A federal judge yesterday refused a request by a Baltimore Bancorp shareholder to make the company delay its May 22 annual meeting.
District Court Judge J. Frederick Motz decided instead to schedule a hearing on the stockholder's claim that the company's proxy materials falsely said a proposal to set up a new shareholder advisory committee needed to win 80 percent of the votes to be approved.
Barbara S. Larkin, a shareholder from Severna Park, had submitted the proposal to the company in December. The proposal would set up a committee of shareholders that would meet with the company's board of directors once every three months but would not have any formal control over the company's operations or strategy.
Mrs. Larkin's attorneys contended in federal district court in Baltimore yesterday that the measure needs only a simple majority to win approval. They said that the shareholders meeting should be delayed and that the proxy solicitations sent to shareholders April 9 should be corrected.
But Judge Motz turned down the bid for a temporary restraining order barring Baltimore Bancorp, parent company of the Bank of Baltimore, from holding its annual meeting on schedule. Instead, he told lawyers to file briefs later this week in anticipation of a hearing on Monday. "I'm not persuaded, at least until the hearing," Judge Motz said. "I'm not satisfied on probability of success." But he didn't entirely dismiss Mrs. Larkin's claim, xTC adding "there's a real issue here. . . . I'll have to take a look at it."
Mrs. Larkin's lawyers have also complained to the U.S. Securities and Exchange Commission about Baltimore Bancorp's maneuver and asked the SEC to order Baltimore Bancorp to delay its annual meeting.
The SEC has already overruled the company's earlier attempt to kill the proposal without letting it go to a shareholder vote. The commission hasn't responded to Mrs. Larkin's April 24 request that the SEC push back the annual meeting, said Jerome Baroch, executive vice president of Baltimore Bancorp.
The company has a provision in its bylaws that requires an 80 percent shareholder vote to pass any proposal that lessens the directors' control of the company. William A. Hylton, an attorney for Mrs. Larkin, said only 50 percent is required on her proposal, partly because the advisory board wouldn't have authority to change directors' decisions.
The bid to delay the meeting takes place against the backdrop of a separate proxy challenge to the management of Baltimore Bancorp. That bid, led by Edwin F. Hale Sr., the owner of the Baltimore Blast and Port East Transfer Inc., seeks to replace six directors who are up for re-election.
Mr. Hale also seeks to expand the board to 28 members and is leading a slate of 16 candidates who would, if elected, make up a majority of the board.
Mrs. Larkin's lawyers said there is no connection between Mrs. Larkin's legal maneuver and any desire of Mr. Hale's slate to postpone the annual meeting to gain time to solicit shareholders' votes.
Mr. Hale's "committee has said they're prepared to go ahead with their challenge whenever the meeting is," said William Bradford Reynolds, an attorney for the Chicago law firm of Ross & Hardies, which along with Mr. Hylton is representing Mrs. Larkin.
Mr. Hylton said that Mrs. Larkin's son is a member of the Hale slate of candidates for the board of directors.