It seems that hardly a day goes by without yet another SEC filing by Brookdale Senior Living detailing why its slate of Board candidates is far better for shareholders than the slate submitted by activist investor Ortelius Advisors. But how much are they spending on this? It would be nice to know, and we are sure shareholders would rather have the money spent on operations or debt repayment.
It has now come down to two Board seats, and Brookdale’s management has been touting both Lee Wielansky and Victoria Freed’s qualifications. Here’s the problem we have. Wielansky has been on the Brookdale Board since 2015, where shareholders witnessed one of the largest losses in shareholder value ever seen in our sector. Where was he when the share price dropped from $39 to $1? Where was he when the recently terminated CEO, Cindy Baier, kept on making promises that maybe she knew could not be kept? And why did he keep on approving her pay packages up to $5 million, when shareholders got nothing in return? While we are all for the importance of continuity, at some point one has to take responsibility for what happened to the destruction of shareholder value.
We do not believe that the Ortelius plan will result in a doubling or tripling of shareholder value any time soon. It is just not that easy. But we also do not see how the status quo will be any better. And, management acted far too late on any changes, and only when pressured from outside. What does that say? We do believe that if Steven Vick is on the Board, his experience and industry knowledge will serve Brookdale’s shareholders much better than Lee Wielansky’s will. Look where 10 years of his leadership got the company. The shareholder meeting is just two weeks away, but we fear the status quo will prevail. At that point, it may be time to just sell your shares.
