CtW Investment Group called on Universal Health Services Inc. to make changes to its governance practices.
The firm works with pension funds that are substantial investors in the company. It is calling for the changes due to an ongoing criminal investigation of Universal Health by the U.S. Department of Justice's criminal fraud section and the board's "unwillingness" to respond constructively to the efforts of shareholders to improve governance, accountability and compliance.
CtW and other shareholders have repeatedly urged the board to update the "entrenched and unaccountable character" of the company's governance practices and constructively address the mounting legal woes, the firm said in a letter to the board. However, the board has failed to act and let the problems "fester."
In addition, CtW urged the board to reclassify all shares to ensure that voting power is proportional to economic pressure and that all shares have equal voting power. It also seeks to declassify the board so that all directors are subject to annual re-election.
The shareholder group also called for the creation of a new compliance committee comprising newly appointed, independent directors with extensive professional experience in healthcare regulation and enforcement.
CtW plans to publicly oppose director Lawrence Gibbs' candidacy for re-election if the board does not publicly commit to modernizing its structure before issuing its proxy statement for the 2017 annual meeting.