Dissident Gets Institutional Investor's Backing, But May Still Fall

Dissident director Harry B. Brock Jr. enters today's Compass Bancshares proxy vote with a significant block of institutional stock on his side. But whether that will be enough to boost him to victory remains unclear.

Mr. Brock is trying to win control of the Birmingham, Ala.-based company's board. His campaign had been considered a long shot, given the resources an entrenched management can bring to bear.

But Mr. Brock released a memo late last week from the portfolio manager of the John Hancock regional bank funds saying the three funds had decided to vote their 785,000 shares against management. With 37 million Compass shares outstanding, the Hancock bloc provides Mr. Brock with an additional 2% on top of the 7% that he and his supporters hold. The portfolio manager could not be reached for comment.

Analysts who follow Compass were skeptical that the Hancock shares would tip the balance in Mr. Brock's favor.

"It's a significant bloc," said Raimundo C. Archibold of First Manhattan Co. "But even if Mr. Brock got all the institutional holders, that's only 21% of the stock."

Also on Friday, Mr. Brock said he had the support of former board member Thomas E. Jernigan, who has 501,075 shares and Mentor Partners, which has 183,000 shares.

The fact that officers, directors, and employees own about 40% of Compass stock gives management an advantage. Mr. Brock's critical task has been to win control of the 40% in retail hands, which is "more difficult to corral," Mr. Archibold noted.

Mr. Brock has said he would seek a buyer for Compass, which has $9.1 billion of assets, if he is successful in convincing shareholders to vote for his three director nominees instead of the ones proposed by management.

Mr. Brock on Friday issued a statement claiming that First Union Corp. was still interested in acquiring Compass. At Mr. Brock's solicitation, First Union last fall made a $30.71-a-share offer for Compass that was subsequently withdrawn at the request of Compass' management and board.

First Union declined comment Friday. But Mr. Brock said the North Carolina bank had authorized him to make the statement.

Compass chairman and chief executive D. Paul Jones Jr. characterized Mr. Brock's release as "a desperate ploy."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER