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Vineyard National Bancorp Comments on Board Candidates Proposed by Messrs. Morales and Salmanson
Market Wire, April, 2008
The Board of Directors of Vineyard National Bancorp (the "Company") (NASDAQ: VNBC), parent company of Vineyard Bank, N.A. ("Vineyard") and other subsidiaries, commented on the candidates that have been proposed to take over the Company's Board of Directors ("Board").
The candidates were announced by the Company's former Chief Executive Officer ("CEO"), Norman Morales, and a stock broker, Jon Salmanson. The pair is seeking shareholders' consent for a change in the Company's Bylaws so they may submit these candidates to a shareholder vote.
The Company's Board noted that Messrs. Morales and Salmanson may have inadequately disclosed important information about their candidates. Although the Company is not aware of all important undisclosed information, it is aware of the following:
-- Dev Ogle: The public statements by Messrs. Morales and Salmanson
failed to disclose that, while Mr. Morales was CEO, Vineyard paid fees of
$257,363 to The Ken Blanchard Companies for Mr. Ogle's services, which
included acting as Mr. Morales' "executive coach."
-- Glen Terry: Mr. Terry was not the President, CEO, or a director of
SierraWest Bank, as indicated in the public statements by Messrs. Morales
and Salmanson. The public statements also failed to disclose that, at the
time of Mr. Morales' termination as CEO of the Company, he was preparing to
hire Mr. Terry to lead a large expansion of Vineyard's Northern California
operation. At the time that Messrs. Morales and Salmanson announced their
proposed candidates, Mr. Terry was employed at Umpqua Bank -- a competitor
of Vineyard in Northern California.
-- David Hardin: The public statements did not disclose that Mr. Morales
and his wife worked with Mr. Hardin at Hawthorne Savings. Mr. Hardin's
limited board experience was marked by a weak commitment to shareholders:
on March 16, 2008, he resigned after 11 months from the Board of Pacific
Premier Bancorp, citing a desire to "help a friend who has a need I cannot
turn my back on..."
-- Lester Strong: The public statements did not disclose that the
Company's Nominating Committee previously considered Mr. Strong as a Board
candidate on the recommendation of George Crosby, a stock broker in Santa
Maria, Calif. Although Mr. Crosby has been involved in soliciting consents
with Messrs. Morales and Salmanson, he has not been disclosed as a
"participant" in the Consent Solicitation filings with the U.S. Securities
and Exchange Commission.
-- Cynthia Harriss: The public statements did not disclose that, while
Mr. Morales was CEO, he was negotiating the potential hire of Ms. Harriss
to manage a private banking group in Southern California for Vineyard. She
has no prior banking experience.
"The potentially inadequate disclosures are a red flag warning to those who care about good corporate governance," said James LeSieur, Chairman and Interim CEO. "The campaign by Messrs. Morales and Salmanson is not about shareholder rights -- it is a transparent attempt by a former CEO to return to power with the help of his friends and associates."
The Company, on Jan. 23, 2008, accepted the resignation of Mr. Morales from the Board and his employment as President and Chief Executive Officer was terminated. The Board agreed to make severance payments to Mr. Morales of more than $1 million.
"The proposed Bylaw change, by allowing prospective Board candidates to avoid a careful review process before a shareholder vote, would open the door to a former executive's entrenchment behind a new Board with weak qualifications or independence," Mr. LeSieur added. "In fact, most of the proposed candidates have personal or business ties to Mr. Morales and lack the substantive background, ownership stakes or knowledge that one tends to find among independent, objective and effective stewards for the shareholders of a publicly traded financial institution. In contrast, five of the six current Board members are independent of management and together own approximately 7 percent of the Company's stock.
"We believe the proposed Bylaw amendments would primarily serve the personal interests of Messrs. Morales and Salmanson rather than shareholders generally. The narrow rights in the proposed Bylaw amendments may be triggered only in the rare occasion that a director, President or CEO leaves office within a narrow period, as did Mr. Morales," said Mr. LeSieur. "The financial issues now facing the Company began well before Mr. Morales resigned. Before he resigned, the Board considered and rejected his proposed strategies, deciding instead to emphasize more prudent strategies in response to the changes in the economic climate and the Company's operating environment."
If you have any questions about giving your consent revocation or require assistance, please call:
D.F. KING & CO. INC. 48 Wall Street New York, New York 10005 Shareholders Call Toll-Free at: 800-967-7921 Banks and Brokers Call Collect at: 212-269-5550