A vocal shareholder of Capital Senior Living (NYSE: CSU) is once again expressing dissatisfaction with the Dallas-based senior housing operator’s board of directors.
The shareholder, Cove Street Capital, in January called for “commensurate change” within the company’s board of directors, after Capital Senior Living named a new CEO, Kimberly Lody. At that time, Cove Street proposed a new board candidate and urged the company to de-stagger its board. But those changes never came, Cove Street Principal Jeffrey Bronchick lamented in an April 9 letter.
“We are extremely disappointed that the board did not consider any version of our suggestions to de-stagger,” the letter reads. “This is basic corporate governance in the 21st century, and given the performance of the company and stock over many years, it is a disappointing face to show your investors.”
Capital Senior Living is one of the top 10 largest senior living providers in the industry, with 129 communities in the U.S. As of last September, El Segundo, California-based Cove Street owned a stake of 8.5% in the company.
In his letter, Bronchick also described what he sees as an unwillingness to add board members who can offer a fresh perspective, singling out proposed director Steve Plochocki in the process.
“While we are sure he is a fine family man, there is little in our view within his record to suggest that he is ‘new blood’ to change what has clearly been a board of directors that, until very recently, has not been holding anyone accountable for performance,” Bronchick wrote.
Cove plans to vote against all three of the board’s proposed nominees in the 2019 election in order to send a message of dissatisfaction.
“What we can both agree on is the need for operational improvement on the ground and we are hopeful that new CEO Kimberly Lody has what it takes and has the opportunity to operate in an environment that is conducive to our joint success,” the letter concluded.
In a response to the letter, a representative for Capital Senior Living said the company welcomes open communications and values constructive input.
“Our board of directors and management team are focused on driving value and will continue to take actions that we believe are in the best interests of the company and all shareholders,” said Capital Senior Living spokesperson Susan Turkell.
Capital has executed some high-level changes in recent months. Since the beginning of this year, the operator named Lody as its president and CEO, announced COO Brett Lee was leaving his post after poor fourth-quarter earnings and hired Michael Fryar to work as its chief revenue officer.
The company also unveiled a four-pillar turnaround strategy emphasizing stabilization, investment, nurturing and growing the company dubbed “SING.” That strategy is aimed at thriving in a rapidly changing senior housing and health care landscape — one that “will look completely different” in just a decade’s time, Lody told Senior Housing News last month.
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