Vernon Hill sues Republic First after ouster as chairman
Vernon Hill is not going down without a fight.
The death last week of an ally among Republic First Bancorp’s directors deprived Hill, the $5.6 billion-asset company’s embattled CEO and until recently its chairman, of parity on the board, but he appears prepared to use his remaining influence and litigation in a bid to retain control.
Indeed, Hill filed suit Tuesday in U.S. District Court for the Eastern District of Pennsylvania seeking a temporary restraining order to block Republic First’s board, now chaired by Harry Madonna, from conducting business without a quorum, communicating with employees of the bank, or “taking any other actions that will disturb the status quo on the board of directors, at the company or its subsidiaries.”
Bloomberg News
Madonna founded Philadelphia-based Republic First in 1987. He served as chairman from 1998 until 2016, when he ceded the position to Hill, and as CEO until February 2021, again making way for Hill.
The case is being heard by U.S. District Judge Paul Diamond, who on Friday ruled against an activist investor who was seeking an order to compel Republic First to hold its annual meeting, which was originally scheduled for May 10. Diamond scheduled a hearing on Hill’s motion for late Tuesday but has yet to issue a ruling.
New York activist investor Abbott Cooper, who filed the suit involving Republic First’s annual meeting date, said Friday’s result was “wrong on the facts and the law” and added he expects to file a notice of appeal as early as Wednesday.
Cooper called the situation at Republic First “an absolute mess,” and said shareholders “have to be allowed to weigh in.”
Confronted by a pair of activist investor campaigns — one led by Cooper, the other by prominent New Jersey insurance executive George Norcross and former TD Bank President and CEO Greg Braca — Hill has been the subject of a number of legal actions the past six months. Meanwhile, Madonna has led a board faction hostile to Hill.
Tuesday’s action was the first suit initiated by Hill, who did not mince words characterizing the motives of his antagonists.
Hill asserted the Madonna-led board faction “has been waging a campaign to force out [Hill] and seize control of the company, so they can sell it at any price.” Hill’s filing further alleges that Madonna “was simply failing in his role” as chairman and CEO in 2008, when Hill began his connection with Republic First, agreeing initially to act as a financial and strategic consultant.
Hill still must clear several steep hurdles if he is to retain his job as CEO and possibly return as chairman. Driver Management, where Cooper is founder and managing member, has nominated three director candidates and the Norcross-Braca group has pledged to support them. Together the two groups control nearly 11% of Republic First’s outstanding shares.
The Norcross-Braca group, moreover, was quick to demonstrate its backing for the board’s action late Friday ousting Hill as chairman and reinstalling Madonna. On Monday, the group announced it had withdrawn two lawsuits it filed in March, one seeking to compel the company to produce its books and other financial records for inspection, and the other to prevent Hill and his allies on the board from amending employment contracts of the company’s senior management team to provide substantial severance payments in the event Hill was forced off the board or removed as CEO.
Hill’s suit also claims Cooper and Driver have coordinated their actions, including legal actions, with the Norcross-Braca group, a claim Cooper said was “categorically not the case.”
“The fact we want the same thing, to get Vernon Hill off the board, doesn’t imply co-action,” Cooper said Wednesday in an interview.
Hill had not responded to a request for comment at deadline. A spokesman for the Norcross-Braca group declined to comment.
Hill’s lawsuit claims Friday’s action amounted to a “putsch” since the Madonna faction, which includes directors Andrew Cohen, Lisa Jacobs and Harris Wildstein, lacks the five board members needed for a quorum on an eight-member board. Even after the death of director Theodore Flocco, Hill — who retains his board seat — can still count on the loyalty of directors Brian Tierney and Barry Spivak.
According to Hill’s suit, Madonna and his allies are a “rump board.”
“They have purported to seize control of the board, but they have no quorum, and lack authority to act,” the filing stated.
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