The votes in the Compass Bancshares proxy battle were counted months ago, but that hasn't stopped the principal antagonists from continuing to bash each other.
"The election's over, but they don't want to leave it alone," complained former chairman and dissident director Harry B. Brock Jr., who failed to gain control of the Compass board in a proxy contest that ended April 11.
D. Paul Jones Jr., the Birmingham, Ala., company's current chairman and chief executive officer, reopened the wounds in a July 28 letter to shareholders. He complained that "the expensive and disruptive proxy fight" had "negatively impacted" first-quarter results.
Mr. Jones went on to take credit for a second-quarter earnings recovery that sent the stock price soaring to $32.75 a share in late July, from $25.75 on April 11. Mr. Jones chided the dissident shareholders for favoring a proposal to sell Compass to First Union Corp. for $30.71 a share late last year.
"We hope that all of our shareholders now understand why the board defended their interests so vigorously," Mr. Jones wrote.
Such language raises the hackles of Mr. Brock, who pointed out that First Union's stock price has also improved since April. Mr. Brock calculates that the original First Union offer - only a starting point had negotiations taken place - would be worth more than $35 a share to Compass stockholders today.
"We did the right thing," Mr. Brock insisted, referring to the proxy contest. "I've had very few people outside the senior executives of the bank tell me we did the wrong thing."
In a telephone interview Wednesday, Mr. Jones was unrepentant about his letter to the shareholders.
"I think it's worth pointing out to them that the stock has done well and earnings are on track but that the first quarter continues to be a drag on the yearly results," he said.
Compass' second-quarter earnings improved 13% from the same period of 1994, to $27.8 million. But first-half earnings of $52.1 million were up only 7%, reflecting proxy-related expenses.
Dean Witter analyst Christopher Martel attributed most of the recent gain in Compass' share price to continuing takeover speculation. He noted that Compass spiked upward in early July, after PNC Bank Corp. and NBD Bancorp were involved in major deals.
"It seems to lend credence to the idea that takeover speculation is going toward Compass as well," Mr. Martel said.
The analyst linked the continuing bad feelings between Mr. Jones and Mr. Brock to the fact that Compass management did not win the proxy fight by an overwhelming majority, despite the tactical advantages usually enjoyed by entrenched managers.
Mr. Brock managed to win the support of 42% of Compass shareholders because of an unexpectedly large voter turnout.
"We think that's a sign there's a lot of pressure for Compass to do something - even to look at other possibilities to be taken out by other players," Mr. Martel said.
Mr. Brock certainly hopes the Compass board will change its mind and seek a "larger partner." Meanwhile, he said, he intends to remain on the holding company board until his term expires in the spring of 1997.
In alliance with two other directors, one of whom is his son Stanley, Mr. Brock can still block the 11-member board from achieving the 80% majority required to elect new directors and amend the bylaws.
But Compass doesn't make it easy for him. Mr. Brock, who helped found Compass in 1963, has been kicked off the board of the lead bank and banished from all committee assignments at the holding company level.
Mr. Brock complained that Compass management has also put obstacles in the way of his other son, Harry B. Brock 3d, who has been trying to organize a hedge fund to invest in bank stocks.
"It hasn't gotten off the ground because they've made a threat that they would take that as a violation of the bank's code of conduct and ethics," Mr. Brock said. The younger Mr. Brock, known as "Buck," had planned to invest in community banks that are potential takeover targets, and he enlisted his father as an adviser. But that raises potential conflict of interest problems for the elder Mr. Brock, since he remains a Compass director and Compass has been an active acquirer of community banks in Texas and Florida.
Unfortunately, Buck Brock would have great difficulty marketing the fund without help from his well-known father.
Compass general counsel Jerry W. Powell said the question of Buck Brock's proposed fund is "all balled up in one dispute in terms of Harry's activity as a director." The elder Mr. Brock still has a lawsuit against the bank relating to the failed proxy fight.
"Once you've filed a lawsuit, it doesn't just narrow down to one, two, or three little points," Mr. Powell said. "It basically covers the entire relationship, and that fund is part of the entire relationship."
