UPDATE 1-Chemed says MMI withdraws board nominees
NEW YORK, May 21 (Reuters) - Chemed Corp (CHE.N) said on Thursday a hedge fund has withdrawn its slate of nominees to Chemed's board ahead of a shareholder meeting next week.
MMI Investments Inc withdrew its slate of five board nominees in a letter to the board of Chemed, a provider of hospice care and parent of the Roto-Rooter plumbing business.
"We congratulate you on a well-waged election contest," MMI said in its letter to the company's board.
MMI's decision followed the recommedation by two shareholder advisory firms, RiskMetrics Group and Glass Lewis, which both said shareholders should back Chemed's nominees.
Chemed had argued MMI intended to separate Chemed's VITAS hospice segment from Roto-Rooter, a separation Chemed said was not in shareholders' interst during an economic downturn.
"The board will do the right thing at the right time," Chemed said in a statement on Thursday.
MMI had proposed five nominees to Chemed's 11-member board, and criticized its existing members for having too many financial and family ties to the company and limited operational experience.
Chemed's annual meeting of shareholders is scheduled for May 29 in Cincinnati.
The proxy fight came as the company's hospice segment faces added government scrutiny.
VITAS has received an administrative subpoena from the U.S. Department of Justice, asking for documents, patient records and policy manuals since 2003.
Chemed shares have lost 8 percent since the subpoena was disclosed on May 14 and were down 4 percent at $37.66 in midday trading on the New York Stock Exchange.
"We view this disclosure as a clear negative and consistent with our view that the hospice industry has entered a period of increased scrutiny from the government," Barclays analyst Adam Feinstein said in a research note on Thursday. (Reporting by Nick Zieminski, editing by Matthew Lewis)
