Following Mr. Fetter’s departure, Tenet has since launched plans to “refresh” their board of directors in order to “head off a proxy fight with Glenview Capital Management,” according to Mr. Schurman. Glenview Capital Management owns nearly 18 percent of Tenet shares.
Mr. Fetter isn’t the first Tenet employee to leave, with two Glenview Capital Management employees resigning from Tenet’s board of directors mid-August. Randy Simpson and Matt Ripperger jointly submitted a letter to the board, citing “irreconcilable differences.” Mr. Simpson and Mr. Ripperger joined Tenet’s board in January 2016. Tenet’s decision to allow the two on the board was contingent on Glenview Capital Management agreeing to not increase its stake in the company beyond 25 percent. The agreement also prohibited Glenview Capital Management from teaming up with other investors to replace Tenet’s management or sell the company. The “standstill agreement” initiated by the two parties is no longer valid, leading Tenet to launch a “poison pill’ defense to ensure Glenview shares’ would be diluted if the firm bought more stock. Following the two Glenview Capital Management employees’ resignation, the hedge fund said it was weighing its options on how to increase shareholder value, which may include bolstering Tenet’s financial performance, leadership and operations.
The changes may be pertinent as Tenet’s stock prices are falling. Since July 2017, Tenet’s market cap. has declined by nearly 66 percent. The company has also made a series of acquisitions in recent years, which Mr. Schurman says played a part in the company’s growing long-term debt, which increased by more than $10 billion from 2011 to 2016.
The company’s future as of now is uncertain as the board of directors searches for a new CEO. Regarding Tenet’s new leadership, Mr. Fetter did say during an investor call Sept. 7 that a “lively debate will and should take place.”
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