Elmwood Park, N.J.-based mutual Spencer Savings Bank SLA extended a 14-year legal battle over control of its board of directors by appealing a recent court decision allowing activist investor Lawrence Seidman to more easily float his own candidates for board election.
Seidman has argued that Spencer Savings Bank, with $2.7 billion in total consolidated assets as of Dec. 31, 2017, has tried to put "roadblocks" in his efforts to run people for the board of directors by setting a high threshold for a member-initiated nomination. The litigation has gone back and forth over where the bar should be, but the most recent requirement for a member to nominate a candidate was 10% of the membership. Seidman maintained that the threshold was too high to allow a member to legitimately oppose the incumbent directors, but Spencer Savings Bank countered that Seidman had no evidence that the 10% threshold was unattainable. Spencer Savings Bank told the court it wanted to protect its mutuality and feared that lowering the bar would allow "raiders" to take control of a company and convert the association into a stock formation.
Seidman's legal team instead advocated for the standard used by credit unions: the support of the lesser of 1% of the membership or 500 members.
Based on documents Seidman provided to S&P Global Market Intelligence, the Superior Court of New Jersey ruled that there was no evidence of "chaos or instability" that would result from lowering the 10% threshold. Judge Bruno Mongiardo therefore ordered the installation of the credit union standard, thus lowering the bar for Seidman to nominate his own candidates for the board.
An appeal document provided by Seidman shows that Spencer Savings Bank appealed the court decision Jan. 12, 2018.
"Mr. Seidman has waged a costly, time-consuming 14-year battle purely for his financial gain and for the financial gain of his colleagues," Spencer Savings Bank said in a statement. "Spencer Savings Bank will continue to put the interests of our members and communities first, and defend itself against Mr. Seidman's predatory attacks."
In an interview, Seidman said the appeal still blocks him for the time being from floating his own candidates for the board, which he wants to do. He said he does not want to convert the company's mutual structure, as was argued, but expressed disappointment over the leadership of Chairman, President and CEO José Guerrero. Seidman alleged that Guerrero once manipulated an elderly director, one he argues "really shouldn't have been allowed" to serve on the board, in order to survive a vote over his leadership of the company.
"This is a company that has gone out of their way to bar corporate governance," Seidman said.
