SAN DIEGO, Feb. 6 (UPI) -- Shareholders of a big Pennsylvania bank blasted state lawmakers for passing a bill they say does nothing but entrench corporate managers.
At the urging of Sovereign Bancorp, Pennsylvania legislators added a provision last week to bill preventing shareholders of Pennsylvania-based companies from removing directors "without cause" and also making it easier for companies to buy large blocks of stock in other companies without seeking shareholder approval.
San Diego-based Relational Investors LLC, the largest shareholder of Sovereign with 8 percent of its stock, said the bank "apparently blatantly misled the Pennsylvania legislature. It has been reported that Sovereign's representatives threatened that Sovereign might reincorporate the company in another state if the legislature did not comply with Sovereign's demands.
"It is well known that reincorporation is not in the power of management or the corporate board. Reincorporation is vested with shareholders. Reincorporation can only take place by a majority vote of shareholders.
It was not immediately known if the Democratic Gov. Ed Rendell would sign the bill, but another major Sovereign shareholder wrote to Rendell that the bill was "an extraordinary abuse of the legislative process."
