The combatants in the proxy fight for control of Baltimore Bancorp whipped their horses into the homestretch yesterday, as dissident shareholders protested management's tactics to the U.S. Securities and Exchange Commission and management waited for results from a new proxy mailing to shareholders completed on Friday.
Both sides said they are confident of victory at the company's annual shareholders meeting, scheduled for tomorrow at the Sheraton Inner Harbor Hotel.
Management's new proxy mailing asked shareholders to support Baltimore Bancorp's six incumbent directors up for re-election, and to support the company's position opposing the dissidents' move to expand the board to 28 directors from 18.
Expanding the board would let the dissidents elect up to 16 directors and give them a chance to take control of the company.
Management said the mailing was necessary because some shareholders had mistakenly voided their earlier votes in favor of management. Executive Vice President Jerome Baroch said some shareholders had voted a white proxy card in favor of management's directors, but then sent in a blue proxy card issued by the dissidents, voting against proposals made by insurgents led by Baltimore Blast owner Edwin F. Hale Sr.
When shareholders sent in the second proxy card, a proxy fight's version of a ballot, they voided their earlier votes in favor of directors favored by management, Mr. Baroch said. Voting the second card changed their vote on management's candidates to an abstention. The new card lets them correct their mistake.
"We knew the support was pretty heavy, and we didn't want to lose any of it," Mr. Baroch said. "People thought they were doing the right thing [by voting against the insurgents' proposals], but in fact they were voiding their votes."
But the Hale camp criticized the new mailing. They said major shareholders got their new ballots via Federal Express, with a prepaid Federal Express return, and that the tactic was a waste of shareholders' money.
"I'm sure it cost them $200,000 or $300,000," said Daniel Burch, executive vice president of Dewe Rogerson Inc., a New York proxy solicitation firm retained by Mr. Hale. Mr. Baroch said only a handful of ballots were sent via Federal Express.
The dissidents launched several last-minute salvos to counter some of management's tactics.
* They filed a protest with the SEC, contending that management's advertising distorted the record of candidates on the Hale slate. For example, the company advertised that Richard Fasold had been a key executive of Baldwin United, a financial services conglomerate that went into Chapter 11 bankruptcy in 1983.
The advertisement fails to note that Mr. Fasold was not a senior executive of the company until after the management team that got the company into trouble was fired. Mr. Fasold was actually promoted by the replacement management team that led the company out of Chapter 11.
Mr. Baroch said the ads were approved by the SEC. A later ad dropped the reference to Baldwin United.
* Attorneys for Mr. Hale asked U.S. District Judge J. Frederick Motz to refer to the Maryland Court of Appeals a fight over whether Mr. Hale needs a majority vote or an 80 percent vote to oust management. Last week, Judge Motz said it was a fight over state law and belonged in state court, not federal court.
* The state attorney general's office said it will ask a Baltimore Circuit judge today to dismiss an ethics complaint brought by management against Robert A. Pascal, a member of the Hale slate who is also appointments secretary to Gov. William Donald Schaefer.
Management contends that Mr. Hale can't serve on Baltimore Bancorp's board because he is involved in appointments of bank regulators.