The management of Government Services Savings & Loan of Bethesda settled a dispute with a group of dissident stockholders yesterday by agreeing to a compromise that gives the dissidents four seats on the board of directors.
In return for representation on the board, the dissident group dropped its efforts to oust Government Services' President Alexander R.M. Boyle and backed off on criticism of the planned sale of the company's headquarters property on Wisconsin Avenue.
Under the compromise, the dissidents' leader, Emanuel A. Baker Jr., will take a new post as vice chairman of the board; Arthur G. Lambert Jr. will remain chairman until Dec. 31, when a successor will be elected.
Both sides described the settlement as a happy ending to a fight for control of the largest savings and loan association in Washington's Maryland suburbs.
Baker said the compromise should calm the fears of depositors about the future of Government Services, "stop the outflow of funds" caused by uncertainty over the strength of the institutions and reassure investors who were caught in the fight for control.
"We have difficulties enough without having to be fighting among ourselves," said Boyle. Like many savings and loans which made mortgage loans at low interest rates and now must pay higher rates for funds to back up the loans, Government Services has been losing money.
The losses were so serious that Government Services' reserves recently fell below the minimum required by Maryland state regulators.
To rebuild the reserves and provide income for the future, Government Services last spring said it planned to sell its valuable real estate and was considering the possibility of merging with another firm.
Boyle said yesterday Government Services is moving ahead with plans to sell the property at 7200 Wisconsin Avenue to the Artery Organization, a local real estate group. The sale could be completed later this month, he said.
"We don't feel there is any alternative. The sale of the property is in the best interest of the shareholders," agreed Baker.
Artery is to pay about $11.3 million for the building and adjacent land, based on its present zoning. If the zoning is changed later to permit construction of larger buildings, the price paid Government Services will go up.
Government Services is to get $2.4 million in cash from the sale of the property and another $8.9 million in notes. Interest and principal on the notes will increase Government Services' income by about $1 million a year, Boyle added.
Cash from the sale of property also will rebuild the association's reserves to "well above" the minimum required by law, he added.
Baker, Boyle and Lambert said the settlement between the two stockholder factions also will make it easier to negotiate a sale or merger in the future. As Baker put it, "The stockholders won't have to worry about getting a fire-sale price."
Details of the compromise are spelled out in a letter mailed to Government Services' stockholders. Two competing slates of candidates for the board of directors have been replaced by a single slate agreed to by both sides in negotiations last week.
The compromise enlarges the board from 10 to 11 seats.
Besides Baker, the dissidents get three more board members: Washington attorneys Edward F. Schiff and Lawrence E. Bulman, and Charles H. Seilheimer Jr., president of Sotheby Park Bernet Real Estate.
Four present board members will be renominated as the management representatives. Two present board members who had been backed for re-election by the dissidents will remain on the board as "neutrals." They are Jeffrey R. Scholz, Government Services vice president for construction loans, and Thomas C. Miller, managing director of Mortgage Systems Corp., a consulting firm.
Retired admiral Harry M. Sears resigned from the board to become a director emeritus. Retired general William S. Lawton will serve on the board until Dec. 31 and then also becomes a director emeritus.