Despite opposition by an activist shareholder, provisions up for vote at Brookdale Senior Living’s annual meeting Thursday passed overwhelmingly, according to the company’s Friday filing with the Securities and Exchange Commission.
As expected, Jeffrey Leeds retired at the end of his term as a director, and three new directors joined the board for three-year terms.
Marcus E. Bromley was elected with 118,311,602 votes for him, 22,051,672 against and 15.446,850 abstaining. Rita Johnson-Mills was elected with 118,814,129 votes for her, 21,648,883 against and 15,347,112 abstentions. Denise W. Warren was elected with 120,101,267 votes for her, 20,363,232 against and 15,345,625 abstaning.
The board’s Nominating and Corporate Governance Committee had selected the new director candidates “with a focus on candidates with significant healthcare, finance and operational experience,” Board Chairman Lee Wielansky said in an Aug. 21 letter to stockholders.
In September, however, Land & Buildings founder and Chief Investment Officer Jonathan Litt said the shareholder intended to vote against the three directors in response to proposed governance changes that “fall woefully short of what we believe is required to maximize value for Brookdale shareholders and importantly, are reflective, in our view, of a company seeking to do the bare minimum in order to appease shareholders.”
Specifically, Litt said Land & Buildings was disappointed that the board had not accelerated the de-staggering of board member elections. Currently, approximately one-third of the board’s directors are elected annually to serve three-year terms. An amendment to the company’s articles of incorporation or bylaws passed at the annual meeting will phase out staggered annual elections to three-year terms and, beginning with the 2021 annual meeting, Brookdale will hold annual elections of all directors.
Brookdale President and CEO Lucinda “Cindy” Baier, Frank Bumstead, Jackie M. Clegg, James Seward and Lee Wielansky continue to serve as directors and were not up for election this year.
Litt had complained that when Baier was named president and CEO of Brookdale in February, she was appointed to a class of directors not up for election until 2020, “depriving shareholders of a say on her candidacy to serve until two years after her appointment.”
“Even more concerning,” he said, was the board’s reassignment of Wielansky to a class of directors with a term expiring in 2020, “when he should have been up for re-election at the 2018 annual meeting, and will therefore be serving a five-year term without a shareholder vote.”
Litt already is on record with a proposal for next year’s meeting related to director Jackie Clegg, who joined the board in 2005 and leads the body’s Nominating and Corporate Governance Committee.
Saying Clegg has “a dated knowledge of best corporate governance practices as well as a strong bias for entrenchment,” Litt recommended that the board “reevaluate her inclusion on any committees” and not re-nominate her at the company’s 2019 annual shareholder meeting because she has “overseen material shareholder value destruction at Brookdale.”
