Service boosts dissident HMA shareholders

Did Institutional Shareholder Services tip the scales in favor of dissident shareholders for control of Health Management Associates?

You may not have heard of ISS, but the organization carries plenty of weight among large investors who turn to the firm's independent research on corporate matters put to shareholder votes.

So it was big news when the well-regarded proxy advisory service recommended Aug. 8 that shareholders of Naples-based HMA remove the current board of directors of the 71-hospital operator, including longtime chairman William Schoen.

The ISS report prompted HMA to issue a statement on Aug. 9 refuting it. But by then the damage had been done and the battle for control of the board had clearly shifted to dissident shareholders led by New York hedge fund Glenview Capital Management, which owns 14.6% of HMA's shares and proposed a slate of eight new directors.

Because of its status as an independent organization, ISS likely carried enough weight to sway uncommitted shareholders to vote in favor of Glenview's slate.

To be sure, the ISS report was an investor-relations coup for Glenview. “We appreciate that ISS is part of the broad and growing chorus of voices calling for complete change at HMA, and we believe ISS' conclusions reflect not only HMA's historical shortcomings but more importantly reflect the skill, sincerity, preparation and thoughtful approach of the eight nominees,” Glenview said in an Aug. 9 statement.

On Aug. 13, Glenview says it had garnered the shareholder votes needed to replace the board of HMA.