Tenet Shareholders Shoot Down 'Independent Chairman' Proposal

The company's leadership had urged investors to vote against the idea, saying it is unnecessary and not in its best interest.

A trust fund holding a small number of Tenet Healthcare Corp. shares had proposed to require the company to select a board chairperson who has never served as an executive officer for the company, but shareholders voted overwhelmingly against the idea.

As rationale for the proposal, the trust fund had cited the abrupt resignations of two directors last August, followed by the departure last October of Tenet's then-Chairman and CEO Trevor Fetter.

"In our view, there would be far less leadership and governance uncertainty if the Company had maintained the independent board chairman structure it had prior to 2015," the proposal stated.

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"We also believe that given the Company’s history of regulatory challenges and the policy uncertainties facing healthcare services companies, it would be judicious to commit to appointing an independent chairman."

In advance of Tenet's annual shareholder meeting last Thursday, the company had urged its investors to oppose the proposal, arguing that the board's leadership structure is already independent and consistent with standard industry practice.

• Shareholder proposal shot down: Investors holding more than 15.6 million Tenet shares voted in favor of the proposal, but investors holding nearly 65.9 million shares voted against it, the company reported Monday in a filing to the Securities and Exchange Commission.
   
• Chairman and CEO reelected: More than 79.1 million shares voted in favor of reelecting CEO Ronald A. Rittenmeyer as executive chairman, a position to which he was named last August. Rittenmeyer was named CEO when Fetter's departure was announced in October.
   
• Industry norm: Citing the 2017 Spencer Stuart Board Index, Tenet noted that 72% of S&P 500 companies do not have an independent chairperson.
   
• Current directors: Tenet noted, also, that 11 of its 12 current directors "satisfy the independence standards" of the New York Stock Exchange and Tenet government policies.
   
• The trust fund: The defeated shareholder proposal was proffered by the Graphic Communications Conference IBT Benevolent Trust Fund U.S., based in Washington, D.C., which said it holds 435 shares of Tenet common stock.

Tenet, which posted a $230 million loss in the fourth quarter of 2017, has been carrying out a hospital-selling spree. Rittenmeyer's total compensation was annualized at $5.2 million last year.