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”). All 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 May
29, 2009, at 11:00 a.m. local time at The Queen City Club located at 331 East
Fourth Street, Cincinnati, Ohio, 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 the total number of directors up for
election at the Annual Meeting.
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 March 31, 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 22,583,072 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.____________.
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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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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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.
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
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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 and collectively have vast experience serving on public company
boards1. Additionally,
certain of the MMI Nominees have extensive executive-level experience in the
healthcare industry (outside of the hospice industry) and in industries that
provide services for residential and commercial properties (including experience
in the plumbing service industry2), as further discussed in
their biographical extracts included in this Proxy
Statement. The MMI Nominees are fully committed to pursuing
efforts to increase stockholder value. 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
interrelationships of current directors with Chemed and entities that have had
close past ties to Chemed calls into question the true independence of the
Board. The Board currently contains three current Chemed employees,
five former employees of Chemed or entities that have had close past ties to
Chemed and two members whose employers received significant funding from Chemed,
or a closely-related entity, within recent years (one of whom was just named
Chairman).3 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 3.5% 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.
1 Messrs.
Cromie and Foy have not previously served on the board of directors of a public
company.
2 See the
biographical extract for Mr. Cromie, specifically his experience with The
Service Master Company.
3 See
table on page 8.
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 a May 11, 2004
earnings conference call (shortly following the Company’s purchase of a
controlling interest in Vitas (the “Vitas Purchase”)), CEO Kevin McNamara stated
the following: “Long-term, we recognize they will need to be separated. You
certainly get maximum value from a pure play.”4 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”4, and as
recently as November 2008 that “long-term perspective is that it looks like the
two companies will remain joined at the hip.”5 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 “given the proper economic circumstances 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.
4
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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. Certainly
on a high level, they are overall corporate benefits in regards to tax,
financial, treasury, Sarbanes-Oxley and related public reported
requirements. However, the greatest benefit to the segments is the
strength generated from the combined cash flows of the businesses.
Long-term, we recognize they will need to be separated. You certainly get
maximum value from a pure play. However, the plumbing segment is just
beginning to emerge from the recession. Their adjusted EBITDA is well
below the historical high. In addition, the current run rate of adjusted
EBITDA from the plumbing and drain cleaning segment is more than adequate
to meet the current debt support, plus provide remaining free cash flow to
fund the hospice expansion strategy. At this point in time, from a cash
flow perspective, these business models are complementary. Long-term
separation is inevitable.” Bloomberg Transcript of the
Company’s First Quarter of Fiscal 2004 Earnings Conference Call, Page
5.
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5
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“CHE
stock has not traded at a discount related to the very disparate parts of
the entity. We said from the start that if that was the case
we’d be willing to divest or spinoff whatever made the most sense – and we
just haven’t seen that discount at least hither fore. There’s
some tax very low tax basis associated with Roto-rooter – we bought it for
$20mm – and there’s other limitations on any kind of tax-free spinoff at
this point, technical issues with regard to that. So,
long term perspective is that it looks like the two companies will remain
joined at the hip.” CEO Kevin McNamara’s comments at the
Oppenheimer Healthcare Conference, November 3,
2008.
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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 2006.6
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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:
6 Based on
spin-offs of 100% interests in subsidiaries with greater than $250 million of
value announced since January 1, 2006.
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, 20097:
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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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“People
are quick to say ‘well what about a tax-free spinoff?’; there’s technical
reasons why that couldn’t have been done for first a five year period and
now an extended period just due to some intricacies of original Florida
corporation that we bought the vehicle at. But it still doesn’t
create, I wouldn’t expect that to happen, it still doesn’t create much
value. 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. 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 meantime 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.” CEO Kevin McNamara’s comments at the J.P. Morgan
Healthcare Conference, January 13,
2009.
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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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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, a series of interrelationships with certain entities
that have had close past ties to 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
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Chemed
Employee
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Past
Chemed Employee
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Employee/
Director
of Entity With Past Ties to Chemed
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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 and a director 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 (deceased), the longtime Chairman
and CEO of W.R. Grace (the former parent of Chemed until 1982) 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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c)
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Thomas
C. Hutton is a Vice President and Director 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. Edward L. Hutton, who
was Chairman of Chemed from 1993 until his death in 2009, was also
Chairman of Omnicare from 1981 through
2008.
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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, Inc.
(“DuBois”). The Company completed the sales of
Service America and DuBois on December 22, 2004 and April 2, 1991,
respectively.
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e)
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Ms.
Laney was the Chief Administrative Officer of Chemed from May 1991 to
March 2003. Ms. Laney is currently chairman and CEO of Cadre
Computer Resources Co. (“Cadre”), a former Chemed subsidiary through
August 2001 that presently subleases office space from the
Company. She also has a majority ownership interest in Cadre
according to the Company’s proxy statement. Ms. Laney is also on the board
of Omnicare. In its proxy statement for the Annual Meeting, the
Company discloses that “Ms. Laney, although not an employee and not
receiving a salary, also has the use of an office and a secretary in her
capacity as President of Jet Resource Inc., a wholly owned subsidiary of
the Company.”
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f)
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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. In calendar years 2001 to 2007 the
charitable contributions totaled $66,700, as disclosed in the Chemed
Foundation’s publicly filed Forms 990. Ms. Lindell is also on
the board of Omnicare
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g)
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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.
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h)
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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.
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i)
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Mr.
Saunders held various executive
roles at Chemed subsidiary Dubois Chemicals between
1970-1991.
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j)
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Mr.
Walsh is a partner with the law firm of Thompson Hine LLP. For
several years and through the first quarter of 2007, Thompson Hine
received fees for legal services provided to Chemed. The legal
fees for fiscal years 2004 through 2007 totaled
$113,699.
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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:
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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 Foundation8, a not-for-profit
which received significant past funding from Chemed.9 Ms.
Laney is also a Director of the University of Cincinnati College of
Nursing, fellow director Andrea R. Lindell’s
employer.
|
|
·
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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
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.10
|
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:
8 Chemed
Foundation 2007 Form 990.
9
According to their Q4 1991 earnings release Chemed contributed $624,000 to the
Chemed Foundation in 1991. There may have been significant additional
contributions in other years.
10
“Omnicare Judgment from IBM Reversed”. The Cincinnati Enquirer,
January 18, 2006.
|
·
|
The
five highest paid officers of Chemed have received cash compensation &
benefits in the five years ending 2008 of over $25
million.
|
|
·
|
The
five highest paid officers of Chemed have received total compensation in
this period of nearly $45 million (not including 451,000 options with an
in-the-money value of $6.5 million as of April 17, 2009).11
|
|
o
|
This
combined value (over $51 million) represents over 20% of Chemed’s total
reported net income over this
period.
|
|
·
|
These
five executives would stand to receive significant total compensation upon
a change of control regardless of whether the executive’s employment is
thereafter terminated. According to the Company’s proxy statement, these
five executives would also stand to receive significant total compensation
on a change in control of Chemed followed within two years by the
executive’s termination of employment either without cause or for good
reason: a total of over $21 million, not including gains on vested options
and stock received from the
Company.
|
|
·
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According
to the Company’s proxy statement, assuming there is no change in control
of Chemed, if terminated without cause CEO Kevin McNamara would stand to
receive aggregate compensation of approximately $6,675,000, including a
lump-sum severance payment equal to five times his $780,000 base salary,
pro-rated annual incentive compensation, continuation of welfare benefits,
and the acceleration of restricted stock
awards.
|
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
|
11 The $45
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 451,000 options to the five named executive officers which as
of April 17, 2009 had an in-the-money value of $6.5
million.
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).
|
BACKGROUND
TO THE SOLICITATION
The
following is a chronology of events leading up to this proxy
solicitation:
|
v
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On
March 14, 2007, certain members of the MMI Group attended a Group Meeting
at the Citigroup Small and Mid-Cap Conference with Chemed’s CEO Kevin
McNamara and CFO David Williams. The meeting included
discussion of fundamentals of the industry and the Company’s business
interests.
|
|
v
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On
March 20, 2008, a member of the MMI Group attended a Presentation and
Breakout Session of the Lehman Brothers Healthcare Conference with
Chemed’s Executive Vice President Tim O’Toole and Messrs. McNamara and
Williams. The session included further discussion of the
Company’s fundamental business
interests.
|
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v
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On
March 26, 2008, certain members of the MMI Group participated on a
conference call with Mr. Williams. The purpose of the call was
to discuss the composition of the Board, the Company’s acquisition
strategy and execution, the practicability and other considerations of a
tax-free spin-off, strategies concerning organic growth, earnings
guidance, labor management, the Company’s relationship with Omnicare,
Inc., government investigations, government reimbursement conditions, as
well as the Company’s fundamental business interests and the industry
fundamentals.
|
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v
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On
April 25, 2008, certain members of the MMI Group participated on a
conference call with Mr. Williams. The purpose of the call was
to discuss strategies regarding labor management and earnings
guidance. There was also further discussion of the Company’s
fundamental business interests and the industry
fundamentals.
|
|
v
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On
May 1, 2008, certain members of the MMI Group participated on a conference
call with Messrs. McNamara and Williams. The purpose of the
call was to discuss the Company’s operational management structure,
corporate overhead and expense allocations and strategy regarding labor
management.
|
|
v
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On
May 22, 2008, certain members of the MMI Group met with Mr.
Williams. The purpose of the meeting was to discuss the
Company’s fundamental business interests, the practicability and other
considerations of a tax-free spin-off and acquisition
strategy.
|
|
v
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On
June 23, 2008, certain members of the MMI Group attended an Oppenheimer
golf outing with Messrs. McNamara and Williams. During the
outing they discussed the Company’s conglomerate structure and its holding
company lineage, as well as the Company’s fundamental business interests
and the industry fundamentals.
|
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v
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On
November 3, 2008, certain members of the MMI Group attended a Presentation
and Breakout Session of the Oppenheimer Healthcare Conference where Mr.
McNamara gave a presentation to attendees regarding the Company, and
dismissed the prospects of a tax-free spin-off of the Roto-Rooter
business.
|
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v
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On
November 18, 2008, certain members of the MMI Group participated on a
conference call with Mr. Williams. The purpose of the call was
to discuss government reimbursement conditions and the Company’s business
interests.
|
|
v
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On
January 21, 2009, certain members of the MMI Group participated on a
conference call with Mr. Williams. The purpose of the call was
to further discuss the practicability and other considerations of a
tax-free spin-off, specifically issues regarding Florida state law, the
Company’s convertible notes and the implication on taxes. In
addition, the call included discussion of government reimbursement
conditions and the Company’s operational management
structure.
|
|
v
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On
February 12, 2009, MMI Investments delivered a public letter to the
Board. The letter outlined the varied benefits of a tax-free
spin-off of one of the Company’s
businesses.
|
|
v
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On
March 16, 2009, the Company delivered a public letter to MMI Investments
stating, among other things, that it did not currently intend to pursue a
separation of the Company’s Roto-Rooter and Vitas
businesses.
|
|
v
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On
March 19, 2009, MMI Investments delivered a letter to the Company
nominating Scott J. Cromie, James Foy, Clay B. Lifflander, Peter A. Michel
and Carroll R. Wetzel, Jr. for election as directors on the
Board.
|
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
with one existing vacancy. 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, specializing in operational
improvements for privately held companies. Mr. Cromie was a Group
President of The ServiceMaster Company (“ServiceMaster”), a provider of
outsourced services, including HVAC, electrical and plumbing, 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, relating to systems
including plumbing. 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.
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, a New York
State public benefit corporation which assists the United Nations community with
its real estate needs. 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., a provider of outsourced fulfillment and construction
services for the cable industry, 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., an outsourced media services company
specializing in remote television production of live sports and entertainment,
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., a manufacturer and marketer of indoor gardens, 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.
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.
While 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, the MMI Nominees will not receive any
compensation from any member of the MMI Group for their services as directors of
the Company, if elected. 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.
In the
event that any MMI Nominee is unable to serve or for good cause will not serve,
the MMI Group may seek to replace such MMI Nominee with a substitute
nominee. In the case that the MMI Group substitutes a nominee, the
MMI Group will file and deliver supplemental proxy materials, including a
revised proxy card, disclosing the information relating to any substitute
nominee that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Only in such case will the
Shares represented by the enclosed GOLD
proxy card be voted for substitute nominees. In addition, MMI
Investments reserves the right to challenge any action by Chemed that has, or if
consummated would have, the effect of disqualifying the MMI Nominees. MMI
Investments reserves the right to nominate additional persons, to the extent
this is not prohibited under the Bylaws or applicable law, 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.
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.
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.
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.
ABSTENTIONS
AND BROKER NON-VOTES
Abstentions
and broker “non-votes” will count as votes present for the purpose of
determining whether a quorum is present. Abstentions and broker
“non-votes” will not be counted as votes cast in the election of directors but
will be counted and have the effect of negative votes with regard to ratifying
the selection of PricewaterhouseCoopers LLP as independent accountants for the
Company and its consolidated subsidiaries for 2009.
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.
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 $190,000,
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 30 persons to solicit
Chemed’s stockholders for the Annual Meeting. The MMI Group does not
intend to employ any persons other than MacKenzie Partners, Inc. to solicit
Chemed stockholders.
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
$275,000. MMI Investments estimates that through the date hereof, its
expenses in connection with this solicitation are approximately
$125,000. 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.
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 Exchange Act 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.
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 proposals for the Company’s 2010 annual meeting of stockholders must
be in writing and received by the Secretary of the Company by _____ __, 2009 to
be eligible for inclusion in the Company’s proxy statement and accompanying
proxy for such meeting. If a stockholder intends to bring a matter
before the 2010 annual meeting of stockholders other than by submitting a
proposal for inclusion in the Company’s proxy statement and accompanying proxy
for such meeting, the stockholder must provide notice of the proposal to the
Secretary of the Company at its principal executive offices not later than _____
___, 2010 in order for such notice to be considered timely.
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
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
|
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
SCHEDULE
II
The
following table is reprinted from Chemed’s proxy statement filed with the
Securities and Exchange Commission on April 17, 2009.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
This
table sets forth information as of March 31, 2009, with respect to the only
persons known to us to beneficially own more than 5% of the outstanding Capital
Stock:
Name
or Address
Of
Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of
Class
(a)
|
|
|
|
Iridian
Asset Management LLC
276
Post Road West
Westport,
CT 06880-4704
|
2,853,256
shares (b)
|
12.8%(c)
|
|
|
|
Barclays
Global Investors, NA
400
Howard Street
San
Francisco, CA 94105
|
1,435,625
shares (d)
|
6.4%
(e)
|
(a)
|
For
purposes of calculating Percent of Class, all shares of Capital Stock
subject to stock option awards which were exercisable within 60 days of
March 31, 2009, were assumed to have been
issued.
|
(b)
|
Shared
voting power, 2,853,256 shares; shared dispositive power, 2,853,256
shares.
|
(c)
|
Information
is based on Schedule 13G filed with the SEC on February 4,
2009.
|
(d)
|
Shared
voting power, 1,090,314 shares; shared dispositive power, 1,435,625
shares.
|
(e)
|
Information
is based on Schedule 13G filed with the SEC on February 5,
2009.
|
This
table shows the shares of 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 March 31, 2009:
Name
|
Amount
and Nature of
Beneficial
Ownership (a)
|
Percent
of Class (b)
|
Kevin
J. McNamara
|
189,412
|
|
Direct
|
|
|
352,665
|
|
Option
|
|
|
|
|
Trustee
(c)
|
2.3%
|
|
|
|
|
|
Joel
F. Gemunder
|
14,476
|
|
Direct
|
|
|
6,952
|
|
Trustee
|
|
|
|
|
|
|
Patrick
P. Grace
|
5,200
|
|
Direct
|
|
|
|
|
|
|
Thomas
C. Hutton
|
80,859
|
|
Direct
|
|
|
34,666
|
|
Option
|
|
|
170,776
|
|
Trustee
(c) (d)
|
1.2%
|
|
|
|
|
|
Walter
L. Krebs
|
14,748
|
|
Direct
|
|
|
|
|
|
|
Sandra
E. Laney
|
169,921
|
|
Direct
|
|
|
40,000
|
|
Option
|
|
|
22,162
|
|
Trustee
(c)
|
|
|
|
|
|
|
Andrea
R. Lindell
|
1,000
|
|
Direct
|
|
|
|
|
|
|
Ernest
J. Mrozek
|
0
|
|
|
|
|
|
|
|
|
Timothy
S. O’Toole
|
41,440
|
|
Direct
|
|
|
41,666
|
|
Option
|
|
|
|
|
|
|
Thomas
P. Rice
|
0
|
|
|
|
|
|
|
|
|
Donald
E. Saunders
|
7,731
|
|
Direct
|
|
|
|
|
|
|
George
J. Walsh III
|
3,700
|
|
Direct
|
|
|
|
|
|
|
Frank
E. Wood
|
3,400
|
|
Direct
|
|
|
|
|
|
|
Spencer
S. Lee
|
35,954
|
|
Direct
|
|
|
158,665
|
|
Option
|
|
|
|
|
|
|
Arthur
V. Tucker, Jr.
|
23,718
|
|
Direct
|
|
|
57,333
|
|
Option
|
|
|
|
|
|
|
David
P. Williams
|
75,747
|
|
Direct
|
|
|
127,499
|
|
Option
|
|
|
|
|
|
|
Directors
and Executive
|
793,738
|
|
Direct
|
|
Officers
as a Group
|
812,494
|
|
Option
|
|
(15
persons)
|
152,610
|
|
Trustee
(e)
|
7.3%
|
(a)
|
Includes
securities beneficially owned by (i) the named persons or group members,
(ii) any organization of which any of the named persons or group members
is an officer, partner or beneficial owner of 10% or more of any class of
equity securities, (iii) any trust or other estate in which any named
person or group member has a substantial beneficial interest, (iv) any
relative or spouse of any named person or group member, or any relative of
such spouse, who has the same home as the named person or group member or
who is a director or officer of the Company or any of its subsidiaries,
and (v) any trust or other estate as to which any named person or group
member serves as trustee or in a similar fiduciary
capacity. Such securities include shares of Capital Stock
allocated as of March 31, 2009, to the account of each named person or
member of the group under the Retirement Plan or, with respect to Mr.
Gemunder, allocated to his account as of March 31, 2009, under the
Omnicare Employees’ Savings and Investment Plan (the “Omnicare Savings
Plan”)). “Direct” refers to securities in categories (i) through (iv) and
“Trustee” to securities in category (v). Where securities would fall into
both “Direct” and “Trustee” classifications, they are included under
“Trustee” only. “Option” refers to shares of Capital Stock which the named
person or group has a right to acquire within 60 days from March 31,
2009. Except as otherwise disclosed in this Proxy Statement,
each director, director nominee and executive officer has sole voting and
investment power over the shares of Capital Stock shown as beneficially
owned.
|
(b)
|
For
purposes of determining the Percent of Class, all shares of Capital Stock
subject to stock option awards which were exercisable within 60 days from
March 31, 2009, were assumed to have been issued. Percent of
Class under 1.0% is not shown.
|
(c)
|
Messrs.
McNamara and T. C. Hutton and Ms. Laney are trustees of the Chemed
Foundation, which holds 123,476 shares of Capital Stock over which the
trustees share both voting and investment power. This number is
included in the total number of “Trustee” shares held by the Directors and
Executive Officers as a Group but is not reflected in the respective
holdings of the individual
trustees.
|
(d)
|
The
shares of Capital Stock held by Mr. T. C. Hutton include 126,432 shares of
Capital Stock that were directly held by Mr. E. L. Hutton and 22,162
shares of Capital Stock held by Mr. E. L. Hutton as “Trustee” prior to his
death on March 3, 2009. As of March 31, 2009, such shares are
held in the estate of Mr. E. L. Hutton. Mr. T. C. Hutton is
co-executor of such estate and, as such, has shared voting and dispositive
power of the 148,594 shares previously held by Mr. E. L.
Hutton.
|
(e)
|
Shares
of Capital Stock over which more than one individual holds beneficial
ownership have been counted only once in calculating the aggregate number
of shares of Capital Stock owned by Directors and Executive Officers as a
Group.
|
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
APRIL 20, 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 May 29, 2009 at
11:00 a.m. local time at The Queen City Club located at 331 East Fourth Street,
Cincinnati, Ohio, 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 completion of the Annual Meeting. This
Proxy will only be valid in connection with the MMI Group’s solicitation of
proxies for 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.