First United Corporation (NASDAQ:FUNC) Files An 8-K Other Events
Item 8.01. Other Events.

On Friday, December 13, 2019, Driver Management Company LLC (“Driver”) demanded in a letter to certain members of the Board of Directors (the “Board”) of First United Corporation (the “Corporation”) that the Board immediately amend the Corporation’s Amended and Restated Bylaws, as amended (the “Bylaws”), to provide for a plurality voting exception in the case of a contested election to the majority voting standard set forth in the Bylaws (the “Plurality Carve-Out Demand”). Driver demanded in its letter that the Board respond to the Plurality Carve-Out Demand prior to Monday, December 16, 2019.

A contested election is one in which there are more director nominees than there are directorships up for election. A majority voting standard means that a director nominee will be elected if he or she receives a majority of the votes cast in the election. A plurality voting standard means that a director nominee will be elected if he or she receives the most votes cast in the election, even if the number of votes is less than a majority.

Between December 13^th and December 15^th, counsel for the Corporation and Driver discussed the Plurality Carve-Out Demand by phone and e-mail. The Corporation’s counsel explained that the Board was aware of the lack of a plurality carve-out in the Bylaws and that the Board intended to address this issue after its Nominating and Corporate Governance Committee had conducted a fulsome, holistic review of the Bylaws, with an eye toward addressing changing shareholder expectations and evolving corporate governance practices. The Corporation’s counsel also explained that, while this review was ongoing, and in light of Driver’s demand for a response prior to Monday, December 16, 2019, the Board would convene no later than the morning of Monday, December 16, 2019 for the purpose of voting on the approval of a plurality carve-out with respect to the majority voting standard in the event that there is a contested director election at the 2020 annual meeting of shareholders. The Corporation’s counsel stated his belief that the Board would approve this carve-out and that he would notify Driver’s counsel when such approval had been obtained. Finally, the Corporation’s counsel explained that, rather than making a one-off amendment, the Board should wait to make any formal amendments to the Bylaws until the above-mentioned review had been completed, and that the proposal should adequately address Driver’s Plurality Carve-Out Demand. Driver’s counsel initially stated the proposal seemed reasonable, but that sentiment changed between December 15, 2019 and December 16, 2019.

At a meeting held on December 16, 2019, the Board, including each of its Class I directors whose term will expire at the conclusion of the 2020 annual meeting of shareholders, approved a plurality voting exception for the 2020 annual meeting of shareholders such that if there is a contested election at that meeting and if any incumbent Class I director is ultimately nominated by the Board for election but fails to receive a plurality of votes cast in the election, then such incumbent director will resign from the Board and the Board will fill the vacancy created by such resignation with the director nominee who does receive the most votes cast in the election.

The Maryland General Corporation Law (the “MGCL”) provides that, unless provided otherwise in a Maryland corporation’s charter or bylaws, directors will be elected at each annual meeting of shareholders by a plurality vote. Since its incorporation in 1985, the bylaws of the Corporation have provided for a majority voting standard. This standard is generally considered to be far more shareholder friendly than the default plurality voting standard permitted by the MGCL, and that is why the Corporation’s initial Board chose this voting standard, and it has since not been changed. In fact, Driver has known about the Corporation’s majority voting standard since at least April 2, 2019 and has publicly stated that, through that standard, “FUNC has empowered shareholders with a meaningful voice[.]”  See https://www.sec.gov/Archives/edgar/data/763907/000147793219001382/dmc_px14a6g.htm.