The war of words and budding proxy fight at Compass Bancshares escalated to new heights of bitterness as the bank's founder and now dissident director was evicted from his company-supplied office.
Meanwhile, the stock price of the Birmingham, Ala.-based bank soared as investors placed their bets on a potential takeover by a larger bank.
Harry B. Brock Jr. launched his attempt to take over control of the 12- member Compass board on Friday by filing a list of three nominee directors with the Securities and Exchange Commission. A local newspaper reporter caught Mr. Brock the next day packing boxes in his office in Compass' operations center, also known as the Harry B. Brock Banking Center.
"I can identify with people who get their lights cut off and get evicted from their apartments," Mr. Brock told the reporter.
Compass chairman and CEO D. Paul Jones Jr. had no apologies on Tuesday. "Once Mr. Brock began to wage war against the board, it wasn't appropriate to fund him in doing that," Mr. Jones said.
The brouhaha at Alabama's fourth-largest bank has certainly excited some investor interest. On Friday, when Mr. Brock announced his plans to force a sale of the $9 billion-asset company, the stock soared 13% to $26.375, the bank sector's biggest gainer for the day.
By Monday, some profit taking had pushed the price back down 50 cents to $25.875 a share.
Dean Witter analyst Anthony R. Davis downgraded Compass from "buy" to "neutral" in the belief that Mr. Brock's challenge "will probably be unsuccessful. Based on the past performance of the current management team, we doubt a majority of shareholders would choose to side with Brock," he wrote in a report issued Monday.
Compass ended 1994 with record earnings of $99.7 million, up 11% from the previous year, its seventh consecutive annual gain. Since April 1991, when Mr. Jones assumed control of the company from Mr. Brock, Compass' stock has appreciated 102%, compared with 78% for the Dean Witter regional bank universe, according to Mr. Davis.
The conflict is expected to come to a head at Compass' annual shareholders' meeting, which is likely to occur in April or May. Until then, Mr. Brock has his work cut out for him.
"The ability to go after entrenched management in a financial institution is enormously difficult," said Walter Moeling 4th, an attorney with the Atlanta firm of Powell Goldstein Frazer & Murphy.
"It's hard for me to think of a situation, in a publicly traded company, where a majority of the board and management has actually been thrown out in a contested proxy statement, at least recently," added Mr. Moeling, who has represented bank clients in proxy battles.
In fact, dissident challenges failed in two of the most high-profile proxy fights to develop in recent years - at UJB Financial Corp., Princeton, N.J., and Farmingham Hills-based Michigan National Corp. One of the few victories was won in 1992 at Baltimore Bancorp., helped by the fact that institutions held 50% of the bank's shares.
Similarly, the key to the fight at Compass, in Mr. Moeling's view, is whether Mr. Brock can enlist the support of another block of Compass stock larger than the 5% he and his supporters appear to control.
"What Mr. Brock must really have is some idea that there will be a significant other block of stock out there that supports him. This block may come from institutional investors, it may come from former shareholders of institutions acquired by Compass. Those two blocks can make a lot of difference."
Unfortunately for Mr. Brock, total institutional ownership of Compass is only about 20%, excluding the company Employee Stock Ownership Plan. It is not known how many shares are still controlled by shareholders of banks that Compass acquired.
"It's fair to say that unless Mr. Brock gins up some support we don't see yet, he's not going to get this done," Mr. Jones said.
