Dissident shareholders in former credit union Synergy Financial announced last week they had succeeded in getting two of the ex-credit union's long-time directors, who had been attacked as "greedy" by an investor group, including CEO John Fiore, voted off the board.
As a result of the rare boardroom coup-CEOs are rarely ousted as directors-two representatives of PL Capital, the credit union-convert's largest shareholders, will be seated on the nine-member board.
Officials at Synergy Financial would not comment last week.
PL Capital, which owns a 9.8% stake in the former credit union, has been waging a heated proxy contest over the past two months for board representation, claiming the incumbent board has used company profits to enrich themselves and top management at the expense of outside investors.
The investment firm, which has waged similar proxy contests at other small thrifts, claims that insiders at Synergy Financial, known until 1999 as Synergy FCU, have paid themselves more than $14 million in stock and cash compensation since taking the institution public in an initial public offering three years ago. That's roughly $2 million more than they have paid outside shareholders in dividends and exceeds the bank's net income for all three years combined.
They noted that Fiore was paid almost $4.5 million in stock and cash in the three years, and the directors were paid more than $500,000 during that time.
Fiore was the first credit union-turned-bank CEO to earn more than $1 million a year after converting his credit union. Documents filed with the Securities and Exchange Commission show Fiore earned $2.1 million in stock and cash in 2003, $1.8 million in 2004, and $630,000 in 2005.
Richard Lashley, a principal of PL Capital, acknowledged it is unusual for a CEO to be removed from the board in a proxy contest, but said he hopes his candidates can now work closely with the seven other directors. "Hopefully, they can all focus their efforts on enhancing Synergy's financial performance, improving corporate governance and maximizing shareholder value for the benefit of all of Synergy's shareholders," he said.
Ousted from the board along with Fiore was W. Phillip Scott, who was elected as director of Synergy FCU in 1996.
The two will be replaced by PL Capital's representatives, Daniel Spiegel and Daniel Eliades. Lashley emphasized the two new directors do not represent his or his company's interest, but those of all Synergy Financial shareholders.
Nancy Davis, the longest-serving director, first elected to the board of Synergy FCU in 1977, survived the boardroom coup and won one of the three seats contested.
