New Haven Independent

President Peyton Patterson faced 20 minutes of shareholder open-mic barbs — including pointed questions from a retired reverend and a union activist — at the end of the bank’s annual meeting Tuesday morning. The meeting took place in the lobby of the Chevrolet Theatre (which was known as the Oakdale back in the days when NewAlliance was known as New Haven Savings Bank).

Patterson had good news to report to shareholders. The board voted to increase quarterly dividends by half a cent, to 6.5 cents per share. The stock price rose 12.8 percent from the end of 2005 to the end of 2006.

Click here to read the bank’s release about the meeting.

The bank continued this past year on the torrid growth spurt that began when it went public in 2004. Its two most recent acquisitions, Cornerstone and Westbank, moved NewAlliance’s reach into Fairfield County and Massachusetts, respectively. NewAlliance now has $8 billion in assets and 88 branches. Patterson told the hundreds of people in attendance that she envisions the bank continuing to expand, into Rhode Island, more of Massachusetts, perhaps New York.

The last 15 minutes of the meeting were reserved for one-minute shareholder comments. The session stretched past the limit, as did some of the comments. Suzanne Clark (pictured) kept her comment brief. She asked Patterson about her role as a board member of Yale-New Haven Hospital, which has been embroiled in a divisive labor dispute with a union seeking to organize blue-collar workers.

Clark, who works for the union and spoke as a proxy for a bank shareholder, noted that an arbitrator found that the hospital had violated an agreement over how to conduct a fair election process.

“Ms. Patterson,” Clark said, “you and lead [NewAlliance] director Julia McNamara also sit on the board of Yale-New Haven Hospital. The independent arbitrator’s rulings reveal countless instances in which the hospital violated the mutually agreed upon terms of the fair election agreement — as well as the law. What we’re looking at is a cover-up of the hospital’s dishonest and illegal actions at the highest level.

“How can we trust you to take care of our investments if you can’t get the top management of Yale-New Haven Hospital to keep agreements they’ve made — to their workers, the mayor and the entire community of New Haven?”

“Thank you very much for your comment,” Patterson responded. “In the interest of our shareholders, we are here to discuss NewAlliance Bank. Yes, I sit on the board of Yale-New Haven Hospital. Thank you for your comment.”

Patterson’s Yale-New Haven role was also relevant to a lengthier broadside delivered by Richard Diehl.

Diehl (pictured) is a retired reverend who worked for many years in various Connecticut churches. (He earlier worked at Kent State University in 1970.) Diehl spoke for a good five minutes from a prepared text on runaway executive pay in America and conflicts of interests involving execs who sit on each other’s boards and set each other’s pay.

Patterson’s total 2006 compensation was $4,031,839, according to NewAlliance’s proxy statement. Four other execs earned between $1 million and $1.9 million. Patterson sat on the Yale-New Haven board when Joe Zaccagnino was its president; Zaccagnino sits on the NewAlliance board as well as its compensation committee.

“Is it fair,” Diehl asked during his turn at one of the two microphones set up for shareholder speakers, “to have other CEOs determining the packages of others? Is that nepotism?”

Diehl, who said he owns 1,800 shares of the bank, spoke about the growing difference in salaries between American executives and their line workers. He called it a “national outrage.” “What is fair, and when is enough, enough?” he asked. “In this free market system we have developed an economic power elite that has removed itself from revision or checks on what is reasonable and just…

“Are bank managers, tellers, and supportive staff worth only one-half of an inch, one inch, one foot, of a yardstick? How do we get to what is fair? What are the ratios between top management’s compensation and those who go about daily work holding up this institution?”

Patterson stood expressionless at the podium as Diehl spoke well past the one-minute limit. Finally she told him gently that his time had expired. He asked to submit a resolution. She assented.

Diehl proceeded to move that NewAlliance’s compensation committee commission an “independent evaluation of all salaries and compensations of all employees as measured by percentages of upper-management’s total compensation (including stock options, bonuses, and other perks).”

Diehl’s motion further instructed the bank to publish the evaluation and prepare a plan of action for the 2008 annual meeting. It ordered the compensation committee to wait until after that meeting “before setting any management’s total compensation packages in light of the audit findings and shareholder’s approval.”

In order to have the assemblage vote on his proposal, Diehl needed someone to second it. He received some applause. No one offered a second.

He sat down. The meeting proceeded toward its conclusion.

Tuesday’s meeting was the last as a director for Cornell Scott (pictured). Scott has served on the bank’s board for 18 years — most of the time when it was a depositor-owned mutual bank known as New Haven Savings. Scott has reached the board’s mandatory retirement age of 72. (He continues in his day job as head of the Hill Health Center, which he has run since 1972.)

Reflecting on his nearly two decades on the board, Scott said he is proudest of having helped establish the bank’s charitable foundation. The late Charles Terrell, New Haven Savings’ longtime president, set up a bank-affiliated charitable foundation in the 1990s and asked Scott to serve as its first board chair. When the bank went public and changed its name, it had to pour millions into the foundation as part of an agreement with state regulators. The NewAlliance Foundation has emerged as one of the leading charitable givers in the region. Last year it distributed $3.448 million to 350 not-for-profits. Scott served as co-chair of the foundation’s board.

Just as at last year’s gathering, the meeting ended with the bank serving shareholders an eggs-and-bacon buffet while Patterson and her fellow board members scurried out of sight.