A proxy fight has broken out at a Cumberland, Md., thrift over its stock option plan and the makeup of its board of directors.
Shareholders of $330 million-asset First Financial Corp. of Western Maryland are receiving proxy materials this week from the company's largest shareholder, Seymour Holtzman, a bank investor based in Exeter, Pa.
"How can a company grant these sort of options after its first loss in 20 years and after its president has been on the job for only seven months?" Mr. Holtzman asked, adding: "I decided I was going to take whatever action I could to oppose this."
First Financial, the parent company of First Federal Savings Bank of Western Maryland, asserted that Mr. Holtzman had only his own interests in mind and was seeking a quick sale of the company.
"It upsets me that he can get away with some of the things he's been saying," said William C. Marsh, chief financial officer of First Financial. "We don't take it personally, but sometimes it's hard not to. To some degree, it undermines the credibility of the board and management in the community."
Mr. Holtzman, who owns 6% of the stock, has placed several advertisements in the local media. A newspaper ad features a drawing of three pigs in bankers' clothing, with the words: "Oink, oink, oink - Is it management or is it greed?"
Shareholders will decide for themselves at the company's annual meeting, scheduled for Oct. 26. About 10% to 15% of the stock is internally owned, Mr. Marsh estimated, and 15% more is held by institutional investors.
Mr. Holtzman said his main concern was over the stock option plan, which would grant another 230,000 shares to management, or 10% of the total outstanding shares.
Patrick J. Coyne, the company's chief executive starting last January, would receive options for 20,000 shares, and each director would get options for 7,000, he said.
Mr. Holtzman said such a plan was both dilutive and unwarranted given the company's $1.2 million loss for the fiscal year ended last June.
Company officials said the new management was in the midst of turning the company around and could not be blamed for the recent loss. Last quarter, for example, the company earned $801,000, a 29% jump from last year, the company reported. The option plan is needed to retain the professional management now in place, Mr. Coyne said.
Mr. Holtzman denied that he was seeking a quick sale of the company, though he seeks to place three directors of his choosing on the board.
