Moments before the annual meeting of Baltimore Bancorp began today, the head of a group trying to take over the state's fifth-largest bank-holding company denounced an extension of voting beyond the meeting.
Baltimore Bancorp, the target of a bitter proxy fight over control of the company, announced yesterday that it will extend stockholder voting for directors on the board and other issues through noon next Tuesday.
"We believe the bank's 11th-hour announcement of an adjournment until May 28th makes a mockery of the shareholders' rights at an annual meeting," said Edwin F. Hale Sr., leader of the dissidents.
Hale, a Baltimore truck and shipping executive and owner of the Baltimore Blast soccer team, heads a 16-person group trying to seize control of Baltimore Bancorp, the parent of Bank of Baltimore.
In a proxy fight, a group tries to persuade shareholders to support its slate of candidates by sending in their votes before the annual meeting or casting them at the meeting.
Under the arrangement, today's annual meeting was adjourned until 11 a.m. Tuesday. After the meeting reconvenes at the bank's headquarters at 120 E. Baltimore St., it will remain in session for voting until noon, bank officials said.
The current directors are led by Harry Robinson, Baltimore Bancorp's chairman.
"This last-minute stunt by Harry Robinson to evade shareholders' judgment would be laughable -- if it weren't the latest in a string of typically arrogant and deceptive tricks that Robinson has played on his shareholders," Hale said.
Hale said he objects to the postponement because it gives management more time to persuade individual shareholders to vote for current directors. "We think they are afraid that they are going to lose," Hale told reporters. "We think we have the votes to win."
But early in the meeting, lawyers for Baltimore Bancorp said the extension grew out of a request by the Securities and Exchange Commission because of possible stockholder confusion. "This was done solely at the request of the SEC," said Benjamin Stapleton, an attorney for Sullivan & Cromwell of New York.
The dissidents are trying to persuade the 4,300 shareholders, who hold a total of 12.8 million shares, to enlarge the company's board from 18 to 28 members and to elect the dissidents to the enlarged board.
The counting of the votes is complicated by the ability of stockholders to revoke previous votes and cast new ballots up to the time of the closing of the polls. Adding to possible stockholder confusion, three separate ballots have been mailed to shareholders -- the initial one on April 9 by the company, one by the dissidents on May 9 and a revised ballot by Baltimore Bancorp last Friday.
The two-and-a half hour meeting was only minutes old when William Bradford Reynolds, the attorney for the Hale group, objected to those selected to count the votes. He suggested that a company, Corporate Trust, should count them. The dispute was not resolved at the meeting but will be one of the issues subject to balloting. The bank will initially count votes to see who will handle the tally.
At today's meeting, held at the Sheraton Inner Harbor Hotel, shareholder comments were equally divided between supporters and opponents of the bank's current leadership. Some people said they thought the company had done well in difficult times and others criticized management for not listening to shareholders and for mediocre performance.
"I think we should pay attention to the old adage, 'If it ain't broke, don't fix it,'" said Fred Gross, a shareholder.
But other shareholders attacked the management for its rejection last year of an acquisition offer by First Maryland Bancorp.
"You stand as a stumbling block," one shareholder said. Yesterday, the dissident stockholders claimed a small victory with a decision by the Federal Reserve that the group is not violating banking regulations by staging a proxy fight. Baltimore Bancorp had asked the Federal Reserve to examine the issue, contending that the dissidents might be breaking regulations relating to changing the control of banks.
Meanwhile, the bank yesterday announced its regular quarterly dividend of 15 cents a share payable July 1 to stockholders of record June 14.
Even before today's meeting, the two sides have been filing suits against each other and running critical newspaper advertisements.
The Hale group has filed a protest with the SEC, contending that the bank is misrepresenting the record of some of the candidates. On the other side, Baltimore Bancorp filed a suit in U.S. District Court on Monday saying the Hale group was unfairly comparing the performance of the bank to a select group of high-earning banks.
The bank also has filed a suit in Baltimore Circuit Court saying that the candidacy of Robert A. Pascal, who is chairman of United Propane Inc. and also Gov. William Donald Schaefer's appointments secretary, is in violation of the state's public ethics law. Baltimore Bancorp contends that Pascal has indirect control over banks through his power to recommend regulators.
The issue of what percentage of votes is necessary to change the size of the board has yet to be resolved. An 80 percent requirement is in the company's bylaws. The dissidents say state law requires that such a restriction be in the charter rather than in the bylaws.