CONCERNED REPUBLIC FIRST BANCORP DIRECTORS OPPOSE POTENTIAL HARMFUL ACTIONS BY OTHER COMPANY BOARD MEMBERS
The Concerned Directors of Republic First Bancorp (NASDAQ: FRBK) issued a statement urging the incumbent board members to refrain from actions they believe could harm the company and shareholder value. They requested that proposed related party transactions, including a retainer for an architect firm linked to Chairman Vernon Hill's wife and amendments to executive contracts providing enhanced severance, be postponed until after the upcoming annual shareholder meeting. The Concerned Directors warned that these actions could jeopardize senior management retention and breach fiduciary duties.
- Potential for improved governance if Concerned Directors' recommendations are adopted.
- Proposed actions could lead to costly severance payments and risk retaining senior management.
- Concerns over conflict of interest related to related party transactions.
- Potential legal violations under Pennsylvania law if proposed actions proceed.
NEW YORK, March 4, 2022 /PRNewswire/ -- A consortium of concerned directors (the "Concerned Directors") of Republic First Bancorp, Inc. (NASDAQ: FRBK) (the "Company") today issued the following statement in an attempt to dissuade certain incumbent members of the Company's board of directors (the "Board") – Vernon Hill, Theodore Flocco, Barry Spevak and Brian Tierney – from proposing or approving actions that the Concerned Directors believe would be harmful to the Company and a number of constituent groups, which might destroy shareholder value.
Proposed Related Party Transactions Could Harm the Company
The Concerned Directors request that the following proposals be tabled until after the upcoming 2022 annual meeting of shareholders (the "Annual Meeting"):
- Extension of a related party agreement providing a retainer for a company owned by Chairman and Chief Executive Officer Vernon Hill's wife for architecture, interior design and related services;
- Agreements obligating the incurrence of expenses related to the opening of new branches and the renovation of existing branches; and
- Most critically, proposed amendments to certain employment contracts that would provide significantly augmented severance payments to, and risk retention of, key executives should Mr. Hill be voted off the Company's Board at the upcoming Annual Meeting or cease to serve as CEO.
The Concerned Directors wish to make clear that, in manipulation of proper governance processes, certain of these actions already have been approved by directors of the Company's primary subsidiary. The Concerned Directors do not believe that the majority of the subsidiary's directors are fully independent. In other instances, transactions have been approved by Board committees in order to sidestep a review by the full Board.
Following the Annual Meeting, the Concerned Directors believe the Board should reassess any related party transactions with individual directors and insiders, including agreements with outside advisors or service firms.
The Company Must Avoid Jeopardizing the Retention of Senior Management
The Concerned Directors understand that proposed amendments to executive compensation agreements might revise the definition of "Change of Control" to include the circumstance where "Vernon Hill ceases to be either the Chairman of the Board of Directors of the Company, or ceases to serve as the Chief Executive Officer of the Bank."
The Concerned Directors strongly disagree with such amendments, which they believe would:
- Trigger costly change of control severance payments to key executives, including the Chief Financial Officer, Chief Credit Officer, the President and Chief Operating Officer, and the Chief Risk Management Officer; and
- Put retention of virtually the entire senior management team at risk.
These issues are especially significant given the Company is embattled with dissident shareholders who have nominated individuals for election to the Board at the Annual Meeting to replace Mr. Hill as well as Theodore Flocco and Barry Spevak, who comprise the majority of a three-member Compensation Committee, which would need to approve any executive compensation arrangement amendments.
The Concerned Directors believe any amendments to executive compensation agreements that would provide severance should Mr. Hill not win reelection to the Board are both punitive and potentially damaging to the Company and the Board. Such amendments must be tabled immediately to avoid Board entrenchment and a breach of fiduciary duties.
Adopting the aforementioned proposals could constitute serious legal violations, given that any thinly-veiled attempt to provide a management slate of nominees with an advantage and to undermine a dissident's election and proxy efforts is inequitable and impermissible under Pennsylvania law. Significantly, adoption of these proposals would likely impose direct costs on all shareholders, some of them potentially irrevocable, by way of blatant self-dealing for personal benefit.
Conclusion
The Concerned Directors implore current Board members Vernon Hill, Theodore Flocco, Barry Spevak and Brian Tierney to do the right thing and forego proposing or acting on any material corporate actions, including those enumerated above, until after shareholders have spoken at the Annual Meeting.
The Concerned Directors urge shareholders to take full heed of ongoing Company news and remain vigilant of the Board's potentially destructive actions.
About the Concerned Directors
Andrew B. Cohen, Lisa Jacobs, Harry Madonna and Harris Wildstein have served as members of the Board or Chairman Emeritus of the Company since as early as 1988. Mr. Madonna is the Founder of the Company and previously served as Chief Executive Officer of the Company, as well as Chief Executive Officer and Chairman of its subsidiary, Republic Bank.
Media Contacts
Gasthalter & Co.
Jonathan Gasthalter/Amanda Shpiner
212-257-4170
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SOURCE The Concerned Directors of FRBK
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