As Community Health Systems closes in on its acquisition of Triad Hospitals, a question remains unanswered: What will Denny Shelton do?
Shelton, chairman and chief executive officer of Triad, will be out of a job when Community completes its $6.8 billion acquisition of Triad, Plano, Texas.
The deal took a big step toward closing last week when a majority of Triad shareholders voted in favor of the $54-per-share offer made by Community, Franklin, Tenn., in March. In addition to the $5.1 billion in cash that will go to shareholders, Community also will take on $1.7 billion in Triad debt. Both companies also said last week that holders of some of their debt have agreed to have their bonds paid off early. Community plans to issue $9.07 billion in new debt as part of financing the Triad deal.
At the time Communitys offer was announced, Shelton stood to gain more than $40 million in various forms of compensation.
Executives like Shelton typically choose one of three paths, said Deedra Hartung, a vice president of Cejka Search, St. Louis, and leader of the healthcare practice of its executive search division. They tend to go into consulting, serve on corporate boards or try their hand at using their industry experience as venture capitalists, she said.
Theyre very astute businesspeople, Hartung said. These people understand Wall Street. They have enormous contacts.
Paul Frankenberg, president of Kraft Search, said a former CEO who is still looking for a big financial score would look for a smaller company to run, while adding a financial sponsor that can help the company grow larger.
Jim Dalton, former CEO of Quorum Health Group, Brentwood, Tenn., served on several company boards after Triad acquired Quorum in 2001. Besides Triads board, Dalton also was on the boards of healthcare companies including Select Medical Corp. and Universal Health Realty Investment Trust. Dalton is now the nonexecutive chairman of privately held Signature Hospital, Dallas.
Martin Rash, former CEO of Province Healthcare Co., joined HealthSprings board a month before LifePoint Hospitals bought Province.
Sheltons employment agreement includes a three-year noncompete clause, fairly long for such clauses, said Andrew Rudolph, of the law firm Pepper Hamilton. Rudolph said its likely that Community and Triad dont want to keep Shelton completely out of a job anyway. Sometimes, they just want to know what youre doing and have a say in approving it, Rudolph said.