Two proxy advisory services have recommended against a proposal for Hampden Bancorp (HBNK) in Springfield, Mass., to explore a possible sale.
A shareholder proposal requests Hampden to "explore avenues to enhance shareholder value through an extraordinary transaction … including, but not limited to, selling or merging Hampden Bancorp with another institution," according to a proxy statement the $611 million-asset company filed with the Securities and Exchange Commission this month.
The proposal argues that "current management has not been able to achieve acceptable returns since the public offering in January of 2007" and that return on equity has been below 4% every fiscal year that the company has been public.
Hampden reported in August that it had earned $3 million, up almost 130% from the previous year, for its fiscal year that ended June 30. Total stockholder equity declined almost 7%, to $87.2 million.
"Hampden remains committed to maximizing the company's value for all stockholders," Hampden said in a news release. "This commitment has been demonstrated in part by our quarterly dividend, by our periodic stock buyback programs, by investments in new technology and by recent improvements at various Hampden branches to enhance efficiency, support expanded services and position Hampden Bancorp for growth and long-term profitability that will enhance stockholder value."
Both Glass Lewis & Co. and Institutional Shareholder Services recommended against the proposal last week in reports, Hampden said Friday.
Glass Lewis said that it thought "decisions about the strategic sale of assets, or the corporation as a whole, are best left to management and the board, absent a showing of egregious nonfeasance or a specific proposal that has been ignored," according to Hampden.
Although Hampden's one-year shareholder return had underperformed its peers and the Russell 3000 index, its long-term total shareholder return had remained strong, ISS said, according to Hampden.
"As this point, while we acknowledge some performance concerns cited by the proponent, on balance, we do not believe that the proposal is in shareholders' best interests. Nevertheless, shareholders are encouraged to closely monitor the company's performance going forward," ISS said, according to Hampden.
The proposal was submitted by two people who jointly own less than 1% of the company's common stock at June 30, according to the proxy filing. Shareholders will vote on the proposal at Hampden's annual meeting on Nov. 6.