NEW YORK--(BUSINESS WIRE)--Driver Management Company LLC (“Driver”), the manager of an investment partnership that is the largest shareholder (holding more than 5% of the outstanding shares) of First United Corporation, (“First United” or the “Company”) (NASDAQ: FUNC), has sent a letter to John McCullough, First United’s Lead Director, demanding an explanation for the misleading voting information and irregular vote tallies in connection with First United’s 2010 proposal to declassify its Board of Directors (the “Board”). Visit www.RenovateMyBank.com to read the letter and obtain information about how to vote for change on the WHITE Proxy Card.
Abbott Cooper, Driver’s founder and managing member, commented:
“During the course of our investigation into First United’s poor corporate governance practices, we discovered a number of irregularities in connection with the Company’s proposal to declassify the Board that was voted on at the 2010 Annual Meeting of Shareholders of the Company (the “2010 Annual Meeting”). Last week, we sent a letter to John McCullough, First United’s Lead Director, demanding information about these irregularities, and we have yet to receive a response.
It is bad enough that shareholders have been stuck with a classified Board structure that reduces directors’ accountability to shareholders, despite the fact that more than 60% of all outstanding shares entitled to vote at the 2010 Annual Meeting were voted in favor of the Company’s declassification proposal. For First United to fail to explain obvious voting irregularities on a proposal that represents a best practice of corporate governance is outright offensive. It is equally offensive that First United touts a so-called ‘commitment’ to good governance even though it has never again taken the necessary steps to seek to declassify the Board.
We were also deeply troubled to discover that Mr. McCullough and the six other directors who remain on the Board today misreported First United’s ‘Say-on-Pay’ proposal votes in both 2009 and 2010, demonstrating yet another example of the Company’s apparent disregard for proper shareholder oversight.1 This inaccurate public disclosure – spanning two years – which was never corrected, was a serious blunder that allowed the Board and management to benefit as the Company appeared to effectively gift itself more votes in support of its Say-on-Pay proposal, to approve what we believe was excessive compensation for the Company’s executive officers immediately after the Great Recession. We find the Board’s pattern of ineffective oversight to be egregious, and we urge shareholders to reject the status quo of a Board that seems to habitually abuse shareholder rights while hollowly claiming it is committed to corporate governance.”
The following are just a few examples of First United’s disregard for shareholder rights:
- Hiding behind Maryland law as an excuse to deny Driver access to key information about how to contact shareholders (which we believe First United will use for itself leading-up to the upcoming annual meeting);
- Lobbying* the Maryland Commissioner of Financial Regulation to try to limit Driver’s ability to exercise its fundamental right to vote its shares of First United common stock;
- Attempting to mislead shareholders by falsely suggesting that Driver’s nomination of three highly-qualified, independent director candidates is invalid;
- Rejecting Driver’s good faith settlement offer and publicizing a misleading counter offer that would have isolated just one of our independent director nominees on First United’s eleven-member Board, and;
- Maintaining a litany of repressive governance practices that undermine shareholders’ rights, such as the right to vote for all directors annually, the right to act by written consent (other than unanimously) and the right to call a special meeting with less than 50% of the outstanding shares.
*Shareholders should know Carissa Rodeheaver, First United’s Chairman and CEO, is the Chairman of the Maryland Bankers Association, which focuses on engaging with “state legislators, industry regulators and public policy makers on a frequent basis, keeping them informed of our members' concerns […]” Shareholders should also know that one of First United’s law firms, Gordon Feinblatt, is a registered lobbyist for the Association.
About Driver Management
Driver employs a valued-oriented, event-driven investment strategy that focuses exclusively on equities in the U.S. banking sector. The firm’s leadership has decades of experience advising and engaging with bank management teams and boards of directors on strategies for enhancing shareholder value.
1 First United Corporation Proxy Statement, 2010: https://www.sec.gov/Archives/edgar/data/763907/000114420410016056/v178407_def14a.htm