Four Oaks Fincorp Inc. and a shareholder are engaged in a proxy battle over a proposal to separate the North Carolina company's chairman and CEO roles.
Four Oaks said in its proxy statement this month that William M. Womble Jr., who owns 27,339 of the $1 billion-asset company estimated 7 million shares, has proposed that the bylaws be changed to require the chairman to be independent.
A vote is to be held May 10 at the annual meeting.
Womble, who said he began investing in the company in the 1990s, said in an interview Wednesday that his contest is not geared specifically toward existing management.
He said he feels strongly that the jobs aren't meant to be handled by one person at a company the size of Four Oaks.
"With all the complexity of the industry and everything going on from a regulatory perspective, one person can't wear both of those hats," Womble said.
In a letter attached to the proxy statement, Womble said that such separation would make risk management more effective and would let the occupants of the two posts fulfill their unique duties.
The company, however, disagrees and is advising shareholders to vote "no" on the proposal.
Four Oaks said it has appointed a lead director to serve as a strong, independent voice.
The bylaw amendment "would put into place a rigid, inflexible requirement that limits the board's ability to select the best and most qualified individual."
In a brief interview, Four Oaks Chairman and Chief Executive Ayden R. Lee Jr. said the proposal did not arise out of an acrimonious relationship with Womble.
"Shareholders have a right to advance their own agenda on the proxy," Lee said. "We will vote on it, and either way it goes, it is not going to be divisive to the organization."
J. Brennan Ryan, a partner in Nelson Mullins Riley & Scarborough LLP, said separating the chairman post from the CEO's role is common but having such a bylaw provision is rare.
Still, Ryan said, in this tough banking climate, shareholders are becoming more active.
"It is a sign of the times. In a down economy, it is not unusual to see shareholders calling for more oversight," he said.
