Tenet Healthcare Corp. plans to make minor changes to its corporate governance structure, but Chairman and Chief Executive Officer Jeffrey Barbakow didn't attribute that to the two-month-long proxy battle he apparently won hands-down at last week's annual shareholders meeting.
Just after the meeting on Oct. 11 in Beverly Hills, Calif., Barbakow said Tenet, based in Santa Barbara, Calif., would examine its system of staggering the terms of its corporate directors and would likely form a governance committee. Earlier in the month Barbakow said two new outside directors would be appointed, and he would resign from the board's nominating committee (Oct. 9, p. 17).
But Barbakow credited vigilance by Tenet's board and management with any changes.
Since August, M. Lee Pearce, M.D., had criticized Tenet's management as overstaffed, overpaid and poorly governed. Although Tenet labeled Pearce a disgruntled shareholder with a history of troublemaking, he had made inroads in his battle. The California Public Employees Retirement System, which holds a sizable bloc of Tenet stock and regularly chimes in on corporate governance issues, initially backed Pearce's slate of himself plus three other candidates for the Tenet board. CalPERS officials changed their minds after meeting with Tenet management earlier this month.
Pearce's slate was overwhelmingly defeated by a three-member slate that included Barbakow and was backed by Tenet directors and management, according to a preliminary tally of shareholder votes taken last week.
Tenet, a for-profit hospital chain with 111 hospitals, has had strong profits of late. Net income for the quarter ended Aug. 31 was up 41%, to $154 million or 48 cents per share, compared with year-ago net income of $109 million, or 35 cents per share.
"I wondered if Dr. Pearce was looking at the same organization as everyone else," Barbakow told reporters at a brief press conference after the meeting. He blasted Pearce for his tactics, which included advertisements in newspapers across the nation.
Pearce also claimed victory. In a prepared statement he read during the shareholders meeting, he said Tenet changes were prompted by pressure from him, CalPERS and Institutional Shareholder Services, a Rockville, Md.-based provider of proxy voting and corporate governance services.
"I'm amazingly happy in view of the changes that were made," Pearce said.