HMA shareholders advised to replace entire board of directors

An investment advisory firm has dealt a blow to Health Management Associates in recommending that shareholders vote to replace its current board of directors with eight new members.

The recommendation comes days after the Naples, Fla.-based hospital chain seemed to make a concession to activist shareholder Glenview Capital Management, which is pushing for an entirely new board. Late Tuesday, HMA said it was prepared to invite some of the hedge fund's nominees to join its board, including as chairman.

But HMA also asked to retain two or three of its current directors, citing the need for continuity. Glenview quickly dismissed the offer as inadequate, saying it would create a “suboptimal hybrid board.”

In its report, Institutional Shareholder Services, which offers voting advice to investors in contentious situations, recommended that shareholders vote in favor of Glenview's entire slate.

HMA said in a statement that the company and its board of directors “strongly disagree with and are disappointed by” the recommendation.

Citing ongoing federal investigations into practices at HMA, recent CEO turnover and the pending $3.9 billion acquisition offer from Community Health Systems, HMA reiterated that it is “critical and in the best interest of shareholders and HMA for there to be some continuity on the board.”

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