By Svea Herbst-Bayliss
(Reuters) -Institutional Shareholder Providers (ISS) mentioned on Thursday Enhabit shareholders ought to elect three AREX Capital Administration director candidates to the nine-member board, arguing the corporate wants extra experience in house well being, hospice and public firm monetary reporting.
The outstanding proxy advisory agency, whose suggestions usually information shareholder votes on proposed mergers and who serves on a board, mentioned AREX made a convincing case that new administrators are wanted.
However the hedge fund didn’t persuade ISS {that a} majority of the two-year-old firm’s administrators ought to be ousted, the report reviewed by Reuters mentioned.
AREX is asking buyers to interchange seven administrators to assist reverse poor monetary efficiency. It has additionally been pushing the house well being and hospice supplier to place itself up for a sale.
Buyers will vote on July 25 until the 2 sides attain an settlement earlier than the assembly date.
“The corporate’s vital underperformance, each from a TSR (complete shareholder return) and operational standpoint, point out {that a} diploma of change is required on the board degree,” ISS wrote.
Enhabit’s inventory worth has tumbled almost 60% because it was spun off of post-acute healthcare companies supplier Embody Well being (NYSE:) in July 2022. The inventory climbed 2.9% to commerce at $9.52 in early Friday buying and selling.
ISS beneficial votes for AREX candidates Gregory Sheff, who has house well being operations expertise, Anna-Gene O’Neal, who has hospice expertise, and Mark Ohlendorf, who has public firm chief monetary officer expertise.
Enhabit on Friday urged stockholders to vote for all its 9 nominees, including it disagrees with ISS’s advice as crucial expertise can be misplaced by changing the administrators.
AREX mentioned it’s “happy {that a} main impartial proxy advisory agency has acknowledged the shortage of house well being and hospice business experience on Enhabit’s board and validated our case for significant boardroom change.”
AREX, which owns a 4.9% stake in Enhabit, is backing CEO Barbara Jacobsmeyer and director Barry Schochet for re-election. Schochet joined the board final yr when the corporate reached an settlement with buyers Cruiser Capital and Harbour Level Capital Administration in March 2023.
AREX advised Enhabit final yr it wished the corporate to commit to right away begin a strategic assessment earlier than the tip of 2023. Enhabit in Could determined to proceed as an impartial, public firm after having evaluated a spread of strategic choices.