Brookdale Senior Living President and CEO Lucinda “Cindy” Baier “has taken the bull by the horns in an effort to maximize value for shareholders” since her promotion in February, but she “appears to have been hamstrung in her efforts” by the company’s board of directors, according to Jonathan Litt, founder and chief investment officer of Stamford, CT-based Land and Buildings Investment Management LLC.
Litt made the comments to fellow Brookdale stockholders in a public letter on Thursday.
A spokeswoman for Brentwood, TN-based Brookdale told McKnight’s Senior Living that the company had no comment.
The activist investor said he would like to see Brookdale “immediately put up for sale portfolios of $500 million to $1 billion and reload as transactions are completed.” Simultaneously, Litt said, the company should “pursue a senior housing real estate investment trust for its real estate.”
“Comparable companies trade at multiples in the mid-teens, compared with mid-single digit multiple for Brookdale today,” he said.
Litt specifically called out Jackie Clegg, who joined the board in 2005 and leads the board’s Nominating and Corporate Governance Committee, as an impediment to progress. Saying Clegg has “a dated knowledge of best corporate governance practices as well as a strong bias for entrenchment,” Litt recommended that the board “reevaluate her inclusion on any committees” and not re-nominate her at the company’s 2019 annual shareholder meeting because she has “overseen material shareholder value destruction at Brookdale.”
Litt also called for “more shareholder-friendly governance changes” at the company, including:
- Accelerating 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.
- Amending the charter and bylaws to allow shareholders to call a special meeting of shareholders.
- Appointing a new, finance-oriented individual to the board and to its Investment Committee.