Amid NBA investigation, Sarver to exit as chair of Western Alliance

Robert Sarver, the embattled owner of the Phoenix Suns basketball team, is stepping down from his longtime role on the board of Western Alliance Bancorp. and its banking arm, Western Alliance Bank.

Sarver will retire from his role as executive chairman and vacate his seat on the board in June at Western Alliance’s shareholder meeting, a spokesperson for the $56 billion-asset company confirmed Friday. A date for the annual meeting has not yet been announced.

Sarver’s upcoming departure, which caps a 20-year tenure at Phoenix-based Western Alliance, comes amid an ongoing investigation by the National Basketball Association of the Suns and majority owner Sarver regarding allegations of racism and misogyny inside the Suns organization.

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Western Alliance did not say what prompted Sarver’s impending exit from the board, which he has chaired since 2002, when he was also named CEO of Western Alliance. The company did not mention the NBA investigation in a press release it issued Thursday about Sarver’s departure.

On Friday, when asked if Sarver’s exit from the board is related to the NBA’s investigation, a company spokesperson said in an email that he could not speak to Sarver’s thought process any more than what was provided in the press release. It was Sarver’s choice to retire, the spokesperson said.

Allegations against Sarver and the Suns organization have been in the spotlight since November, when ESPN published a story that described “a toxic and sometimes hostile workplace” under the leadership of Sarver, who bought a majority stake in the team in 2004.

The ESPN story included specific allegations by current and former Suns employees that Sarver has used racially insensitive language and engaged in conduct that was misogynistic in the office. Sarver denied using racially insensitive language, according to the article.

The league’s investigation began shortly after ESPN published its story in November. This week, NBA Commissioner Adam Silver told ESPN that the investigation, which is being conducted by the law firm Wachtell Lipton, “is closer to the end than the beginning,” but he declined to provide a specific timeline for its completion.

After ESPN published the allegations against Sarver, the independent directors on Western Alliance's board hired the law firm Munger, Tolles & Olson to help them conduct their own investigation to evaluate Sarver's "continued leadership role in the company,” CEO Kenneth Vecchione told investors during the company’s first-quarter earnings call in January.

The board’s investigation “is not the result of any allegations related to the company discovered by the board or the NBA,” Vecchione said at the time.

Sarver is the largest insider owner at Western Alliance, with holdings worth about $87.4 million, including about $2 million in stock that was purchased in the first quarter, according to a Janney Montgomery Scott research note.

Sarver’s exit was one of several leadership changes and updates that Western Alliance announced on Thursday.

Lead independent board director Bruce Beach, co-founder of BeachFleischman, a public accounting firm, will succeed Sarver as board chairman, the company said.

Meanwhile, the board has extended Vecchione’s contract as CEO through at least 2024. Vecchione succeeded Sarver as chief executive in 2018 after rejoining the company as president in 2017.

The company also said that the board has nominated Patricia Arvielo, president of the mortgage lender New American Funding, as a new director. And the board plans to add another new director later this year.

Steven Hilton, the CEO of Meritage Homes, who has been on the board since 2002, will retire in June, according to the company.

While it is somewhat unusual for a bank to announce the extension of a CEO’s contract in a press release, the move may be designed to reinforce stability in the company’s leadership, said Ebrahim Poonawala, an analyst at Bank of America Securities who covers Western Alliance.

“I think because of all the headlines that have been around … this just gives you visibility that you have, from a CEO standpoint, a steady hand continuing,” Poonawala said.

As of midday Friday, Western Alliance’s stock price was up about 1.5%, though it moved slightly down in the afternoon. The slight uptick on Friday morning could mean that investors were pleased with Vecchione’s contract extension and the board changes, Poonawala said.

Poonawala said investors are becoming a lot more sensitive about environmental, social and governance issues, referring to the allegations against Sarver as an example.

“When you have this uncertainty,” he said, “it does remove a little bit of an overhang.”