Jefferson Savings Bancorp's largest shareholder's continuing battle with management now has her fighting for a proposal to sell the company.
Mary Kathryn Drake, who owns just under 10% of the St. Louis-area company's stock, last April aired several complaints about the company at its annual meeting, including lack of representation on Jefferson's board, the level management salaries, and the absence of a stock dividend.
Now, Mrs. Drake, of League City, Tex., wants the Ballwin, Mo., company to add a proposal seeking a buyer to its proxy statement, to be voted on at its upcoming annual meeting.
And the staff of the Securities and Exchange Commission, acting on an inquiry from the bank, refused to rule out taking enforcement action if the proposal were omitted from the proxy statement.
Jefferson Savings executives and a lawyer for the company, which owns $1.1 billion-asset Jefferson Savings and Loan Association, did not return phone calls made to learn whether it would include the proposal in its proxy statement.
If it does, it can add its own response. And even if approved by shareholders, the sale proposal wouldn't be binding to management.
Still, "I think it would send a message to the management and that they would respond accordingly, assuming that it's successful," Mrs. Drake said in an interview.
She said a yes vote would be a step toward maximizing shareholder value.
Mrs. Drake says consolidation in the industry will make it harder for Jefferson to compete. "Time is of the essence" for Jefferson to look for a buyer, her proposal says.
Mrs. Drake and her attorney, Thomas Litz of Thompson & Mitchell, St. Louis, said Jefferson Savings cited several reasons for excluding the merger proposal.
Mr. Litz said Jefferson argued that Mrs. Drake was avenging a personal grievance related to her earlier attempts to get a seat on the board. He also reported that the company claimed it had tried to find merger partners and said it would consider merger proposals submitted to its board.
But Mrs. Drake said she isn't seeking the vote to get on the board. She also said that considering proposals is not the same as actively seeking a merger, and that Jefferson's management had publicly said it did not intend to sell.