Final voting totals released yesterday confirm that dissident shareholders led by Baltimore Blast owner Edwin F. Hale Sr. won the six seats available on the 18-member board of directors of Baltimore Bancorp, but the two sides are still fighting over whether Mr. Hale's slate won enough votes to expand the board to 28 members and gain control of the company.
Mr. Hale and five supporters each won 6.1 million votes for seats on the board of Baltimore Bancorp, the parent company of the Bank of Baltimore. Management's six incumbent nominees won about 4 million votes each.
But on the all-important question of whether to expand the board of directors to 28 members, which would give the insurgents 10 more seats and control of the company, the verdict was still hotly contested even after the final vote count.
The Hale slate won the support of owners of 5.2 million shares to expand the board, while the company's management won 4.2 million votes. According to Corporation Trust Co., the Delaware firm that counted the votes, 1.1 million shares abstained.
Both sides saw good news in the voting results, which are a revision of preliminary numbers reported last week. Management picked up more than a half-million votes on the issue of whether to expand the board, but the Hale slate still had more votes.
But management has a beef with Corporation Trust, said Jerome Baroch, company executive vice president. Management said Corporation Trust should have counted 1,016,793 of the abstaining shares against expanding the board, which would be enough to deny the insurgents a majority.
The shares were counted as abstentions because of mistakes made by two outside companies that cast shareholders' votes for them, Mr. Baroch and David Clarke Jr., an attorney for Baltimore Bancorp, said. The bank said the owners of those shares wanted their votes to be cast against expanding the board and contended that Corporation Trust should overlook the mistake.
Vicki L. Dexter, an attorney for the Hale slate, said that the proxy ZTC ballot officially submitted to the superintendent of election -- in this case, Corporation Trust -- is the final authority on how a shareholder votes.
Mr. Clarke said the bank may challenge Corporation Trust's decision in state court.
Daniel H. Burch, a proxy solicitor for the Hale slate, said that the owners of those 1 million shares may not have meant to vote against expanding the board.
"Included in that total are hundreds of thousands of shares that voted against management on other issues," Mr. Burch said. "To assume that they should be cast for management is really a stretch."
But even if the votes on the issue of expanding the board remain abstentions, the company said yesterday that the Hale slate doesn't have a majority because it doesn't have more than 50 percent of all shares voted, including abstentions. Mr. Baroch acknowledged that insisting on a majority of all votes, including abstentions, was a new position for the company.
Mr. Burch disagreed, noting that the company's law firm lost the same argument in another case in New York.
The voting set the stage for a confrontation at the company's board meeting next week. Mr. Hale, who said the board meeting is Tuesday, said he plans to show up with the five other newly elected directors and claim their seats.
Mr. Baroch, who said the meeting is scheduled for Wednesday, said that management will try to avoid seating the insurgents until U.S. District Judge J. Frederick Motz rules on a lawsuit asking that the votes in favor of the insurgents not be counted because the dissidents made allegedly misleading statements during the election campaign.
In other news, the two sides went back to Judge Motz yesterday to argue issues raised by the insurgents.
The most important is what vote it takes to expand the board of directors. The company insists that its bylaws require an 80 percent shareholder vote to amend the bylaws to allow the board to be expanded.
The insurgents say it takes only a majority. They claim Maryland law bans bylaws that impose "super-majority" requirements, or more than a majority vote to change bylaws.
Judge Motz pressed Mr. Clarke on whether the company's bylaw was properly drafted and whether it actually does impose the super-majority requirement that management says it does.
"There are two different ways to interpret it," the judge said.
Mr. Clarke said the judge was zeroing in one one small part of the bylaw in question, rather than reading the company's rules as a whole, which he said were unambiguous. "It can't be read to focus on each particular aspect of a very inter-related whole," he said.