Dissidents' victory claim disputed Baltimore Bancorp's management attacks dissidents' claim.


Six days before all ballots are due, dissidents trying to take over the board of Baltimore Bancorp are claiming victory -- a claim that was immediately challenged by the bank's management.

Shortly after the 2 1/2 -hour annual meeting yesterday, Edwin F. Hale Sr., leader of the dissident group, issued a press release saying a preliminary tally of results indicates his slate of candidates got a majority of the shareholder votes and was "duly elected."

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. Hale would become chairman of the bank holding company if he is successful.

Harry L. Robinson, chairman and chief executive officer of Baltimore Bancorp, issued a statement late yesterday attacking Hale's claim. "We believe it is a violation of [the] Securities and Exchange Commission's rules for anyone to predict the outcome of this election before the polls close on Tuesday afternoon. We are therefore constrained from making a victorious statement and we believe it is a blatant disregard for the rights of shareholders who either haven't voted yet or who may change their vote to do so," he said.

A preliminary count by the bank's management indicates that it has a majority of the votes, according to Jerome Baroch, senior executive vice president for Baltimore Bancorp. However, he cautioned that it is difficult to tell because of the ability of shareholders to revoke ballots. "At this point, nobody knows," Baroch said.

The dissidents' claim of victory also depends on their being victorious in court on the issues of what percentage of the shareholders' vote is necessary to enlarge the board and whether the company can extend the voting period.

Despite the victory announcement, Hale's group would not disclose how many votes it had collected in proxies before the meeting. "Those numbers will be filed with the courts," said Daniel H. Burch, executive vice president of Dewe Rogerson, a New York solicitation firm representing the dissidents. After being pressed, however, Burch said the dissidents have well over 5 million of the 12.8 million outstanding shares.

The dissidents estimate that 9 million to 10 million votes were cast before and during the meeting.

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. The winner needs a majority of the votes cast.

The Hale group's effort is dependent on getting solid support from the 40 institutional investors who control about 35 percent of Baltimore Bancorp's 12.8 million outstanding shares. Burch claimed that he did not know of one institutional investor voting for management.

Yesterday's annual meeting was preceded by Hale holding a press conference to denounce Baltimore Bancorp's decision on Tuesday to extend the voting until noon next Tuesday.

Under the arrangement, yesterday'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.

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."

In a press release after the meeting, the Hale group said it would be mounting a legal challenge to the extension of voting.

During the annual meeting, lawyers for Baltimore Bancorp said the extension grew out of a request by the SEC 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 also challenging a provision in Baltimore Bancorp's bylaws that would require an 80 percent vote of shareholders to change the size of the board. Unless dissidents are successful in overturning that provision, it is unlikely they will be able to get a majority on the board.

Only six of the board's 18 members are up for election. To gain a majority of the board, the Hale group is trying to increase the board by 10 positions and then elect 16 new members.

In his speech to the annual meeting, Robinson emphasized that the bank was able to remain safe, sound and profitable during 1990 despite the problems of major banks in the area. The bank has been profitable for the last 40 years. He particularly pointed to an increase of $80 million in deposits during September, October and November of last year as other area banks were experiencing problems. "That was the largest gain we have ever had," he said.

In an indirect reference to his opponents, Robinson said the "high-risk banking we saw in the 1980s is over," and that regulators are looking for more caution. "We look to the future with great care," he said. "Ladies and gentlemen, your bank is a strong bank," Robinson said, finishing his speech to the applause of many of the shareholders.

The meeting at the Sheraton Inner Harbor Hotel was attended by more than 500 people. Shareholder comments were equally divided between supporters and opponents of the bank's current leadership.

One shareholder asked repeatedly how the increase in Robinson's salary compared to the company's earnings over the last five years. Robinson said he would provide the answer to the shareholder later, saying he could not make those calculations in his head.

Robinson received $368,076 in cash compensation last year, according to the bank's proxy statement.

Charles H. Whittum Jr., one of the members of the Hale group, told the annual meeting that the record for Baltimore Bancorp has been "poor" and the outlook is "bleak" for the bank. "Here you have a chance and we ask for your support," he said.

Whittum, 61, who is a retired executive from Signet Bank, would replace Robinson as chief executive officer if the dissidents are successful.

Besides Hale and Whittum, Hale's slate includes an employee of the state port agency, a former Baltimore County executive and two political allies of Gov. William Donald Schaefer.

AThe state employee is G. Gregory Russell, the director of finance for the Maryland Port Administration, the agency that oversees a large part of the operation and development of the Baltimore port.

Another candidate is Dennis F. Rasmussen, who lost his bid for another term as Baltimore County executive in the last election. He is now self-employed as a consultant.

Thomas T. Koch, a fund-raiser for Schaefer and president of Curtis Engine & Equipment Inc. in Baltimore, will also be trying to get on the board. Another person well connected with the governor is Robert A. Pascal, appointment secretary and adviser to Schaefer. He is also the former Anne Arundel County executive, and chairman of United Propane Inc.

The other 10 candidates on the Hale slate are:

* Paul G. Hays Jr., president of Pat Hays Buick Inc., a Baltimore automobile dealership.

* Melvin S. Kabik, a retired supermarket executive and now a private real estate investor.

* Herbert F. Lee, retired vice president of Meridian Healthcare Corp.

* Barry B. Bondroff, president and managing director of the managing consulting firm of Grabush Newman & Co.

* Richard E. Fasold, president of Treasury Bank in Washington.

* Dr. David S. Hungerford, professor of orthopedic surgery at Johns Hopkins Hospital.

* Charles J. Kelly Jr., chairman of the Washington investment group, Capital Strategy.

* R. Andrew Larkin Jr., president of Maryland Realty Investment Corp.

* J. Richard Leon, president of James Madison Mortgage Co.

* David D. Smith, president of Sinclair Broadcast Group Inc., owner of television station WBFF.

The six Baltimore Bancorp directors standing for re-election are:

* Charles T. Albert, a member of the Baltimore law firm of Piper & Marbury.

* L. Patrick Deering, chairman of Riggs, Counselman, Michaels and Downes Inc., a Baltimore insurance agency.

* George B. Hess Jr., vice president of the Joseph Meyerhoff Fund, a local foundation.

* W. Clark McClelland, senior vice president of the Hechinger Co., the Washington-based retail chain.

* Theo C. Rodgers, president of A&R; Development Corp., a real estate developer.

* Rodney G. Stieff, director of the Kirk-Stieff Co., a Baltimore silversmith, and a director of Waverly Inc., a Baltimore publishing and printing firm.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad