The board succession is expected to take place this week. Steven Shulman will be the new chair. Shulman, currently a senior advisor at a private equity firm, is a former chair and CEO of Magellan Health Services, Inc. where he is credited with spearheading a turnaround and restructuring following bankruptcy.
The shareholder vote is considered a "very rare event" according to CRT Capital Group analyst Sheryl Skolnick. "Shareholders typically don't take action on their own behalf," but in this instance "they drew a line in the sand and said 'we're taking control of our company.'"
"I'm not surprised by the vote, though. I think HMA has worked hard to make sure shareholders voted against the sitting board," Skolnick said in a telephone interview.
She noted that any shareholder who might wonder if they did the right thing need only read the SEC form 8-K filing made on Monday by HMA. In it the board announced the adoption on Aug. 6 of a retention bonus and severance plan, commonly known as golden parachutes, for "certain members of key management," including Kelly E. Curry, executive vice president and CFO; Robert E. Farnham, senior vice president-finance; and Steven E. Clifton, senior vice president and general counsel.
Glenview Capital announced on July 31, just hours after the CHS-HMA merger was announced, that it would continue its efforts to replace the HMA board. On Aug. 7 Glenview rejected HMA's offer to create a hybrid board of current members plus Glenview board nominees. Glenview's position was strengthened last Friday when it was endorsed by the Institutional Shareholders Services.