Compass Bancshares issued a "fight letter" to its shareholders last week, asking them to reject a proxy challenge from founder and director Harry B. Brock Jr.
Mr. Brock had issued his own fight letter earlier in the month. He is attempting to replace three Compass directors with his own nominees and take control of the 12-man board, with an eye to selling Alabama's fourth- largest banking company.
The Compass response was filed with the Securities and Exchange Commission and then mailed out late last week. It accuses Mr. Brock of trying to "assert control of the board and to bully the members into pursuing his agenda."
"In spite of the company's respect for and long affiliation with Mr. Brock, we find that his current activities have placed us in the uncomfortable position of having to take a stand against his behavior," adds the statement, which is signed by chairman and chief executive D. Paul Jones Jr. and six other Compass directors.
"This is the first time that the board's points against Mr. Brock have been laid out in detail," said Compass spokeswoman Ellen Laden.
The fact that the letter came with only six director signatures, including that of Mr. Jones, also emphasizes the split created by Mr. Brock's challenge. Mr. Brock, himself a director, has gained the public support of two other board members: his son, Stanley, and G.W. "Red" Leach Jr.
The swing votes on the board had been held by Thomas E. Jernigan and Garry N. Drummond Sr. When Mr. Jernigan resigned his seat last month, Mr. Drummond was left by himself in the neutral corner.
Ms. Laden said Mr. Drummond was out of town and "unavailable" at the time the letter was being prepared. "To the best of our knowledge, he has not taken a public position on either side," she added.
Mr. Drummond did not return calls Friday.
Dated March 9, the seven-page Compass letter devotes a lot of ink to Mr. Brock's well-publicized effort to solicit takeover bids for the bank last fall. Charlotte, N.C.-based First Union Corp. responded in October with an offer of $30.71 a share, which was subsequently withdrawn. The letter lays out arguments from Compass' investment banker, CS First Boston Corp., saying that Compass shareholders can expect to receive a better price at a later time.
The letter adds: "No one is foreclosing a sale or strategic merger if it makes sense."
