize the bank.

Stanley said she had been asked by the bank’s chief financial officer in September if she was “strong enough.” She characterized the inquiry as “ridiculous.”

The bank instead sent other executives on the investment-seeking circuit.

In a late September meeting with Gilkey, Stanley was told that Sterling’s “legacy management” would have to step down to make way for a new executive team led by Greg Seibly and Ezra Eckhardt. This was to be done in order for the bank to raise money.

Stanley said she argued that she had, in fact, been the executive who orchestrated the bank’s efforts to clean up its real estate portfolio upon her taking over the CEO role years earlier.

She was fired in October 2009 and days later met with Gilkey. According to her lawsuit and demand letter filed by attorneys Bob Dunn and Nicholas Kovarik, former Sterling leader Gilkey told her that “They (Sterling) don’t want a 70 year old guy and a female executive with breast cancer as the face of the company. They need to know that (Mrs. Stanley) will be around in 10 years.”

Sterling responded to Stanley’s version of events and lawsuit Friday with a statement read by spokeswoman Marty Dickinson: “Ms. Stanley’s claims are without merit and she is not entitled to the golden parachute payments she has demanded from Sterling.

“Sterling also strongly denies any mistreatment of Ms. Stanley and maintains that her termination was proper.”

Dickinson declined to provide details about Stanley’s demand for severance pay. The bank has asked a federal judge in Spokane to deny Stanley any severance payment or related benefit.

Sterling was eventually able to raise more than $700 million in new capital and is undergoing a financial turnaround with new investors and executive management.


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