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Banker & Tradesman photo / file
A month after an investor publicly criticized Berkshire Bank for hiring a new CEO instead of pursuing a sale, the bank has agreed to cooperate with the investor, a move that will see the asset management firm’s co-founder nominated to Berkshire’s board of directors.
Berkshire Bank’s parent company, Berkshire Hills Bancorp Inc., entered into a cooperation agreement yesterday with HoldCo Asset Management LP, the bank said in an SEC 8-K filing. As part of the agreement, Berkshire will nominate HoldCo’s co-founder, Michael “Misha” Zaitzeff, to the board of directors. Another new independent director will also be nominated, with HoldCo’s consent.
Along with Berkshire’s 11 current directors, Zaitzeff and the other nominee will be up for election at the bank’s annual shareholder meeting on May 20.
As part of the agreement, HoldCo, which owns about 3.3 percent of Berkshire’s outstanding shares, will vote in favor of each of the bank’s nominees for the board, the bank said today in a statement announcing the agreement. HoldCo has also agreed to “certain customary standstill provisions and other voting commitments,” the bank said.
“We are pleased to have reached this agreement with HoldCo and look forward to welcoming Misha to our Board,” J. Williar Dunlaevy, Berkshire’s independent chairman, said in the statement. “This agreement underscores our commitment to listening to and incorporating the views of our investors in our purpose-driven mission to enhance value for all stakeholders, including our shareholders, customers, employees and the communities we serve. We believe that Misha will bring a valuable perspective as we continue to work with our new CEO, Nitin Mhatre, in further developing our strategic plan for the future of Berkshire.”
HoldCo in February had sent an open letter to Dunlaevy questioning the bank’s decision to hire a new CEO instead of pursuing other alternatives, including a sale. Berkshire had announced last August that it would search for a new leader after then-CEO Richard Marotta abruptly resigned. Nitin Mhatre was announced as the new CEO in January.
In a statement on Feb. 16 responding to HoldCo’s letter, Berkshire said it had contacted HoldCo and planned to continue a dialogue with the firm. The bank also explained why it had hired Mhatre.
“Berkshire’s Board chose Mr. Mhatre to lead the Company for, among other reasons, his decades of experience driving growth and profitability in community and global banks; his proven leadership qualities in a range of roles building customer-centric cultures; his commitment to technology-driven innovation and digital transformation; and his vision, passion and integrity,” Berkshire said in February.
As part of the agreement, scheduled to last for one year, HoldCo could replace Zaitzeff on the board with someone not affiliated with the asset management firm if he resigns. If HoldCo’s ownership stake falls below 2 percent, Zaitzeff will be required to resign from the board, according to the agreement.
HoldCo on Feb. 19 had notified Berkshire that it would nominate six candidates to the board, including Zaitzeff, and has withdrawn these nominations, according to the SEC filing.
If elected, Zaitzeff will be appointed to the board’s audit committee and risk management and capital committee, and as a non-voting observer on the corporate governance/nomination committee. The other new director will be appointed to at least one standing committee.
“We appreciate the constructive dialogue we have had with Berkshire throughout this process and believe that today’s agreement is an important step in improving the company’s performance and strengthening shareholder alignment for the benefit of all shareholders,” Zaitzeff said in today’s statement. “I look forward to bringing the perspective of a large shareholder to the board as Nitin and his management team continue to develop their plan to enhance value at Berkshire.”
