Sometimes even proxy advisory firms can't agree on the best way to run a bank.
Consider the case of Hampden Bancorp (HBNK), a $696 million-asset thrift in Springfield, Mass., that's in the midst of a proxy fight with a Texas hedge fund. Three advisory firms Egan-Jones Proxy Services, Institutional Shareholder Services and Glass Lewis have issued conflicting recommendations on how shareholders should vote at Hampden's annual meeting Tuesday.
Clover Partners, a Dallas activist investor group that controls 7.9% of Hampden's shares, nominated two directors to Hampden's board and wants the thrift to seek a buyer, saying management is overpaid and the bank has underperformed its peers. ISS and Glass Lewis say Clover's proposals have merit and recommended that shareholders cast votes for Clover.
"The dissident's claim of lackluster share price performance prior to shareholder pressure to pursue sale seems to have merit," ISS said in an Oct. 22 report.
Additionally, Hampden's management made an error when it seemingly ignored a shareholders' nonbinding vote last year, which urged the company to explore strategic alternatives, ISS said.
"There is a lack of convincing evidence and disclosure that the board acquiesced to shareholders' demands by meaningfully pursuing a review of strategic alternatives," ISS said.
"The dissidents have made a case that increased board oversight is warranted," ISS said.
On the other side, Hampden management submitted its own slate of four board nominees and said in an Oct. 29 proxy filing that Clover's attempts to force a sale "is the wrong path and is not in the best interests of Hampden shareholders."
Egan-Jones recommended shareholders back management, whose "strategic plan appears to be bearing fruit," the firm said in an Oct. 23 report. The strategic plan is being led by Glenn Welch, who was hired on Jan. 1 as Hampden's chief executive.
Egan-Jones also criticized the process that Clover used to assess the need for Hampden to sell itself. Clover can't determine whether shareholder value can be maximized through a sale just by "looking at average prices in past transactions involving companies that may have no similarities" to Hampden, Egan-Jones said in its report.
Hampden's management, in its own proxy filings, said that Clover has "misrepresented [its] total shareholder return, financial performance" and executive compensation to try to force a sale.
Hampden's largest shareholder is an employee stock-ownership plan, which holds about 10.9% of the company's stock. The ESOP was created in 2007 when Hampden converted from a mutual to a stock holding company.
Hampden's annual meeting is scheduled for 10 a.m. ET at the Sheraton Springfield Monarch Place Hotel in Springfield, Mass.