Glenview Capital Management, which currently owns 17.8 percent of Dallas-based Tenet Healthcare, has submitted a proposal to Tenet that would amend the for-profit hospital operator’s bylaws to allow all shareholders to take action by written consent without a meeting.
Here are five things to know about Glenview’s proposal, which will be voted on at Tenet’s annual meeting.
1. In a letter to Tenet shareholders, Glenview said Tenet has been a “chronically underperforming company for decades,” and shareholders need the ability to take action by written consent.
“Just as a person in worsening health may need more frequent medical attention than a check-up once every 12-18 months, a chronically unhealthy company is likely to return to health quicker and with more certainty if its owners are allowed more frequent board oversight, and this is effectively accomplished through the ability to take action by written consent,” Glenview wrote in the letter to shareholders.
2. In addition to Tenet’s financial underperformance, Glenview said there are several other factors supporting the proposed change, including the board’s slow response to Tenet’s financial and operational challenges.
3. Although Tenet’s board approved amendments to the company’s bylaws in January that allow majority shareholders to request special meetings, Glenview argued shareholders still need action by written consent.
Glenview said the amendment to allow majority shareholders to call special meetings is “wholly impractical, clearly off-market, and sends a dangerous signal that the board may need additional feedback from shareholders to fully appreciate the cultural renaissance for which we mutually strive.”
4. Tenet said it is reviewing Glenview’s proposal. “We will make a recommendation to shareholders in due course,” Tenet said in a statement.
5. Tenet launched a $250 million cost reduction initiative last year, which involves divesting hospitals in non-core markets and cutting 2,000 jobs, or about 2 percent of the company’s workforce. The for-profit hospital operator ended the third quarter of 2017 with a net loss of $367 million on revenues of $4.59 billion. That’s compared to the same period of 2016, when the company recorded a net loss of $8 million on revenues of $4.85 billion.