Cleveland hedge fund Clutterbuck Capital Management LLC has proposed its own board nominee to other shareholders of Waukesha-based CIB Marine Bancshares Inc., in opposition to the company’s recommendations.
The activist investor owns 100 shares of CIB common stock, and a “significant amount” of the bank holding company’s Series A and Series B preferred stock, according to CIB Marine.
Clutterbuck could not be reached for information about its nominee or its concerns. But CIB Marine issued a shareholder letter in response to Clutterbuck Wednesday.
“This fund is well known to the company, having contacted the company regularly to advocate a preferred shareholder agenda,” the letter says. “Clutterbuck has apparently become frustrated by the board’s dedication to the interests of all shareholders and a refusal to engage in strategies that the board, in its judgment, believes would damage the company and its common shareholders.”
CIB is the parent company of Marine Bank in Wisconsin and other banks in Illinois and Indiana. According to the company, Clutterbuck’s concerns mostly relate to employee compensation. But CIB says the raises were related to increased mortgage lending production.
“Over the five year period cited by Clutterbuck, more than 100 percent of the increase in compensation is due to compensation at the Avenue Mortgage division as a result of increased production. In fact, compensation for all other employees has decreased over that period due to prior cost savings measures implemented by management and the board,” the letter says.
In 2009, Clutterbuck recommended preferred shareholder Charlie Mires as a representative director, and he was appointed by the board. In 2015, he was re-elected for another three-year term.
CIB Marine reported a loss of $600,000 in 2015, down from 2014, when it had a $300,000 profit. The bank has undergone struggles since 2009, when it filed for Chapter 11 bankruptcy. It completed a reorganization in 2010, and de-listed its stock in 2012.
Last year, CIB’s board elected a new chief executive officer, Brian Chaffin and a new chairman, Mark Elste, to replace retiring interim CEO and chairman John Hickey. Since then, the company has announced a cost reduction strategy that is currently underway and aims to reduce costs by more than $1 million per year through office closures and layoffs.
CIB Marine has recommended shareholders vote to re-elect three of its directors: John Hickey, Jr., Charles Baker and Brian Chaffin.
