Brookdale Senior Living shareholder Land & Buildings intends to vote against the three directors up for election at Brookdale’s annual meeting Oct. 4, the Stamford, CT-based investment manager’s founder and Chief Investment Officer Jonathan Litt said Wednesday in a letter to fellow shareholders.
The plan, Litt said, is in response to proposed governance changes that “fall woefully short of what we believe is required to maximize value for Brookdale shareholders and importantly, are reflective, in our view, of a company seeking to do the bare minimum in order to appease shareholders.” The activist shareholder invited other shareholders to share their opinions with board members and proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co.
Specifically, Litt said Land & Buildings was disappointed that the board has not accelerated the de-staggering of board elections so that all directors up for election are elected to one-year terms. Currently, approximately one-third of the board’s directors are elected annually to serve three-year terms. Up for vote at the 2018 annual meeting, according to a proxy statement that Brookdale filed with the Securities and Exchange Commission, is a proposal to hold annual elections of all directors beginning with the 2021 annual meeting.
When Lucinda “Cindy” Baier was named president and CEO of Brookdale in February, she was appointed to a class of directors not up for election until 2020, “depriving shareholders of a say on her candidacy to serve until two years after her appointment,” Litt said.
Litt, a frequent critic of Brookdale, said Land & Buildings found “even more concerning” the board’s reassignment of Chairman Lee Wielansky to a class of directors with a term expiring in 2020, “when he should have been up for re-election at the 2018 annual meeting, and will therefore be serving a five-year term without a shareholder vote.”
Accelerating the de-staggering of board elections was one of the changes Litt previously called for in an Aug. 9 letter to shareholders.
Directors up for election at the annual meeting are Marcus E. Bromley, Rita Johnson-Mills and Denise W. Warren.
Brookdale declined to comment on the Land & Buildings letter, but in an Aug. 21 letter to stockholders, Wielansky said the board’s Nominating and Corporate Governance Committee had selected the new director candidates “with a focus on candidates with significant healthcare, finance and operational experience.” Johnson-Mills and Warren, he said, have “decades of proven executive leadership experience in those areas.”
Bromley, Wielansky added, “draws on more than 35 years of real estate industry leadership experience.” He is on the annual meeting agenda for approval to continue his service.
Bromley was appointed to the Brookdale board in 2017 as an independent member under an agreement the company struck with Land & Buildings. Under the terms of the agreement, Litt’s company agreed to support the slate of director nominees put forth by the board at Brookdale’s 2017 annual meeting, and Brookdale agreed to consult with Land & Buildings about the board’s composition before the 2018 annual meeting.
Wielansky said that if the three are elected at the October meeting, the average tenure of Brookdale’s board members will be five years, with half of the directors having joined the board since July 2017.
“The board will also represent an equal mix of gender,” he wrote. “This evolution in gender composition and diversity was a purposeful effort of the board to more closely resemble our customer base and the makeup of our employee base, which is more than 80% female.”
