Rejecting appeals by both sides in the struggle over Baltimore Bancorp, a federal appeals court affirmed yesterday a lower-court ruling ordering a new stockholder vote on whether the company's board of directors should be expanded to 28 members from 18.
A three-judge panel of the 4th U.S. Circuit Court of Appeals handed down a one-sentence ruling affirming last month's decision by U.S. District Judge J. Frederick Motz, who said a dispute over more than 1 million votes in the 10 million-vote election made it impossible to tell whether a majority of shareholders wanted to expand the board of the Bank of Baltimore's parent company.
"We're going to have to take the fight on," said Edwin F. Hale Sr., the leader of a group of dissident shareholders that is trying to take control of the company. "I've never had good luck in court. We'll have to fight it on whatever front comes up. We won the first time."
"He [Mr. Hale] seems to be debating the judge a little," said Jerome P. Baroch, Baltimore Bancorp executive vice president. "The judge has decided that they didn't win. . . . We feel very confident that with the leadership the bank has now, with the record the bank has, that we can retain the existing director group and retain control."
Expanding the board has become the centerpiece of a dispute (( between the company's incumbent management, led by Chairman Robert F. Comstock since former Chief Executive Officer Harry L. Robinson was dumped last month, and dissident shareholders led by Mr. Hale.
In May, the bank's stockholders voted to put six candidates selected by Mr. Hale on the existing 18-member board of directors. The voting also appeared to give the proposal to expand the board a 970,000-vote majority, in an election in which each stockholder had one vote for each share of stock owned.
The disputed votes were counted as abstentions by the firm that refereed the election, but the company's management said the votes should have been counted as voting against expanding the board. Without them, management's position lost by about 970,000 votes.
If the board is expanded, the dissidents will get the 10 new seats and gain control of the board. If it stays at 18, Mr. Comstock and the incumbents will remain in charge.
Mr. Baroch said the new vote is tentatively set to close Aug. 29 and will be open to the company's shareholders of record as of July 8. Because many shares have been bought and sold since the May election, the group of voters will be different, but both sides say the changes will be minor because the major holders of the company's stock have held on to their shares.