26 Aug, 2022

Blue Foundry shareholders approve incentive plan in face of activist opposition

Blue Foundry Bancorp shareholders approved the company's 2022 equity incentive plan despite an activist's push for them to strike down the proposal.

At the company's annual meeting on Aug. 25, shareholders signed off on the incentive plan with 14,542,821 votes for the measure compared to 5,904,318 against.

Activist investor Lawrence Seidman in June launched a proxy contest against the bank, urging shareholders to strike down the incentive plan on the basis that senior management and directors "are not entitled to receive these awards now" given the company's underperformance, according to his June 21 letter. Seidman specifically pointed to Blue Foundry's recent decline in tangible book value and profitability metrics like the company's net income and efficiency ratio.

Blue Foundry reported net losses throughout 2020 and 2021. The company reported net income of $40,000 in the most recent quarter and $553,000 in the first quarter, according to S&P Global Market Intelligence data.

Compass Point analyst Laurie Hunsicker was not surprised the measure passed despite the activism campaign, she wrote in a note following the shareholder meeting. However, Hunsicker acknowledged that Blue Foundry's core profitability "remains challenged" despite being one year out from the company's IPO.

The company's "return-to-profitability story" will be driven by growth and expense containment, the analyst wrote, but if management is unable to return Blue Foundry to profitability, "the franchise could still represent a desirable acquisition candidate" considering its strong position in the attractive northern New Jersey market.

Regulatory rules prohibit companies that recently converted from mutual to stock from selling until three years after their IPO. Blue Foundry completed its conversion in July 2021.

Also at the Aug. 25 meeting, shareholders approved two other measures: the reelection of three directors and the appointment of KPMG LLP to serve as the company's independent registered public accounting firm for the fiscal year ending Dec. 31.