- Board to Select Four New Independent Directors and Name a Non-Executive Chairman; Barbakow Will Remain CEO
- Longest-Serving Outside Directors Will Retire; New Heads of Compensation, Nominating and Audit Committees to Be Named
- Company Will Declassify Board, Impose Stricter Director Independence Standards, and Establish Executive Stock Ownership Requirements
SANTA BARBARA, Calif. - April 8, 2003 - Tenet Healthcare Corporation (NYSE: THC) announced today that its board of directors has approved a comprehensive set of initiatives designed to enhance corporate governance.
As part of these initiatives, the board will select four new independent directors and elect a non-executive chairman. Jeffrey C. Barbakow will continue as chief executive officer, but he will relinquish his role as chairman after Tenet's annual shareholder meeting later this year and will not stand for reelection to the board. The company also said its three longest-serving outside directors - Bernice B. Bratter, Maurice J. DeWald and Lester B. Korn - will retire from the board as of the shareholder meeting.
Barbakow said, "These actions, which have been under discussion by the board for several months, underscore our commitment to enhancing shareholder-focused corporate governance, improving performance and restoring investor confidence. All of our board members felt it was necessary for us to add a significant number of new directors with fresh perspectives. We wanted to do this without enlarging the board, and so it was decided that the four longest-serving directors would step down no later than immediately following this year's annual meeting. Seniority was simply the best way to facilitate this renewal. In short, my decision to step down as chairman, as well as the decision of the three other dedicated individuals to retire from the board, is simply the right thing to do for the company."
Barbakow continued, "On behalf of the entire board, I want to thank Bernice Bratter, Maury DeWald and Lester Korn for their many years of exemplary service to the company. Tenet will miss them greatly. I look forward, as chief executive officer, to continuing to advance Tenet's strategic growth agenda - while keeping a clear focus on our mission of providing quality care to every patient in all of our hospitals."
In addition to electing an independent director to serve as non-executive chairman, the board will also appoint new heads of the compensation, nominating and audit committees - positions currently held by Bratter, Korn and DeWald, respectively. The board has retained Spencer Stuart, a leading executive search firm, to assist in identifying strong independent candidates and recruiting them for the Tenet board.
Bratter, Korn and DeWald noted that the board is moving quickly to recruit new board members, and is making good progress in identifying superb candidates who will bring additional perspectives and expertise to the board.
The company also announced other actions consistent with its focus on leadership in all areas of corporate governance, including declassifying the existing staggered board (which will require all board members to stand for election annually), imposing stricter standards of independence for board members than those newly proposed by the New York Stock Exchange, and establishing minimum Tenet stock ownership requirements for company officers of one to five times their annual salaries. These actions were adopted by the board upon the recommendation of the corporate governance committee, chaired by Sanford Cloud Jr.
With the decision to declassify the board, or move away from the current system of electing three classes of directors on a staggered basis, each director will be voted upon annually. This initiative requires amending Tenet's articles of incorporation and bylaws, and will result in the directors standing for one-year terms as they come up for reelection, beginning with this year's annual meeting of shareholders.
The corporate governance initiatives announced today are the latest in a series of recent moves by Tenet to address the company's challenges and position it for future growth. Since December, the company has, among other things, (1) announced plans to sell non-core assets and accelerate share repurchases, (2) taken action to reduce operating expenses going forward by at least $100 million annually, (3) announced its intention to begin expensing on its income statement the cost of stock options granted to employees, (4) changed to a calendar year for financial reporting to enhance comparability with other hospital companies, (5) adopted a new policy on Medicare outlier payments, (6) restructured its operating divisions and regions, (7) promoted its top hospital executives to the senior executive management team, (8) placed a seasoned hospital executive who is also a physician in charge of its large California market, and (9) established a groundbreaking new policy for uninsured patients that includes an offer, subject to government approval, of managed care-style pricing.
Tenet Healthcare Corporation, through its subsidiaries, owns and operates 114 acute care hospitals with 27,882 beds and numerous related health care services. Tenet and its subsidiaries employ approximately 116,500 people serving communities in 16 states. Tenet's name reflects its core business philosophy: the importance of shared values among partners - including employees, physicians, insurers and communities - in providing a full spectrum of health care. Tenet can be found on the World Wide Web at www.tenethealth.com.
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Certain statements in this release may constitute forward-looking statements. They are based on management's current expectations and could be affected by numerous factors and are subject to various risks and uncertainties. Certain of those risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K and quarterly reports on Form 10-Q. Do not rely on any forward-looking statement, as we cannot predict or control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events or otherwise.