In the history of LendingClub, the year 2016 will not be remembered fondly. There was the shock resignation of CEO Renaud Laplanche over a faulty loan scandal. There was a plunge in the stock price, which had already been tumbling since the IPO. And then there were three straight quarters of losses, followed by a weak guidance, and the near-complete turnover in executive ranks. Reaching for the thesaurus, one might come across the word: “bloodbath.” But in discussing the impact of all this on executive compensation in the company’s latest proxy, LendingClub found itself turning to some other rather creative euphemisms. For example: The implosion of its leadership and the loan scandal? LendingClub says: “The year 2016 proved to be a transformational year for our senior leadership team, and we believe we are building a sophisticated, experienced management team that will lead us in our next generation of growth.” ouster of Leplanche? A grand opportunity for career development! To wit: “During the course of the year, we were able to promote or hire senior executives with highly relevant experience to rebuild the executive team and posture our company to build a strong foundation to support sustained future growth. Most significantly, with the departure of Mr. Laplanche, the Board promoted our President, Mr. Sanborn, a seasoned executive with a deep understanding of our business, from the position of President to the position of President and Chief Executive Officer.” In such a filing, one does not say that the company’s upper ranks of management are being scrambled. Rather, for LendingClub: “In 2016, there was a swift and decisive transition in our senior leadership team.” Of course, such an overhaul might create panic in the ranks, or a slide in confidence. What to do? Pay raises: “To facilitate this transition, while ensuring the continuity and stability of the business, we made the decision to provide additional compensation to key employees, including certain NEOs, with the goal of retaining these key personnel during this transition period.” Many of those bonuses came after Leplanche left the nest. The company said it awarded “special cash and/or equity retention awards” to many executives in May 2016 following Laplanche’s resignation. As it turns out, there can be a significant downside to having to replace much of your executive leadership on short notice: “Recruiting some of these individuals required significant cash and/or equity awards to make them whole for compensation they forfeited by leaving their former employer.” Typically, when companies set executive pay, they also identify peer companies and attempt to set benchmarks to offer a rationale for pay. But when you’re in crisis, such things go out the window: “While our Compensation Committee reviewed our executive compensation against our compensation peer group in setting 2016 executive compensation, it did not seek to benchmark our total executive compensation to any particular level. Rather, we sought to compensate our executive officers at a level that would allow us to successfully retain the best possible talent for our executive team.” This is the cost of executive hanky-panky. In promoting Sanborn to CEO, the company awarded him 1.4 million RSUs and $500,000 in cash, payable in two chunks in November 2016 and May 2017. A pretty-please stay payment, if you will. CFO Carrie Dolan received an award of 857,844 RSUs and $500,000, but still left in August 2016. Bradley Coleman, Corporate Controller, Principal Accounting Officer and Interim-Chief Financial Officer, received a promotional grant of 271,740 RSUs in connection with this appointment as our Principal Accounting Officer and Interim-Chief Financial Officer. and $250,000. Then there was a $250,000 bonus for Timothy Bogan, Chief Risk Officer for his “tireless efforts in connection with the internal board review and subsequent remediation of our material weakness in our internal controls over financial reporting.” Tireless, but not thankless, apparently! If there was any good news for investors amid this opening of the executive pay spigot, it was Laplanche had to forfeit all of his unvested equity awards. He also did not receive any severance or termination payments or benefits upon his resignation on May 6, 2016. Other top executives who left gave up about 90% of their unvested equity, the company said. For now, the lights remain on at LendingClub. But all this money was spent preventing the company from falling even deeper into a hole of distrust and disarray. That’s certainly something. But the company is still in a hole nonetheless. Climbing out will require the company to do more than just call the hole a “transformational” opportunity.