UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. )
Filed by
the Registrant ¨
Filed by
a Party other than the Registrant x
Check the
appropriate box:
x Preliminary
Proxy Statement
¨ Confidential,
for Use of the Commission Only (as permitted by Rule14a-6(e)(2))
¨ Definitive
Proxy Statement
¨ Definitive
Additional Materials
o Soliciting
Material Under Rule 14a-12
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CHEMED
CORPORATION
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(Name
of Registrant as Specified in Its Charter)
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MMI
INVESTMENTS, L.P.
MCM
CAPITAL MANAGEMENT, LLC
JOHN
S. DYSON
CLAY
B. LIFFLANDER
SCOTT
J. CROMIE
JAMES
FOY
PETER
A. MICHEL
CARROLL
R. WETZEL, JR.
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(Name
of Persons(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
¨ Fee
paid previously with preliminary materials:
¨ Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount
previously paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
Persons
who are to respond to the collection of information contained in this form are
not required to respond unless the form displays a currently valid OMB control
number.
PRELIMINARY
COPY SUBJECT TO COMPLETION
DATED
MARCH 26, 2009
MMI
INVESTMENTS, L.P.
__________,
2009
Dear
Fellow Stockholder:
MMI
Investments, L.P. (“MMI Investments”) and the other participants in this
solicitation (collectively, the “MMI Group” or “we”) are the beneficial owners
of an aggregate of 800,001 shares of common stock of Chemed Corporation
(“Chemed” or the “Company”), representing approximately 3.6% of the outstanding
shares of common stock of the Company. For the reasons set forth in
the attached Proxy Statement, the MMI Group believes that the Board of Directors
of the Company is not acting in the best interests of its
stockholders. The MMI Group is therefore seeking your support at the
annual meeting of stockholders (the “Annual Meeting”) scheduled to be held on
_______, 2009 at ____ _.m. local time at _____ located at _____ _______,
_______, ______ _____, for the
following:
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1.
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To
elect the MMI Group’s slate of five (5) director nominees to the Company’s
Board of Directors in opposition to certain of the Company’s incumbent
directors;
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2.
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To
ratify the selection by the Audit Committee of the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the Company and
its consolidated subsidiaries for 2009;
and
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3.
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To
transact any other business that may properly come before the Annual
Meeting or any adjournment(s) of such
meeting.
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We are
not seeking control of the Board of Directors. Rather, we are seeking
five (5) out of eleven (11) seats on the Board of Directors to ensure that the
interests of the stockholders, the true owners of Chemed, are vigorously
represented in the boardroom by truly independent
representatives. Through the attached Proxy Statement, we are
soliciting proxies to elect not only our five (5) director nominees, but also
the candidates who have been nominated by Chemed other than _______________,
_______________, _________________, _________________ and
_________________. This gives stockholders the ability to vote for
the total number of directors up for election at the Annual
Meeting. The names, backgrounds and qualifications of Chemed’s
nominees, and other information about them, can be found in the Company’s proxy
statement. There is no assurance that any of Chemed’s nominees will
serve as directors if our nominees are elected.
The MMI
Group urges you to carefully consider the information contained in the attached
Proxy Statement and then support its efforts by signing, dating and returning
the enclosed GOLD proxy
card today.
If you
have already voted a proxy card furnished by the Company’s management, you have
every right to change your vote by signing, dating and returning a later dated
proxy.
If you
have any questions or require any assistance with your vote, please contact
MacKenzie Partners, Inc., which is assisting us, at its address and toll-free
number listed on the following page.
| Thank you for your support. | |||
| MMI INVESTMENTS, L.P. | |||
| By: |
MCM
Capital Management, LLC
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| General Partner | |||
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By:
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Name:
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Jerome
J. Lande
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Title:
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Executive
Vice
President
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2
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If
you have any questions, require assistance in voting your GOLD proxy
card,
or
need additional copies of the MMI Group’s proxy materials, please
call
MacKenzie
Partners at the phone numbers listed below.
 105
Madison Avenue
New
York, NY 10016
(212)
929-5500 (Call Collect)
or
TOLL-FREE
(800) 322-2885
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3
2009
ANNUAL MEETING OF STOCKHOLDERS
OF
CHEMED
CORPORATION
_________________________
PROXY
STATEMENT
OF
MMI
INVESTMENTS, L.P.
_________________________
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
MMI
Investments, L.P., a Delaware limited partnership (“MMI Investments”), MCM
Capital Management, LLC, a Delaware limited liability company (“MCM”), John S.
Dyson (“Mr. Dyson”), Clay B. Lifflander (“Mr. Lifflander”), Scott J. Cromie
(“Mr. Cromie”), James Foy (“Mr. Foy”), Peter A. Michel (“Mr. Michel”) and
Carroll R. Wetzel, Jr. (“Mr. Wetzel”) (collectively, the “MMI Group” or “we”)
are significant stockholders of Chemed Corporation, a Delaware corporation
(“Chemed” or the “Company”). The members of the MMI Group are
participants in this solicitation. The MMI Group believes that the
Board of Directors of the Company (the “Board”) is not acting in the best
interests of its stockholders. The MMI Group is therefore seeking
your support at the annual meeting of stockholders scheduled to be held on
__________, 2009 at ____ _.m. local time at _____ located at _____ _______,
_______, ______ _____, including any adjournments
or postponements thereof and any meeting which may be called in lieu thereof
(the “Annual Meeting”), for the following:
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1.
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To
elect the MMI Group’s director nominees, Scott J. Cromie, James Foy, Clay
B. Lifflander, Peter A. Michel and Carroll R. Wetzel, Jr. (the “MMI
Nominees”), to serve as directors until the 2010 annual meeting of
stockholders and until their respective successors shall have been elected
and qualified, in opposition to certain of the Company’s incumbent
directors whose terms expire at the Annual
Meeting;
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2.
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To
ratify the selection by the Audit Committee of the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the Company and
its consolidated subsidiaries for 2009;
and
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3.
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To
transact any other business that may properly come before the Annual
Meeting or any adjournment(s) of such
meeting.
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This
Proxy Statement is soliciting proxies to elect not only the five (5) MMI
Nominees, but also the candidates who have been nominated by the Company other
than _______________, _______________, _________________, _________________ and
_________________. This gives stockholders who wish to vote for the
MMI Nominees the ability to vote for eleven (11) nominees in total.
As of
___________, 2009, the approximate date on which this Proxy Statement and the
enclosed GOLD proxy card
are first being mailed to stockholders, the members of the MMI Group were the
beneficial owners of an aggregate of _________ shares of common stock of the
Company, par value $1.00 per share (the “Shares”), which currently represent
approximately __% of the issued and outstanding Shares.
Chemed
has set the record date for determining stockholders entitled to notice of and
to vote at the Annual Meeting as _______, 2009 (the “Record
Date”). The mailing address of the principal executive offices of
Chemed is 2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio
45202-4726. Stockholders of record at the close of business on the Record Date
will be entitled to vote at the Annual Meeting. According to Chemed,
as of the Record Date, there were _________ Shares outstanding and entitled to
vote at the Annual Meeting. The participants in this solicitation
intend to vote all of their Shares which they are entitled to vote FOR the
election of the MMI Nominees and the candidates who have been nominated by the
Company other than _______________, _________________, _______________,
_______________ and _________________.
This
proxy statement (this “Proxy Statement”) and the enclosed GOLD proxy card are first
being furnished to stockholders on or about _________, 2009.
THIS
SOLICITATION IS BEING MADE BY THE MMI GROUP AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OR MANAGEMENT OF THE COMPANY. THE MMI GROUP IS NOT AWARE OF
ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD
OTHER MATTERS, WHICH THE MMI GROUP IS NOT AWARE OF A REASONABLE TIME BEFORE THIS
SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES
IN THE ENCLOSED GOLD PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR
DISCRETION.
THE MMI
GROUP URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF THE MMI NOMINEES.
IF YOU
HAVE ALREADY SENT A PROXY CARD FURNISHED BY CHEMED MANAGEMENT TO THE COMPANY,
YOU MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE MMI NOMINEES AND THE
CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY OTHER THAN _______________,
_______________, _______________, _______________ AND _________________ BY
SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE
LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE
OF REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL MEETING TO THE MMI GROUP,
C/O MACKENZIE PARTNERS, INC., WHICH IS ASSISTING IN THIS SOLICITATION, OR TO THE
SECRETARY OF CHEMED, OR BY VOTING IN PERSON AT THE ANNUAL MEETING.
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
This
Proxy Statement and our GOLD proxy card are available
at http://www.____________.
2
IMPORTANT
Your vote
is important, no matter how few Shares you own. The MMI Group urges
you to sign, date and return the enclosed GOLD proxy card today to vote
FOR the election of the MMI Nominees.
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·
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If
your Shares are registered in your own name, please sign and date the
enclosed GOLD
proxy card and return it to the MMI Group, c/o MacKenzie Partners, Inc.,
in the enclosed envelope today.
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·
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If
your Shares are held in a brokerage account or bank, you are considered
the beneficial owner of the Shares, and these proxy materials, together
with a GOLD voting
form, are being forwarded to you by your broker or bank. As a
beneficial owner, you must instruct your broker, trustee or other
representative how to vote. Your broker cannot vote your Shares
on your behalf without your
instructions.
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Depending
upon your broker or custodian, you may be able to vote either by toll-free
telephone or by the Internet. Please refer to the enclosed
voting form for instructions on how to vote electronically. You
may also vote by signing, dating and returning the enclosed voting
form.
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Since
only your latest dated proxy card will count, we urge you not to return any
proxy card you receive from the Company. Even if you return the
Company’s proxy card marked “withhold” as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to the MMI
Group. Remember, you can vote for our five nominees only on our GOLD proxy card. So
please make certain that the latest dated proxy card you return is the GOLD proxy card.
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If
you have any questions regarding your proxy,
or
need assistance in voting your Shares, please call:
105
Madison Avenue
New
York, NY 10016
(212)
929-5500 (Call Collect)
or
TOLL-FREE
(800) 322-2885
|
3
REASONS
FOR THE SOLICITATION
We have
decided to nominate five highly qualified and independent director nominees for
election to the Board due to our concerns regarding Chemed’s business strategy
and the entrenchment at Chemed, including the high concentration of current or
former executives on the current Board. We believe the election of
the MMI Nominees represents the best means for stockholders to maximize the
value of their Shares. The MMI Nominees are truly independent, have
extensive experience relevant to the Company and the ability to fully pursue
efforts to increase stockholder value, as further discussed in their
biographical extracts included in this Proxy Statement. Although the
current Board may technically comply with the requirements of the New York Stock
Exchange and SEC rules relating to board “independence,” we believe the
existence of various relationships of current directors with Chemed and its
affiliates calls into question the true independence of the
Board. The Board currently contains three current Chemed employees,
five former employees of Chemed or its affiliates and two members whose
employers received significant funding from Chemed or its affiliates within
recent years (one of whom was just named Chairman).1 We
believe this insularity and interlocking influence has obstructed reasoned
debate within the Board on crucial matters such as strategic configuration,
particularly relating to a separation of Chemed’s Vitas and Roto-Rooter
businesses, and executive compensation.
CHEMED
REFUSES TO TAKE ACTION EVEN THOUGH IT ACKNOWLEDGES THE CLEAR MERITS OF A
TAX-FREE SPIN-OFF: MARKET WEAKNESS IS NO EXCUSE TO PUT OFF LONG-TERM
STRATEGY.
CHEMED’S
EXECUTIVES HAVE REVERSED POSITIONS ON A TAX-FREE SPIN-OFF SEVERAL TIMES – CAN
THEY BE TRUSTED TO EXECUTE IN THE FUTURE?
CHEMED’S
BOARD LACKS THE INDEPENDENCE TO HOLD MANAGEMENT ACCOUNTABLE. WE
BELIEVE THEIR ALLEGED CONSIDERATION OF A SPIN-OFF MAY BE AN ATTEMPT TO DEFLECT
SCRUTINY OF THEIR STRATEGY AND ENTRENCHMENT.
THE
MMI INVESTMENTS’ NOMINEES BRING INDUSTRY EXPERTISE, GENUINE INDEPENDENCE AND
ALIGNMENT WITH CHEMED’S TRUE OWNERS, THE STOCKHOLDERS
MMI
Investments is the owner of 800,000 shares of the Company’s common stock,
representing approximately 3.6% of the outstanding shares. MMI
Investments is a long-only value fund focused on small-cap companies with
longstanding, differentiated businesses generating significant, consistent cash
flow. As long-term investors we have held Chemed stock for over two
years and are prepared to hold our stock well beyond 2009.
4
We
invested in Chemed because of the strength and consistency of cash flow in both
its businesses – Vitas, the leading for-profit provider of hospice care and
Roto-Rooter, the leading provider of plumbing/drain-cleaning services nationally
– despite our concerns that these businesses might never reach their full
potential value due to their highly unorthodox combination and an entrenched
Board. We decided to invest due to our belief that the stock market
had significantly undervalued the recession-resistance and growth prospects for
both Vitas and Roto-Rooter, and because management had publicly acknowledged the
benefits of the separation of these businesses. On May 11, 2004
(shortly following the Company’s purchase of a
controlling interest in Vitas (the “Vitas
Purchase”)),
CEO Kevin McNamara stated “Long-term, we recognize they will need to be
separated. You certainly get maximum value from a pure play.”2 We
agreed and built a significant position in Chemed common
stock.
As noted
above and elsewhere in this Proxy Statement, we believe that the interlocking
relationships on the current Board have influenced its decisions and inaction on
the separation of Chemed’s Vitas and Roto-Rooter businesses, which we believe
would unlock significant stockholder value. Our views have been
formed in part by Chemed management’s shifting positions and conflicting public
statements regarding its conglomerate structure and strategy in the five years
since the Vitas Purchase. In that time, Chemed management’s public
statements have veered significantly, stating at the outset that “Long-term
separation is inevitable”3,
and as recently as November 2008 that “long-term…the two companies will remain
joined at the hip.”4 Management’s
dramatic reversal prompted us to inquire publicly on February 12, 2009, of the
Board’s view of a split-up, which we believe could be implemented on a tax-free
basis. Rather than a response from the new chairman or an independent
director designee, on March 16, 2009, MMI Investments received a public response
from a management insider, CEO Kevin McNamara, informing us that even though the
Board agrees that “a separation could create substantial shareholder value”, and
that “the Board has already positioned Chemed’s businesses to facilitate such a
separation,” the Board nevertheless would maintain the current conglomerate
structure indefinitely due to vague concerns about timing and potential value
destruction. We believe this pattern demonstrates arbitrary,
short-term thinking at best, and at worst an attempt by an entrenched board to
maintain its holding company infrastructure. Regardless of the cause,
we believe Chemed stockholders deserve better.
The MMI
Nominees, Scott J. Cromie, James Foy, Clay B. Lifflander, Peter A. Michel and
Carroll R. Wetzel, Jr., bring operational and strategic experience in both
residential services and healthcare, a strong track record of public company
board service and effective governance, strategic alternatives review and
execution expertise, and total uncompromised independence and stockholder
alignment. We are not seeking control of the Board. The
MMI Nominees, if elected, will comprise a minority of the Board and will be
wholly independent, with no vested interest in any single strategic direction,
other than taking the steps necessary to enhance stockholder value.
The
MMI Nominees will serve you, the stockholders and true owners of Chemed, not
executive allegiances and entrenched interests. They will bring
expertise and objectivity to Chemed, not derive their livelihood from
it.
2
Bloomberg Transcript of the Company’s First Quarter of Fiscal 2004 Earnings
Conference Call, Page 5.
3
Bloomberg Transcript of the Company’s First Quarter of Fiscal 2004 Earnings
Conference Call, Page 5.
4 CEO
Kevin McNamara’s comments at the Oppenheimer Healthcare Conference, November 3,
2008.
5
IF
VITAS AND ROTO-ROOTER WERE SEPARATE COMPANIES TODAY, WOULD ANYONE ENDORSE
COMBINING THEM, REGARDLESS OF THE ENVIRONMENT?
On
February 12, 2009, MMI Investments sent a letter to the Board requesting their
response to our proposal that Chemed split up via a tax-free spin-off,
suggesting a split-up could generate significant stockholder value and noting
that, contrary to recent statements by management, such a transaction would be
relatively simple to execute. On March 16, 2009, Chemed’s CEO Kevin
McNamara responded, stating, among other things, that:
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“…we
are well positioned to separate the businesses if and when the time is
right.”
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“We
agree that given the proper economic circumstances a separation could
create substantial shareholder
value.”
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“…executing
a separation in the current market environment, including the current
state of the equity and credit markets, would be risky and could impair,
rather than create, value for Chemed's current
stockholders.”
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We are
pleased that the Board has acknowledged the simplicity of execution and
potential value creation of a split-up of Chemed. We note
however that the Board’s objection on the basis of current markets chooses to
ignore several points:
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Spin-offs
take time to execute – on average more than eight months from announcement
to execution for spin-offs of comparable size since 2006.5
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The
current market malaise will not last forever – we believe a board should
position itself during market weakness to take greatest advantage when
markets rebound.
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Waiting
for strengthening in markets before beginning a spin-off process likely
means missing several quarters of capital markets
strength.
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With
a limited ability to call special meetings, stockholders are given only one
chance a year to hold management and the Board accountable. We
believe it’s wiser to get our homework done while it rains, so when the sun
comes out we can take full advantage.
WE
BELIEVE THE CHEMED BOARD’S RESPONSE AMOUNTS TO: “TRUST US – WE’LL REVISIT
SEPARATION IN EARNEST AT A LATER DATE.” LET’S CONSIDER THEIR
RECORD:
The following are excerpts from
statements made by Chemed management over the past several years regarding a
separation of Vitas and Roto-Rooter:
5 Based on
spin-offs of 100% interests in subsidiaries with greater than $250 million of
value announced since January 1, 2006.
6
Executive
Vice President Tim O’Toole, “Roto-Rooter to Buy Vitas Healthcare, May Spin It
Off” – Bloomberg News, December 19, 2003:
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“Tim O’Toole,
Roto-Rooter’s executive vice president and treasurer, said the company had
no interest in selling Vitas, though would ‘investigate
the opportunity of it becoming a public company, independent from us.’”
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“We
do not see long-term running one business with two divisions – one
plumbing and one hospice”
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CEO Kevin
McNamara, Q104 Earnings Call, May 11, 2004:
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“One
issue that is on many of your mind is synergy, or lack synergy between our
business segments. From an operational basis, these are
minimal.”
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“Long-term,
we recognize they will need to be separated. You certainly get maximum
value from a pure play.”
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“Long-term
separation is inevitable.”
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CEO Kevin
McNamara, Oppenheimer Healthcare Conference, November 3, 2008:
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“CHE
stock has not traded at a discount related to the very disparate parts of
the entity.”
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“So,
long term perspective is that it looks like the two companies will remain
joined at the hip.”
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CEO Kevin
McNamara, J.P. Morgan Healthcare Conference, January 13, 2009:
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·
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“People
are quick to say ‘well what about a tax-free spinoff?’ . . . I wouldn’t
expect that to happen, it still doesn’t create much
value.”
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“Roto-Rooter
probably wouldn’t exist as a separate company for very
long. Probably just result in a sale, probably soon after that
and it would just be a slightly different tax situation, but in any event
a substantial tax result would happen, you know, in relative short
order.”
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“And
then just to completely close the issue, let me say with regard to that
convertible debenture issue, which I said had worked out and was very
propitious for us - good time, good rate. We’re not looking at
any likely dilution from it and in the mean time it’s a rate of 1 7/8
percent so given the fact that any kind of a sale of Roto-Rooter would
upset that and make us give the holders the option to close out that deal
we’re very reluctant to do that as
well.”
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Our
frustration with management’s reversal and alleged obstacles to a tax-free
spin-off led us to write our February 12, 2009 letter, asserting that a tax-free
spin-off would enhance value long-term and would be simple to
execute. As described above, in Chemed’s March 16, 2009 letter, Mr.
McNamara’s responded:
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“We
agree that given the proper economic circumstances a separation could
create substantial shareholder
value.”
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7
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“We
agree with the statement in your letter that, ‘A spin-off of one of
Chemed's businesses would be relatively
simple’”.
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·
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We
note that Mr. McNamara’s letter makes no further mention of obstacles to a
tax-free spin-off from tax issues or the convertible
debentures.
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Which
is more likely:
That
Chemed’s board has studiously concluded that the combination of Roto-Rooter and
Vitas continues to make sense,
or…
That
they are committed to maintaining their conglomerate
infrastructure?
CHEMED
CORPORATE GOVERNANCE: TRUE INDEPENDENCE & OBJECTIVITY OR ENTRENCHMENT &
TECHNICAL COMPLIANCE WITH INDEPENDENCE STANDARDS?
We
believe that the true independence of ten of the eleven current members of the
Board is in serious doubt by reason of current employment with Chemed, former
employment with Chemed, employment with a current or former affiliate of Chemed,
employment by an entity that has received significant monies directly or
indirectly from Chemed, family relationships, or in many cases several of these
factors. The following chart indicates the existence of these factors
for each of the current Chemed directors.
The
Current Chemed Board
|
Chemed
Employee
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Past
Chemed Employee
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Affiliate
Employee/
Director
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Chemed
$ to Employer
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Family
Relationships
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Joel F. Gemundera
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X
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Patrick P. Graceb
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X
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X
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Thomas C. Huttonc
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X
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X
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X
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Walter L. Krebsd
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X
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Sandra E. Laneye
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See
Note e)
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X
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X
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Andrea R. Lindellf
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X
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X
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Kevin J. McNamarag
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X
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X
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Timothy S. O’Tooleh
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X
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X
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X
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Donald E. Saundersi
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X
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George J. Walsh IIIj
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X
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Frank
E. Wood
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a)
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Mr.
Gemunder has been CEO of Omnicare Inc. (“Omnicare”) since May 2001 and
President since May 1981, when Omnicare was formed from Chemed’s and W.R.
Grace & Co.’s (“W.R. Grace”) healthcare
businesses.
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b)
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Patrick
P. Grace is the son of J. Peter Grace, the longtime Chairman and CEO of
W.R. Grace and the Chairman of Chemed until 1993. Patrick P. Grace was the
President of Grace Logistics (a W.R. Grace subsidiary) from 1991-1995 and
CFO of Kascho GmbH (a W.R. Grace subsidiary) from
1988-1991.
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8
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c)
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Thomas
C. Hutton is a Vice President of Chemed and the son of Edward L. Hutton,
the former Chairman and CEO of Chemed. Thomas C. Hutton was a director of
Omnicare from 1983-2001.
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d)
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Mr.
Krebs was the CFO of former Chemed subsidiary Service America from October
1997 to July 1999. From January 1990 to April 1991 he was also the CFO of
Chemed subsidiary DuBois Chemicals.
|
|
|
e)
|
Ms.
Laney was the Chief Administrative Officer of Chemed from May 1991 to
March 2003. Ms. Laney is currently CEO of Cadre Computer
Resources Co. (“Cadre”), a former Chemed subsidiary. Ms. Laney is also on
the board of Omnicare. Ms. Laney is also named on a corporate
website, though not disclosed in the Company’s recent proxy statements, as
President of Chemed subsidiary Jet Resource
Inc.
|
|
|
f)
|
Ms.
Lindell is Dean and Professor of the College of Nursing at the University
of Cincinnati. The University of Cincinnati and its College of Nursing
have received charitable contributions from the Chemed Foundation as
recently as 2007. Ms. Lindell is also on the board of
Omnicare.
|
|
|
g)
|
Mr.
McNamara is the President & CEO of Chemed. Mr. McNamara was the COO of
Omnicare from 1990-1992 and a director from 1986-2003. Mr. McNamara is
also a director of Cadre.
|
|
|
h)
|
Mr.
O’Toole is an Executive Vice President of Chemed and the CEO of its
subsidiary Vitas. Mr. O’Toole was a director of Omnicare from 1989-1997.
Mr. O’Toole has two current or former brother-in-laws (Thad Jacarz and
Robert Meyrose) who were employed by
Vitas.
|
|
|
i)
|
Mr.
Saunders held various executive roles at Chemed subsidiary Dubois
Chemicals between 1970-1991.
|
|
|
j)
|
Mr. Walsh is a partner with the
law firm of Thompson Hine LLP. Thompson Hine received fees for legal
services provided to Chemed as recently as
2007.
|
Chemed
reported in its 2008 proxy statement that seven members of the current board are
independent by New York Stock Exchange listing standards. We believe
this is a masterful example of operating just within the envelope of
independence from a literal reading of the definition without taking into
account the spirit of true independence on a board and, in our view, does not
amount to good corporate governance.
In
addition to the above, several other interlocks exist:
|
|
·
|
In
2001, current director Sandra E. Laney, who was at the time Executive Vice
President and Chief Administrative Officer of Chemed, purchased Cadre from
Chemed for a $399,000 note. In 2002 Cadre borrowed another
$150,000 from the Company. Chemed CEO Kevin McNamara is also a
director of Cadre. Ms. Laney also serves in a paid capacity as
president of the Chemed Foundation6, a not-for-profit
which received significant past funding from Chemed.7 Ms. Laney is
also a Director of the University of Cincinnati College of Nursing, fellow
director Andrea R. Lindell’s
employer.
|
|
|
·
|
Chairman
George J. Walsh III’s law firm, Thompson Hine LLP, in addition to legal
fees received from Chemed as recently as 2007, also has represented Chemed
former affiliate Omnicare, whose board also includes Chemed board members
Andrea R. Lindell, Sandra E. Laney (whose husband, D. Michael Laney, is an
Omnicare employee) and Joel Gemunder, also Omnicare’s CEO.8
|
This
culture of entrenchment has developed over a long period of time – we note that
the current directors of Chemed average nearly 17 years on the
Board. We believe that the lack of new truly independent directors on
the Board may have bred an atmosphere that, from our point of view, may have
contributed to excessive compensation for Chemed’s senior
management:
9
|
|
·
|
The
five highest paid officers of Chemed have received cash compensation &
benefits in the five years ending 2007 of over $21
million.
|
|
|
·
|
The
five highest paid officers of Chemed have received total compensation in
this period of over $36 million (not including 637,000 options with an
in-the-money value of $8.1 million as of March 20, 2008).9
|
|
|
o
|
This
combined value (over $44 million) represents over 25% of Chemed’s total
reported net income over this
period.
|
|
|
·
|
These
five executives also stand to receive significant total compensation on a
change in control of Chemed: a total of nearly $18 million, not including
gains on vested options and stock received from the
Company.
|
CHEMED
STOCKHOLDERS HAVE AN ALTERNATIVE: MMI INVESTMENTS’ HIGHLY QUALIFIED &
INDEPENDENT DIRECTOR CANDIDATES
The MMI
Group has nominated a slate of five highly-qualified director candidates who are
totally committed to taking the necessary steps to enhance stockholder
value. The MMI Nominees have the necessary experience and skillsets
to execute on that commitment, both operationally and strategically, and offer
substantial expertise in both of Chemed’s industries, healthcare and residential
services. The MMI Nominees are independent of management and the
current Board and are committed to selecting and executing the right plans,
operationally and strategically, for the optimization of value for all Chemed
stockholders and the realization of a share price worthy of Chemed’s intrinsic
value.
The
following are highlights of the relevant operational and strategic experience of
the MMI Nominees. More detailed biographical extracts for each MMI
Nominee are included elsewhere in this Proxy Statement.
|
Relevant
Operating Experience
|
James
Foy (57)
|
·
President & CEO since 1993 of Riverside Healthcare System, a
$250 million healthcare network, including three hospital sites, multiple
clinics, a skilled nursing facility and a nursing school
·
Chairman, Greater New York Hospital Association
·
Faculty, Mercy College Healthcare Management
Program
|
|
Scott
J. Cromie (52)
|
· Former
Group President of the ServiceMaster Company (NYSE:SVM-acquired), a
provider of outsourced services for residential and commercial
buildings
· Former
President & COO of American Home Shield, a subsidiary of ServiceMaster
providing home inspections & home warranties
|
|
|
Peter
A. Michel (66)
|
· Former
President of Brinks Home Security, provider of high-tech home protection
services which Mr. Michel grew to serve 700,000 homesites.
· CEO,
President & Director of iSECUREtrac Corporation (OTCBB:ISEC), provider
of electronic monitoring products for the corrections
industry
|
9 The $36
million in total compensation is as reported by the Company in the Summary
Compensation Tables in its Schedule 14A Proxy Statements but does not include a
value for the expensing of stock options in fiscal 2003-2005. In those years,
the Company issued 637,000 options to the five name executive officers which as
of March 20, 2008 had an in-the-money value of $8.1 million.
10
|
Strategic
Alternatives Review & Execution Expertise
|
Clay
B. Lifflander (46)
|
·
President of MMI Investments, President of MCM, and President of
Millbrook Capital Management, Inc. a diversified private investment
firm
· Former
Co-Chairman and CEO of Key Components LLC, a diversified manufacturing
company and SEC registrant
· Former
Managing Director, M&A Group (coverage including healthcare), Smith
Barney
· Former
Director, Dendrite International, Inc. (NASDAQ:DRTE – acquired), software
& service provider for the pharmaceutical industry
·
Director, Unisys Corporation (NYSE:UIS)
|
|
Carroll
R. Wetzel, Jr. (65)
|
· Former
Managing Director and Co-Head of the Mergers and Acquisitions group of
Chemical Bank/Chase Manhattan
· Former
Managing Director of Smith Barney in the Mergers and Acquisitions
group
·
Director of Exide Technologies (NASDAQ:XIDE)
·
Director of Brinks Home Security Holdings, Inc.
(NYSE:CFL)
· Former
Director of Laidlaw International, Inc. (NYSE:LI – acquired).
· Former
Chairman of Safety Components (NYSE:SAFY –
acquired).
|
11
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The MMI
Group is seeking your support at the Annual Meeting to elect the MMI
Nominees. The Board is currently composed of eleven (11)
directors. The MMI Group believes that eleven (11) directors are up
for election at the Annual Meeting to serve one-year terms expiring at the 2010
annual meeting of stockholders and until their successors have been selected and
qualified. For the reasons stated above, we are seeking your support
at the Annual Meeting to elect the MMI Nominees in opposition to five (5) of the
Company’s eleven (11) director nominees. Your vote to elect the MMI
Nominees will have the legal effect of replacing five (5) incumbent directors of
the Company with the MMI Nominees. If elected, the MMI Nominees will
represent a minority of the members of the Board. We are not seeking
control of the Board of Directors. Rather, we are seeking five (5)
out of eleven (11) seats on the Board of Directors to ensure that the interests
of the stockholders, the true owners of Chemed, are vigorously represented in
the boardroom by truly independent representatives.
THE
MMI NOMINEES
The MMI
Group has nominated five (5) highly qualified nominees, each of whom, if
elected, will exercise his independent judgment in accordance with his fiduciary
duties as a director in all matters that come before the Board. The
MMI Nominees are independent of the Company in accordance with the SEC and New
York Stock Exchange rules on board independence. If elected, and
subject to their fiduciary duties as directors, the MMI Nominees would work with
the other members of the Board to take those steps that they deem are necessary
or advisable to maximize value for all stockholders.
Set forth
below are the name, age, citizenship, business address, present principal
occupation and employment and material occupations, positions, offices or
employments for the past five years of each of the MMI Nominees. This
information has been furnished to us by the MMI Nominees.
Scott J. Cromie (Age 52) is
currently an independent management consultant. Mr. Cromie was a
Group President of The ServiceMaster Company (“ServiceMaster”), a provider of
outsourced services for residential and commercial buildings, from March 2006 to
August 2007. As Group President, Mr. Cromie was responsible for a
number of direct or indirect subsidiaries of ServiceMaster, including American
Home Shield, AmeriSpec, Inc., ServiceMaster Clean, Furniture Medic, Merry Maids
Limited Partnership and InStar Services Group, Inc. Mr. Cromie served
as Chief Executive Officer (from February 2006 to August 2007) and as President
and Chief Operating Officer (from 1996 to 2006) of American Home Shield, a
subsidiary of ServiceMaster providing home inspections and home warranties to
consumers. Mr. Cromie is a former Member of the Memphis Chamber of
Commerce Board of Directors and is currently a Director of the RISE
Foundation. The principal business address of Mr. Cromie is 2510
Lennox Drive, Germantown, Tennessee 38138. Mr. Cromie is a U.S.
Citizen.
12
James Foy (Age 57) has served
as President and Chief Executive Officer of The Riverside Healthcare System
(“Riverside”), a $250 million healthcare network including three hospital sites,
multiple clinics, a skilled nursing facility and a nursing school, since
1993. Prior to joining Riverside, Mr. Foy served as Executive Vice
President and Chief Operating Officer (from 1990 to 1993) and Vice President
(from 1986 to 1990) at the Catholic Medical Center of Brooklyn and Queens, a
multi-institutional medical center encompassing four hospitals, two skilled
nursing facilities, two home health agencies and multiple satellite
clinics. Mr. Foy currently serves as the Chairman of the Greater New
York Hospital Association, a Member of the Business Development Board of Hudson
Valley Bank and as a Faculty Member of the Mercy College Healthcare Management
Program. The principal business address of Mr. Foy is 967 North
Broadway, Yonkers NY 10701. Mr. Foy is a U.S. Citizen.
Clay B. Lifflander (Age 46)
has been President of Millbrook Capital Management, Inc. since 1995 and of MMI
Investments since 1996. Mr. Lifflander has served on the Board of
Unisys Corp., a provider of information technology solutions, since May 2008 and
is a member of the Finance Committee and the Nominating and Corporate Governance
Committee. Mr. Lifflander served on the Board of Dendrite
International, Inc., a supplier of sales force software products and support
services to the pharmaceutical industry from 2006 until its acquisition in 2007
by Cegedim SA. From 1998 to 2004, Mr. Lifflander served, at various
times, as Co-Chairman of the Board, Chief Executive Officer, President and
Director of Key Components, Inc., a diversified manufacturing
corporation. From 1994 to 1995 Mr. Lifflander served as President of
the New York City Economic Development Corporation under then Mayor Rudolph
Giuliani. Prior to this Mr. Lifflander was a Managing Director in the
M&A Group at Smith Barney, where he worked from 1984 to 1994. He
is a former Director of the United Nations Development
Corporation. The principal business address of Mr. Lifflander is 1370
Avenue of the Americas, New York, New York 10019. Mr. Lifflander is a
U.S. citizen.
Peter A. Michel (Age 66) has
served as President and Chief Executive Officer of iSECUREtrac Corporation, a
leading provider of electronic monitoring systems, since 2006. Mr.
Michel was previously President and Chief Executive Officer of General Fiber
Communications, Inc. on an interim basis from May 23, 2005 to July 8,
2005. The Company filed for Chapter 7 Bankruptcy on July 8,
2005. From 2003 to 2004 he served as President and Chief Executive
Officer of NEP Broadcasting, L.L.C. where he led the sale of the business to
private equity investors. He has led four companies as Chief
Executive Officer, including Brink's Home Security, a $258 million leader in
high-tech home protection services supporting over 700,000 households in more
than 100 markets covering 42 U.S. states and two Canadian
provinces. Mr. Michel is currently on the board of iSECUREtrac
Corporation. He has served as a director of AeroGrow International,
Inc. since July 2008. The principal business address of Mr. Michel is
5078 South 111th Street, Omaha, Nebraska 68137. Mr. Michel is a U.S.
citizen.
Carroll R. Wetzel, Jr. (Age 65)
is a retired investment banker. Mr. Wetzel has served as a
member of the Board of Directors of Exide Technologies, a manufacturer of
batteries used in transportation, motive power, network power, and military
applications, since 2005, and Brink’s Home Security Holdings, Inc., a provider
of residential and commercial security alarm monitoring services, since October
2008. From May 2008 to October 2008 Mr. Wetzel served as a director
of The Brink’s Company, a provider of security services. Mr. Wetzel
served as a member of the Board of Directors of Laidlaw International, Inc., a
North American transportation services company, from 2004 to
2007. From 2000 to 2005, he served as Chairman of the Board of
Directors of Safety Components International, Inc., a supplier of automotive
airbag fabric and cushions and technical fabrics. From 1988 to 1996,
Mr. Wetzel was a Managing Director with the Merger & Acquisition Group of
Chemical Bank/Chase Manhattan. From 1981 to 1988, he was a Managing Director in
Smith Barney’s Mergers and Acquisitions Group. Mr. Wetzel is a member
of the Board of Directors and head of the Finance Committee of the Henry L.
Stimson Center, a Washington based non-profit, non-partisan think tank,
concentrating on international issues. The principal business address
of Mr. Wetzel is 1248 Greacen Point Road, Mamaroneck, New York
10543. Mr. Wetzel is a U.S. citizen.
13
Each of
the MMI Nominees, if elected, intends to act in accordance with his fiduciary
duty and recuse himself from voting should any conflict of interest arise in the
future.
The MMI
Nominees will not receive any compensation from any member of the MMI Group for
their services as directors of the Company. Other than as stated herein, there
are no arrangements or understandings between members of the MMI Group and any
of the MMI Nominees or any other person or persons pursuant to which the
nomination of the MMI Nominees described herein is to be made, other than the
consent by each of the MMI Nominees to be named in this Proxy Statement and to
serve as a director of Chemed if elected as such at the Annual
Meeting. None of the MMI Nominees is a party adverse to Chemed or any
of its subsidiaries or has a material interest adverse to Chemed or any of its
subsidiaries in any material pending legal proceedings.
The MMI
Group does not expect that the MMI Nominees will be unable to stand for
election, but, in the event that such persons are unable to serve or, for good
cause, will not serve, the Shares represented by the enclosed GOLD proxy card will be voted
for substitute nominees to the extent this is not prohibited under the Company’s
bylaws or applicable law. In addition, MMI Investments reserves the
right to nominate substitute persons if Chemed makes or announces any changes to
the Company’s bylaws or takes or announces any other action that has, or if
consummated would have, the effect of disqualifying the MMI
Nominees. In any such case, Shares represented by the enclosed GOLD proxy card will be voted
for such substitute nominees to the extent this is not prohibited under the
Company’s bylaws or applicable law. MMI Investments reserves the
right to nominate additional persons if Chemed increases the size of the Board
above its existing size. Additional nominations made pursuant to the
preceding sentence are without prejudice to the position of MMI Investments that
any attempt to increase the size of the current Board or to classify the Board
constitutes an unlawful manipulation of the Company’s corporate
machinery.
YOU
ARE URGED TO VOTE FOR THE ELECTION OF THE MMI NOMINEES ON THE ENCLOSED GOLD
PROXY CARD.
14
PROPOSAL
NO. 2
COMPANY PROPOSAL TO
RATIFY THE SELECTION BY THE AUDIT
COMMITTEE
OF THE BOARD OF DIRECTORS OF
PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT ACCOUNTANTS FOR
THE
COMPANY AND ITS CONSOLIDATED SUBSIDIARIES FOR 2009
As
discussed in further detail in the Company’s proxy statement, prior to the
Annual Meeting, the Company’s Board, upon the recommendation of the Company’s
Audit Committee, selected PricewaterhouseCoopers LLP to serve as independent
accountants for the Company and its consolidated subsidiaries for
2009. The Company is asking stockholders to ratify the selection of
PricewaterhouseCoopers LLP to serve as independent accountants for the Company
and its consolidated subsidiaries for 2009.
We do not
object to the proposal to ratify the selection of PricewaterhouseCoopers LLP to
serve as independent accountants for the Company and its consolidated
subsidiaries for 2009.
We are
not aware of any other proposals to be brought before the Annual Meeting.
However, we intend to bring before the Annual Meeting such business as may be
appropriate, including without limitation nominating additional persons for
directorships, or making any proposals as may be appropriate to address any
action of the Board not publicly disclosed prior to the date of this proxy
statement. Should other proposals be brought before the Annual Meeting, the
persons named as proxies in the enclosed GOLD proxy card will vote on such
matters in their discretion.
15
VOTING
AND PROXY PROCEDURES
Only
stockholders of record on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. Each Share is entitled to one
vote. Stockholders who sell Shares before the Record Date (or acquire
them without voting rights after the Record Date) may not vote such
Shares. Stockholders of record on the Record Date will retain their
voting rights in connection with the Annual Meeting even if they sell such
Shares after the Record Date. Based on publicly available
information, the MMI Group believes that the only outstanding class of
securities of Chemed entitled to vote at the Annual Meeting is the
Shares.
Shares
represented by properly executed GOLD proxy cards will be voted
at the Annual Meeting as marked and, in the absence of specific instructions,
(i) will be voted FOR the election of the MMI Nominees to the Board, FOR the
election of the candidates who have been nominated by the Company other than
_______________, _______________, _______________, _______________ and
_________________, (ii) will ABSTAIN from voting on the proposal to ratify the
appointment of PricewaterhouseCoopers LLP to serve as independent accountants
for the Company and its consolidated subsidiaries for 2009, and (iii) will be
voted in the discretion of the persons named as proxies on all other matters as
may properly come before the Annual Meeting.
This
Proxy Statement is soliciting proxies to elect not only the MMI Nominees, but
also the candidates who have been nominated by the Company other than
_______________, _______________, _______________, _______________ and
_________________. This gives stockholders who wish to vote for the MMI Nominees
and such other persons the ability to do so. Under applicable proxy
rules, we are required either to solicit proxies only for the MMI Nominees,
which could result in limiting the ability of stockholders to fully exercise
their voting rights with respect to the Company’s nominees, or to solicit for
the MMI Nominees and for fewer than all of the Company’s nominees, which enables
a stockholder who desires to vote for the MMI Nominees to also vote for those of
the Company’s nominees for whom we are soliciting proxies. The names,
backgrounds and qualifications of the Company’s nominees, and other information
about them, can be found in the Company’s proxy statement. There is
no assurance that any of the Company’s nominees will serve as directors if the
MMI Nominees are elected.
QUORUM
In order
to conduct any business at the Annual Meeting, a quorum must be present in
person or represented by valid proxies. The presence in person or by
proxy of the holders of a majority of the outstanding Shares entitled to vote at
the Annual Meeting is necessary to constitute a quorum. Abstentions are counted
as present for purposes of determining whether a quorum is present at the
meeting.
VOTES
REQUIRED FOR APPROVAL
Vote required for the election of
directors. According to the Company’s proxy statement,
directors are elected by a plurality of the votes present at the Annual Meeting
or by proxy and entitled to vote at the Annual Meeting. Votes cast for a nominee
will be counted in favor of election. Abstentions will not count
either in favor of, or against, election of a nominee.
Vote required for the ratification
of the appointment of PricewaterhouseCoopers LLP. According to
the Company’s proxy statement, the affirmative vote of the majority of the
shares represented at the meeting, with abstentions having the effect of
negative votes, will be necessary to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants for the Company and its
consolidated subsidiaries for 2009. If the selection is not ratified
at the meeting, the Audit Committee will reconsider its selection of independent
accountants.
DISCRETIONARY
VOTING
Shares
held in “street name” and held of record by banks, brokers or nominees may not
be voted by such banks, brokers or nominees unless the beneficial owners of such
Shares provide them with instructions on how to vote.
REVOCATION
OF PROXIES
Stockholders
of Chemed may revoke their proxies at any time prior to exercise by attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute revocation of a proxy) or by
delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered
either to the MMI Group in care of MacKenzie Partners, Inc. at the address set
forth on the back cover of this Proxy Statement or to Chemed at 2600 Chemed
Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726, or any other address
provided by Chemed. Although a revocation is effective if delivered
to Chemed, the MMI Group requests that either the original or photostatic copies
of all revocations be mailed to the MMI Group in care of MacKenzie Partners,
Inc. at the address set forth on the back cover of this Proxy Statement so that
the MMI Group will be aware of all revocations and can more accurately determine
if and when proxies have been received from the holders of record on the Record
Date and the number of outstanding Shares represented
thereby. Additionally, MacKenzie Partners, Inc. may use this
information to contact stockholders who have revoked their proxies in order to
solicit later dated proxies for the election of the MMI Nominees.
IF
YOU WISH TO VOTE FOR THE ELECTION OF THE MMI NOMINEES TO THE BOARD PLEASE SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID
ENVELOPE PROVIDED.
16
SOLICITATION
OF PROXIES
The
solicitation of proxies pursuant to this Proxy Statement is being made by the
MMI Group. Proxies may be solicited by mail, facsimile, telephone,
telegraph, Internet, in person and by advertisements.
MMI
Investments has entered into an agreement with MacKenzie Partners, Inc. for
solicitation and advisory services in connection with this solicitation, for
which MacKenzie Partners, Inc. will receive a fee not to exceed $____________,
together with reimbursement for its reasonable out-of-pocket expenses, and will
be indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws. MacKenzie Partners,
Inc. will solicit proxies from individuals, brokers, banks, bank nominees and
other institutional holders. MMI Investments has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the Shares they hold of
record. MMI Investments will reimburse these record holders for their
reasonable out-of-pocket expenses in so doing. It is anticipated that
MacKenzie Partners, Inc., will employ approximately ___ persons to solicit
Chemed’s stockholders for the Annual Meeting.
The
entire expense of soliciting proxies is being borne by MMI Investments pursuant
to the terms of the letter agreements (as described below). Costs of
this solicitation of proxies are currently estimated to be approximately
$__________. MMI Investments estimates that through the date hereof,
its expenses in connection with this solicitation are approximately
$___________. MMI Investments intends to seek reimbursement from
Chemed of all expenses it incurs in connection with the solicitation of proxies
for the election of the MMI Nominees to the Board at the Annual
Meeting. MMI Investments does not intend to submit the question of
such reimbursement to a vote of security holders of the Company.
ADDITIONAL
PARTICIPANT INFORMATION
The MMI
Nominees and the other members of the MMI Group are participants in this
solicitation. The principal business of MMI Investments is engaging
primarily in the business of investing in publicly traded securities. The
principal business of MCM is acting as the sole general partner of MMI
Investments. The principal occupation of Mr. Dyson is serving as
Chairman of MMI Investments, Chairman and voting member of MCM and Chairman of
Millbrook Capital Management, Inc. The principal occupation of Mr.
Lifflander is serving as President of MMI Investments, President and voting
member of MCM and President of Millbrook Capital Management, Inc. Mr.
Cromie is currently an independent management consultant. The
principal occupation of Mr. Foy is serving as the President and Chief Executive
Officer of The Riverside Healthcare System. The principal occupation
of Mr. Michel is serving as President and Chief Executive Officer of iSECUREtrac
Corp. Mr. Wetzel is a retired investment banker.
The
address of the principal office of each of MMI Investments, MCM, Mr. Dyson and
Mr. Lifflander is 1370 Avenue of the Americas, New York, New York
10019.
17
The
address of the principal office of Mr. Cromie is 2510 Lennox Drive, Germantown,
Tennessee 38138.
The
address of the principal office of Mr. Foy is 967 North Broadway, Yonkers NY
10701.
The
address of the principal office of Mr. Michel is 5078 South 111th Street, Omaha,
Nebraska 68137.
The
address of the principal office of Mr. Wetzel is 1248 Greacen Point Road,
Mamaroneck, New York 10543.
All of
the MMI Nominees other than Messrs. Cromie and Michel are limited partners in
MMI Investments and Mr. Foy serves as advisor to MMI Investments regarding its
investments in the health care industry.
As of the
date hereof, MMI Investments beneficially owns 800,000 Shares. MCM,
as the general partner of MMI Investments, may be deemed to be the beneficial
owner of the 800,000 Shares owned by MMI Investments. As voting
members of MCM, each of Messrs. Dyson and Lifflander may be deemed to be the
beneficial owner of the 800,000 Shares owned by MMI Investments. As
of the date hereof, Mr. Cromie beneficially owns one Share. As of the
date hereof, none of Messrs. Dyson, Lifflander, Foy, Michel or Wetzel directly
owns any Shares.
Each
member of the MMI Group, as a member of a “group” with the other MMI Group
members for the purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, is deemed to be the beneficial owner of the Shares
beneficially owned in the aggregate by the other members of the MMI Group
reported herein. Each member of the MMI Group disclaims beneficial
ownership of such Shares, except to the extent of their pecuniary interest
therein.
For
information regarding purchases and sales of securities of Chemed during the
past two years by the members of the MMI Group, including the MMI Nominees, see
Schedule I.
MMI
Investments has entered into letter agreements with each of Messrs. Cromie, Foy,
Michel and Wetzel, in which, among other things, (a) MMI Investments agreed to
bear all expenses incurred in connection with the MMI Group’s activities,
subject to certain limitations, (b) MMI Investments agreed to reimburse each of
Messrs. Cromie, Foy, Michel and Wetzel, up to $5,000, for legal fees incurred in
connection with the review of the letter agreement and other related agreements
and documents, and (c) MMI Investments agreed to pay each of Messrs. Cromie,
Foy, Michel and Wetzel $50,000 upon the submission by MMI Investments of a
letter to Chemed nominating each for election as a director of the
Company.
Pursuant
to indemnification agreements MMI Investments has agreed to indemnify each of
Messrs. Cromie, Foy, Lifflander, Michel and Wetzel against claims arising from
the Solicitation and any related transactions.
18
Except as
set forth in this Proxy Statement (including the Schedules hereto), (i) during
the past 10 years, no participant in this solicitation has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors); (ii)
no participant in this solicitation directly or indirectly beneficially owns any
securities of Chemed; (iii) no participant in this solicitation owns any
securities of Chemed which are owned of record but not beneficially; (iv) no
participant in this solicitation has purchased or sold any securities of Chemed
during the past two years; (v) no part of the purchase price or market value of
the securities of Chemed owned by any participant in this solicitation is
represented by funds borrowed or otherwise obtained for the purpose of acquiring
or holding such securities; (vi) no participant in this solicitation is, or
within the past year was, a party to any contract, arrangements or
understandings with any person with respect to any securities of Chemed,
including, but not limited to, joint ventures, loan or option arrangements, puts
or calls, guarantees against loss or guarantees of profit, division of losses or
profits, or the giving or withholding of proxies; (vii) no associate of any
participant in this solicitation owns beneficially, directly or indirectly, any
securities of Chemed; (viii) no participant in this solicitation owns
beneficially, directly or indirectly, any securities of any parent or subsidiary
of Chemed; (ix) no participant in this solicitation or any of his/its associates
was a party to any transaction, or series of similar transactions, since the
beginning of Chemed’s last fiscal year, or is a party to any currently proposed
transaction, or series of similar transactions, to which Chemed or any of its
subsidiaries was or is to be a party, in which the amount involved exceeds
$120,000; (x) no participant in this solicitation or any of his/its associates
has any arrangement or understanding with any person with respect to any future
employment by Chemed or its affiliates, or with respect to any future
transactions to which Chemed or any of its affiliates will or may be a party;
and (xi) no person, including the participants in this solicitation, who is a
party to an arrangement or understanding pursuant to which the MMI Nominees are
proposed to be elected has a substantial interest, direct or indirect, by
security holdings or otherwise in any matter to be acted on at the Annual
Meeting.
OTHER
MATTERS AND ADDITIONAL INFORMATION
Other
than as discussed above, the MMI Group is unaware of any other matters to be
considered at the Annual Meeting. However, should other matters,
which the MMI Group is not aware of a reasonable time before this solicitation,
be brought before the Annual Meeting, the persons named as proxies on the
enclosed GOLD proxy card
will vote on such matters in their discretion.
STOCKHOLDER
PROPOSALS
Any
stockholder who intends to present a proposal at the Company’s annual meeting in
the year 2010 must deliver the proposal to the Corporate Secretary at Chemed not
later than _____________, if the proposal is submitted for inclusion in the
Company’s proxy materials for that meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended.
The
information set forth above regarding the procedures for submitting stockholder
proposals for consideration at Chemed’s 2010 annual meeting of stockholders is
based on information contained in the Company’s proxy statement. The
incorporation of this information in this Proxy Statement should not be
construed as an admission by the MMI Group that such procedures are legal, valid
or binding.
19
INCORPORATION
BY REFERENCE
THE MMI
GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE REQUIRED BY
APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN CHEMED’S PROXY STATEMENT
RELATING TO THE ANNUAL MEETING. THIS DISCLOSURE IS EXPECTED TO
INCLUDE, AMONG OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON CHEMED’S
CURRENT DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION, AND OTHER
IMPORTANT INFORMATION. THE MMI GROUP WAS NOT INVOLVED IN THE
PREPARATION OF CHEMED’S PROXY STATEMENT. SEE SCHEDULE II FOR
INFORMATION REGARDING PERSONS WHO BENEFICIALLY OWN MORE THAN 5% OF THE SHARES
AND THE OWNERSHIP OF THE SHARES BY THE DIRECTORS AND MANAGEMENT OF
CHEMED.
The
information concerning Chemed contained in this Proxy Statement and the
Schedules attached hereto has been taken from, or is based upon, publicly
available information.
THE
MMI GROUP
_____________,
2009
20
SCHEDULE
I
TRANSACTIONS
IN SECURITIES OF CHEMED
DURING
THE PAST TWO YEARS
Except
as otherwise specified, all purchases and sales were made in the open
market.
MMI INVESTMENTS,
L.P.
|
Shares
of Common Stock
Purchased / (Sold)
|
Price
Per
Share($)
|
Date
of
Purchase / Sale
|
|
3,000
|
54.56
|
11/30/07
|
|
(3,000)
|
53.56
|
12/18/07
|
|
20,000
|
43.83
|
03/14/08
|
|
(17,000)
|
41.63
|
03/28/08
|
|
51,900
|
42.07
|
04/09/08
|
|
3,500
|
42.29
|
04/10/08
|
|
50,000
|
42.53
|
04/11/08
|
|
60,000
|
40.63
|
04/14/08
|
|
40,000
|
39.74
|
04/15/08
|
|
8,000
|
40.26
|
04/17/08
|
|
10,000
|
40.00
|
04/21/08
|
|
60,000
|
33.47
|
04/29/08
|
|
80,000
|
34.75
|
05/02/08
|
|
70,000
|
34.00
|
05/05/08
|
|
50,000
|
33.62
|
05/06/08
|
|
30,000
|
33.75
|
05/07/08
|
|
50,000
|
32.92
|
05/09/08
|
|
30,000
|
34.07
|
05/13/08
|
|
30,000
|
34.89
|
05/16/08
|
|
50,933
|
34.06
|
05/19/08
|
|
110,000
|
34.96
|
05/20/08
|
|
40,000
|
35.45
|
05/21/08
|
|
89,600
|
35.91
|
05/22/08
|
|
50,000
|
35.91
|
05/23/08
|
|
19,000
|
36.10
|
05/27/08
|
|
40,000
|
35.77
|
05/28/08
|
|
(25,000)
|
40.57
|
12/12/08
|
|
(20,000)
|
39.55
|
12/15/08
|
|
(35,000)
|
40.06
|
12/16/08
|
|
(20,000)
|
40.51
|
12/17/08
|
|
(15,000)
|
40.79
|
12/18/08
|
|
(20,000)
|
41.02
|
12/19/08
|
|
(5,000)
|
39.03
|
12/22/08
|
|
(30,000)
|
38.72
|
12/23/08
|
|
(15,000)
|
38.23
|
12/24/08
|
|
(15,000)
|
38.33
|
12/26/08
|
|
(15,000)
|
37.62
|
12/29/08
|
|
(15,000)
|
37.70
|
12/30/08
|
|
3,817
|
41.54
|
02/04/09
|
I-1
MCM CAPITAL MANAGEMENT,
LLC
None
JOHN S.
DYSON
None
CLAY B.
LIFFLANDER
None
SCOTT J.
CROMIE
None
JAMES
FOY
None
PETER A.
MICHEL
None
CARROLL R. WETZEL,
JR.
None
I-2
SCHEDULE
II
The
following table is reprinted from Chemed’s proxy statement filed with the
Securities and Exchange Commission on _____, 2009.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
This
table sets forth information as of December 31, 2008, with respect to the only
persons known to us to beneficially own more than 5 percent of Capital
Stock:
|
Name
or Address
Of
Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of
Class
|
This
table shows the Capital Stock beneficially owned and pledged by all nominees and
directors of the Company, the executive officers named in the Summary
Compensation Table and the Company’s directors and executive officers as a group
as of December 31, 2008:
|
Name
|
Amount
and Nature of Beneficial Ownership
|
Percent
of
Class
|
II-1
IMPORTANT
Tell your
Board what you think! Your vote is important. No matter how many
Shares you own, please give the MMI Group your proxy FOR the election of the MMI
Nominees by taking three steps:
|
●
|
SIGNING the enclosed GOLD proxy card, | |
|
●
|
DATING the enclosed GOLD proxy card, and | |
|
|
●
|
MAILING
the enclosed GOLD
proxy card TODAY in the envelope provided (no postage is required if
mailed in the United States).
|
If any of
your Shares are held in the name of a brokerage firm, bank, bank nominee or
other institution, only it can vote such Shares and only upon receipt of your
specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the GOLD proxy card representing
your Shares. The MMI Group urges you to confirm in writing your
instructions to the MMI Group in care of MacKenzie Partners, Inc., at the
address provided below so that the MMI Group will be aware of all instructions
given and can attempt to ensure that such instructions are
followed.
If you
have any questions or require any additional information concerning this Proxy
Statement, please contact MacKenzie Partners, Inc., at the address set forth
below.
|
105
Madison Avenue
New
York, NY 10016
(212)
929-5500 (Call Collect)
or
TOLL-FREE
(800) 322-2885
|
PRELIMINARY
COPY SUBJECT TO COMPLETION
DATED
MARCH 26, 2009
GOLD
PROXY CARD
CHEMED
CORPORATION
2009
ANNUAL MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE MMI GROUP
THE
BOARD OF DIRECTORS OF CHEMED CORPORATION
IS
NOT SOLICITING THIS PROXY
P R O X Y
The
undersigned appoints Clay B. Lifflander and Jerome J. Lande, and each of them,
attorneys and agents with full power of substitution to vote all shares of
common stock of Chemed Corporation (“Chemed” or the “Company”) which the
undersigned would be entitled to vote if personally present at the 2009 Annual
Meeting of Stockholders of the Company scheduled to be held on _______, 2009 at
____ _.m. local time at _____ located at _____ _______, _______, ______ _____,
and including at any adjournments or postponements thereof and at any meeting
called in lieu thereof (the “Annual Meeting”).
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of common stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as
directed on the reverse and in the discretion of the herein named attorneys and
proxies or their substitutes with respect to any other matters as may properly
come before the Annual Meeting that are unknown to MMI Investments, L.P. and the
other participants in this solicitation (collectively, the “MMI Group”) a
reasonable time before this solicitation.
IF
NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSALS ON THE REVERSE, THIS
PROXY WILL BE VOTED “FOR” PROPOSAL 1 AND WILL ABSTAIN ON PROPOSAL
2.
This
Proxy will be valid until the sooner of one year from the date indicated on the
reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE
SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
[X] Please mark vote as in this
example
THE
MMI GROUP STRONGLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE NOMINEES LISTED
BELOW IN PROPOSAL NO. 1
Proposal No.
1 – The MMI Group’s Proposal to Elect Scott J. Cromie, James Foy, Clay B.
Lifflander, Peter A. Michel and Carroll R. Wetzel, Jr. as Directors of the
Company.
|
FOR
ALL NOMINEES
|
WITHHOLD
AUTHORITY TO VOTE FOR ALL NOMINEES
|
FOR
ALL NOMINEES EXCEPT
|
|
|
Nominees: Scott
J. Cromie
James
Foy
Clay
B. Lifflander
Peter
A. Michel
Carroll
R. Wetzel, Jr.
|
[ ]
|
[ ]
|
[ ]
____________
____________
____________
|
THE MMI
GROUP INTENDS TO USE THIS PROXY TO VOTE (I) “FOR” MESSRS. CROMIE, FOY,
LIFFLANDER, MICHEL AND WETZEL AND (II) “FOR” THE CANDIDATES WHO HAVE BEEN
NOMINATED BY THE COMPANY TO SERVE AS DIRECTORS OTHER THAN _________________,
________________, _________________, _________________ AND _______________ FOR
WHOM THE MMI GROUP IS NOT SEEKING AUTHORITY TO VOTE FOR AND WILL NOT EXERCISE
ANY SUCH AUTHORITY. THE NAMES, BACKGROUNDS AND QUALIFICATIONS OF THE
CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY, AND OTHER INFORMATION ABOUT
THEM, CAN BE FOUND IN THE COMPANY’S PROXY STATEMENT.
THERE IS
NO ASSURANCE THAT ANY OF THE CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY
WILL SERVE AS DIRECTORS IF THE MMI GROUP’S NOMINEES ARE ELECTED.
NOTE: IF
YOU DO NOT WISH FOR YOUR SHARES TO BE VOTED “FOR” A PARTICULAR MMI NOMINEE, MARK
THE “FOR ALL NOMINEES EXCEPT” BOX AND WRITE THE NAME(S) OF THE NOMINEE(S) YOU DO
NOT SUPPORT ON THE LINE BELOW. YOUR SHARES WILL BE VOTED FOR THE
REMAINING MMI NOMINEE(S). YOU MAY ALSO WITHHOLD AUTHORITY TO VOTE FOR
ONE OR MORE ADDITIONAL CANDIDATES WHO HAVE BEEN NOMINATED BY THE COMPANY BY
WRITING THE NAME OF THE NOMINEE(S) BELOW.
THE
MMI GROUP DOES NOT OBJECT TO PROPOSAL NO. 2
Proposal
No. 2 – The Company’s proposal to ratify the selection by the Audit
Committee of the Board of Directors of PricewaterhouseCoopers LLP as independent
accountants for the Company and its consolidated subsidiaries for
2009.
|
o FOR
|
o AGAINST
|
o ABSTAIN
|
IN THEIR
DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature,
if held jointly)
____________________________________
(Title)
WHEN
SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH
SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS
PROXY.