Bank calls Pascal's bid for board unethical Judge says meeting can be held as scheduled

May 11, 1991|By Timothy J. Mullaney

A federal judge has refused to force Baltimore Bancorp to postpone its annual shareholders' meeting, scheduled for May 22, after the company agreed to correct proxy materials a dissident shareholder claimed misled other shareholders about a proposal she was forcing to a vote.

The order by U.S. District Judge J. Frederick Motz essentially gives Barbara S. Larkin, a Severna Park investor, what she wanted -- an improved chance of winning shareholder approval of a resolution calling for the company to create a shareholders' advisory board that would meet every quarter with the board of directors.

Mrs. Larkin and her husband proposed the measure because they were upset by the company's refusal to consider a $17-a-share takeover offer last year by First Maryland Bancorp. First Maryland is the parent company of First National Bank of Maryland; Baltimore Bancorp owns the Bank of Baltimore.

Mrs. Larkin's husband has since died, said William A. Hylton Jr., one of her lawyers.

Mr. Hylton said that Mrs. Larkin filed the suit, which sought a temporary restraining order and injunction, after Baltimore Bancorp's proxy said that the proposal must win 80 percent of the shareholders' votes to pass.

Before the proxy was sent to shareholders, the company also failed to send Mrs. Larkin a copy of the parts that concerned her proposal, as required by federal law.

Mrs. Larkin contended that only a 50 percent vote is needed to set up the committee, and the company deferred on that point. The company previously admitted it erred by not allowing Mrs. Larkin to review the proxy material before it was sent to shareholders.

Baltimore Bancorp also agreed to send out corrected proxy materials that say only a 50 percent vote is needed and to accept shareholder votes on the issue until June 14. Proxies already received from shareholders as votes in favor of management's position that the resolution should be defeated will not be counted, Mr. Hylton said.

Judge Motz, in a brief ruling Thursday, said that Baltimore Bancorp's concessions were enough to assure that Mrs. Larkin wouldn't be harmed by his decision to deny the restaining order. "From Mrs. Larkin's point of view, it's a sweeping victory," Mr. Hylton said.

Baltimore Bancorp also was pleased with the outcome. Company officials saw Mrs. Larkin's move as a tactic to aid a group of dissident shareholders led by Baltimore Blast owner Edwin F. Hale Sr.

An attorney for Mrs. Larkin has said the Larkin suit and the Hale challenge are not related.

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