A battle between the Student Loan Marketing Association and dissident shareholders has landed in court, with each side accusing the other of impropriety in last week's fractious proxy contest.
Litigation is the latest offshoot of management's proposal to privatize the government-sponsored enterprise. Dissidents contend the move is unwarranted, and last week claimed victory in a proxy battle to elect directors supporting that view.
On Tuesday, Sallie Mae Tuesday petitioned the U.S. District Court for the District of Columbia to block the election of dissident directors. The law firm of Skadden, Arps, Slate, Meagher & Flom is representing the agency, whose petition follows close on the heels of a suit filed by a leader of the dissident group last Friday.
The suit by Albert Lord, the former chief operating officer who led the slate opposing the company's privatization agenda, charged that Sallie Mae closed the polls early at last Thursday's annual meeting, thus disallowing 7 million votes that would have been voted against management.
Of the 21 directors on Sallie Mae's board, seven are presidential appointees, and 14 are elected by shareholders.
Mr. Lord originally advanced a slate of four dissident directors. But when support swelled behind his group, he changed the number to eight. The former executive last week claimed his group won six seats, but on Tuesday he declared that all eight candidates had won.
On the other hand, Sallie Mae claims that many of the proxies voted for Mr. Lord's group were earmarked only for the four original candidates. By doubling the field of candidates, Sallie Mae contends, Mr. Lord solicited - and counted - votes in a misleading manner.
In an interview, Mr. Lord agreed that four-director proxies should not be counted as a vote for eight, but claimed an appraisal of the balloting would bear out his contention all eight candidates won.
"Why Sallie Mae felt the need to sue me, I don't know," he said. "This is the day and age of running the meter on the lawyers and that is what you do when things don't go you way."
Mr. Lord launched his antiprivatization effort in early April. The company's stock fell from $75 a share in early 1993 to a low of $31.375 earlier this year. It closed at $47 Tuesday.
Much of the trading decline is attributable to concerns about the Clinton administration's direct lending program, which potentially would all but supplant Sallie Mae.
The company's chief executive, Lawrence Hough, proposes privatizing Sallie Mae, so as to diversify its operations.