In a massive turnover, 17 of the 26 members of the board of MNC Financial Inc. have stepped down. Ten directors resigned during the year and seven will not run for re-election, according to the proxy statement for the bank-holding company's annual meeting on May 16.
The statement, which was recently sent to stockholders, also disclosed that the board is being pared from 26 to 18 people. Among the nine new directors standing for election are A. Linwood Holton Jr., a former governor of Virginia, and Paul X. Kelley, former commandant of the Marine Corps.
MNC, the parent company of Maryland National Bank, last year lost $439.5 million, or $5.23 a share, compared with a net income of $245 million, or $2.84 a share, for 1989. The company also saw a dramatic change in its make-up as it sold its $1 billion credit card business and the leadership of MNC passed from Alan P. Hoblitzell Jr. to Alfred Lerner, the company's largest shareholder.
MNC spokesman Daniel Finney said there was no single reason for the large turnover. "Each director had an individual reason for leaving the bank," he said. None of the departures was requested by federal bank regulators, he said.
The board had been larger than usual at the beginning of 1990 because of the merger with Equitable Bank N.A. The company was also restructured during the past year so that Maryland National and American Security Bank of Washington came under one management. "It was felt that 18 was the requisite number for a bank-holding company of this size," Finney said.
It is not unusual for directors to leave troubled companies, said W. Talbot Daley, vice president and market analyst for Legg Mason Inc., a Baltimore brokerage firm. "When things go bad, you usually have people leave," he said.
He also said it is normal for directors who were aligned with a particular chief executive officer to leave when that officer steps down. "The company is a different company than it was a year ago."
The departures may also be the result of the directors not having enough time, according to another analyst.
John A. Heffern, a banking analyst with Alex. Brown Inc., said being a director of a large bank can be a large commitment even during the best of times. "When times are difficult, it takes a greater commitment," he said. "For some, it may become too much.
Three of the directors who resigned had large non-performing loans with one of MNC's subsidiary banks. These directors were Oliver T. Carr, chairman of the Oliver Carr Co. of Washington; Earl L. Linehan, president of Woodbrook Capital Inc., a Baltimore investment company; and A. James Clark, chairman of Clark Enterprises Inc., a Washington construction and real estate company.
The departing directors also included the following well known Baltimoreans:
* George L. Bunting Jr., chairman of Noxell Corp.
* Benjamin R. Civiletti, managing partner of Baltimore's largest law firm, Venable, Baetjer and Howard, and a former attorney general of the United States.
* Harvey M. Meyerhoff, chairman of Magna Holdings Inc., an investment company, and a well known Baltimore philanthropist.
* Rev. Joseph A. Sellinger S.J., president of Loyola College in Maryland.
* Harry K. Wells, former chairman of McCormick & Co. Inc., the Hunt Valley spice processor.
Besides the nine people who are staying on the board, nine new directors are standing for election.
Beside Holton, 67, governor of Virginia in the late 60s and early 70s and currently resident of the Center for Innovative Technology, and Kelly, now vice chairman of Cassidy and Associates Inc., a governement and public relations firm, other well-known candidates include Other well known candidates include William L. Jews, president and chief executive officer of Dimensions Health Corp. in Prince George's County and formerly head of Liberty Medical Center in Baltimore, and Richard E. Hug, chairman of Environmental Elements Corp., a Baltimore supplier of air pollution control systems.
Continuing on as chairman and chief executive officer of MNC is Lerner, 57, who owns 8.6 percent of MNC's stock. The Cleveland businessman took the position after Hoblitzell retired in September.
Lerner was already receiving $45,000 a month as a consultant to MNC and did not receive any additional money for being chairman and chief executive officer, according to the proxy statement. He received $546,200 under that consulting agreement.
Lerner, who had been chairman of Equitable, also received various payments from Equitable in 1990 before the merger with MNC was completed. Those payments included a $33,000 salary for services rendered, a $880,300 bonus and $456,300 for prior years under Equitable's Long Term Incentive Program. The compensation for Equitable in 1990 totaled $1.4 million.
Hoblitzell received a salary of $594,212 plus $19,012 in other cash compensation, according to the proxy statement. When Hoblitzell retired, he received a lump-sum severance payment of $915,865. But at the request of the Federal Reserve Bank, a regulator of the bank-holding company, Hoblitzell returned $695,850 to MNC, the proxy statement said.