Wednesday, April 21, 2010

CFS Bancorp Meeting, April 27

CFS Bancorp, the Indiana-based holding company that operates Citizens Financial, holds its annual shareholder meeting in less than a week.

A proxy contest is underway, because PL Capital Group, which owns 9.9% of the common stock, wants to put John Palmer on the board.

The company has received some assistance of late, because Glass Lewis has recommended a vote in favor of the election of the board's nominees. Glass Lewis says "we are not convinced that the Dissident should be elected to the CFS Board."

Glass, Lewis & Co. serves institutional investors that collectively manage more than $17 trillion in assets, and conducts research focused on the long-term financial impact of investment and proxy decisions. In its report, Glass, Lewis, speaking to one of the contested issues behind the proxy fight, said that it considers the retention bonuses paid by issuer to be appropriate, "given the company's reasonable pay-for-performance and the cancellation of cash bonuses despite [named executive officers] meeting portions of their individual performance objectives."

One of the issues here involves the charge of nepotism. The chairman of CFS is Thomas Prisby. The company employs two of his children -- Michael and Sandra Prisby. But Glass Lewis writes soothingly, "we do not feel that the Dissident's intent to eliminate all related party transactions, including the employment of Michael and Sandy Prisby are in the best interests of shareholders in this case."

Another proxy advisory group has taken the opposite side. Proxy Governance has written, “Given the other significant issues the dissidents have raised about the board’s attention to important governance details – the structure of certain bonus programs even as shareholder value plummeted, and the board’s acceptance of unnecessary related party transactions with the CEO’s direct family members – we believe shareholders will be best served by electing the dissident nominee, J. Palmer.”

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