Prolific activist investor targets HCA

SOURCE: Nashville Business Journal

AUTHOR: Joel Stinnett

An activist investor known for filing corporate governance proposals with Fortune 250 companies has targeted HCA Healthcare Inc. in his latest campaign.

In a filing with the Securities and Exchange Commission Tuesday, California-resident John Chevedden urged HCA corporate governance committee chairwoman Ann Lamont to help pass a proposal that would eliminate the requirement that a supermajority of shareholders must vote to approve any changes to company bylaws. Currently, proposals need approval from 75 percent of shareholders instead of a simple majority.

Shareholders will vote on the proposal April 26 at the company’s annual shareholders meeting. HCA declined to comment on Chevedden's filing through a spokesperson.

Nashville-based HCA (NYSE: HCA) is the area’s largest publicly traded company, with $46.6 billion of revenue in 2018, according to Nashville Business Journal research.

Chevedden is not a typical activist investor. Instead of trying to maximize shareholder value, he crusades for social issues and better corporate governance. He is a prolific filer of corporate proposals, bringing 30 percent of all proposals among Fortune 250 companies in 2014, according to a New York Times article, though he often only owns a few hundred shares of a company’s stock.

In Chevedden’s HCA filing, he calls the proposal (Proposal No. 4) to eliminate supermajority requirements the most important item on the ballot because, in his estimation, it is the only one in danger of not passing. In 2017, a similar proposal brought by shareholders narrowly failed, with 72 percent of the vote.

“Proposal No. 4 began as a shareholder proposal, which raises the question of why didn’t the board of directors think of it first. … Ms. Lamont needs a wake-up call. What is the excuse for HCA to obtain a failed vote on another board of directors proposal in 2017?” Chevedden wrote in the filing. “One can be almost sure that if an executive pay proposal was about to fail by such a narrow margin that somehow the deficit would be eliminated.”

HCA’s board is recommending that shareholders approve Chevedden’s proposal, according to a separate SEC filing made recently by the company.

The other proposals on the annual meeting’s ballot include executive compensation approval, the election of 11 directors to HCA’s board and the ratification of Ernst & Young LLP as the company’s independent accounting firm.