{"id":770279,"date":"2023-07-17T12:22:34","date_gmt":"2023-07-17T16:22:34","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/concerned-shareholders-of-cano-health-condemn-the-boards-egregious-conduct-and-unwillingness-to-accept-a-resounding-rebuke-at-the-2023-annual-meeting\/"},"modified":"2023-07-17T12:22:34","modified_gmt":"2023-07-17T16:22:34","slug":"concerned-shareholders-of-cano-health-condemn-the-boards-egregious-conduct-and-unwillingness-to-accept-a-resounding-rebuke-at-the-2023-annual-meeting","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/concerned-shareholders-of-cano-health-condemn-the-boards-egregious-conduct-and-unwillingness-to-accept-a-resounding-rebuke-at-the-2023-annual-meeting\/","title":{"rendered":"Concerned Shareholders of Cano Health Condemn the Board\u2019s Egregious Conduct and Unwillingness to Accept a Resounding Rebuke at the 2023 Annual Meeting"},"content":{"rendered":"

<\/p>\n

\nConcerned Shareholders of Cano Health Condemn the Board\u2019s Egregious Conduct and Unwillingness to Accept a Resounding Rebuke at the 2023 Annual Meeting<\/p>\n

Group Holding ~35% Stake Issues Letter to Cano\u2019s Stockholders Regarding the Current Board\u2019s Latest Failures and the Importance of Continuing to Provide Feedback to the Failed Directors<\/i><\/b><\/p>\n

Questions the Current Board\u2019s Ability to Maintain Credibility as it Continues Ignoring a Critical Mass of Stockholders<\/i><\/b><\/p>\n

Reaffirms Support for Interim Chief Executive Officer Mark Kent and Urges the Company to Pursue the Immediate Sale of Non-Core Assets to Pay Down Debt and Refocus Cano\u2019s Strategy<\/i><\/b><\/p>\n

Reiterates Commitment to Sustaining a Campaign for Change, With the Goal of Ensuring Mr. Kent and Management are Supported by a Properly Reconstituted Board<\/i><\/b><\/p>\n

NEW YORK & MIAMI–(BUSINESS WIRE<\/a>)–
\nElliot Cooperstone, Lewis Gold and Barry Sternlicht (collectively with our affiliates, the \u201cGroup\u201d or \u201cwe\u201d) today issued the below letter to Cano Health, Inc. (\u201cCano\u201d or the \u201cCompany\u201d) (NYSE: CANO) stockholders. As a reminder, the Group\u2019s advocacy this past spring resulted in overwhelming WITHHOLD<\/span><\/b> votes against Dr. Alan Muney and Kim Rivera, who were the two members of the Board of Directors (the \u201cBoard\u201d) standing for re-election at the Annual Meeting of Stockholders (the \u201cAnnual Meeting\u201d) held on June 15, 2023.<\/p>\n

\n***<\/p>\n

\nFellow Stockholders,<\/p>\n

\nThe three of us hold an approximately 35% equity stake in Cano, making our Group the largest stockholder of the Company. We are gratified that the initial phase of our campaign for change at Cano resulted in the current Board being harshly rebuked by more than 82% of voting stockholders at the recent Annual Meeting. We are equally pleased that our efforts helped lead to Dr. Marlow Hernandez resigning as Chief Executive Officer following a troubled public market tenure that was defined by abysmal capital allocation, egregious disclosure lapses and related-party transactions, persistent strategic missteps and substantial value destruction. This has paved the way for a new Chief Executive Officer, which we suggested during our service as directors, to start bringing sorely needed operational acumen, proper ethics and integrity to Cano.<\/p>\n

\nWe encourage Mark Kent, Cano\u2019s interim Chief Executive Officer, and his team to focus on achieving efficiencies, eliminating excesses and executing a more focused strategy. If supported by a reconstituted Board and no longer shackled to Dr. Hernandez\u2019s self-serving agenda, we are confident they can unlock Cano\u2019s significant earnings power and enhance value for all of us. This brings us to the purpose of today\u2019s letter: making sure you are aware of key facts and in a position to continue to share your views with what remains an entrenched Board.<\/span><\/b><\/p>\n

\nSince the Annual Meeting, the following has occurred:<\/p>\n

    \n
  1. \nThe Board has disregarded the unambiguous results of the Annual Meeting, where more than 82% of the votes cast WITHHELD<\/span><\/b> support for Dr. Alan Muney and Kim Rivera. We question how Dr. Muney, Chair of the Compensation Committee, and Ms. Rivera, Chair of the Nominating & Corporate Governance Committee, can possibly continue to retain their leadership positions as Committee Chairs, much less their board seats. Their unwillingness to step down from the Board reflects a clear disregard for good corporate governance and the will of the stockholders they are supposed to represent. This seems to align with the Board\u2019s general unwillingness to adopt the widely utilized \u201cMajority Voting Standard,\u201d which the Council of Institutional Investors estimates has been adopted by the vast majority of S&P 500 companies and a majority of Russell 3000 companies.<\/p>\n<\/li>\n
  2. \nThe Board has elected to keep Dr. Marlow Hernandez as a director, despite him being a failed leader who should have been required to step off following his recent resignation as an executive. Dr. Hernandez\u2019s employment agreement plainly stated that \u201cthe Executive shall be deemed to have resigned from all officer and board member positions that the Executive holds with the Company or any of its respective subsidiaries and affiliates upon the termination of the Executive\u2019s employment for any reason.\u201d<\/i> Mr. Kent needs to be given the opportunity to refresh the leadership team and put Cano on the path to value creation, which we believe he cannot do with Dr. Hernandez\u2019s continued involvement in any capacity at the Company. Beyond this, we question how Dr. Hernandez can continue to even serve as a fiduciary when he is in debt to executives of Cano (stemming from a series of loans and pledges of stock that were only disclosed at our prior behest) and still entangled with other related-party transactions.<\/p>\n<\/li>\n
  3. \nThe Board continues to keep in place Sol Trujillo as Chairman and Angel Morales as Chair of the Audit Committee. This is a slap in the face to stockholders considering that they both acted as blind allies of Dr. Hernandez, having stood by him as approximately 90% of Cano\u2019s equity market value was destroyed. We hold Messrs. Trujillo and Morales directly accountable for Cano\u2019s shoddy governance, back-to-back delayed 10-Ks and participation in the egregious $57.8 million transaction with MSP Recovery, Inc. (\u201cMSP\u201d). We firmly believe Messrs. Trujillo and Morales knew Cano would be issued practically worthless MSP shares in exchange for sold receivables, which was recently confirmed in MSP\u2019s July 7th<\/sup> 8-K filing.1<\/sup> In our view, this speaks to their motivations in not bringing such a significant transaction to their fellow directors for approval in the first place.<\/p>\n<\/li>\n
  4. \nThe Board remains comfortable with sweetheart severance deals for executives, as evidenced by what we deem to be a golden parachute for Dr. Hernandez. It is completely irresponsible for these directors, who claim to be prioritizing stockholders\u2019 interests, to be authorizing sweetheart deals for failed leaders from scarce stockholder capital.<\/p>\n<\/li>\n
  5. \nThe Board continues to keep in place Frederick S. Green, who up until last year worked at Cano\u2019s outside law firm, Weil, Gotshal & Manges LLP (\u201cWeil\u201d), as the Company\u2019s Interim Chief Legal Officer. In our view, the Company should not continue providing exorbitant monthly equity awards to Mr. Green. How can the Board claim to be putting stockholders first when it is relying on an in-house attorney that appears incentivized to maintain the value-destructive status quo?<\/p>\n<\/li>\n
  6. \nDirectors Muney and Rivera as well as Jacqueline Guichelaar remain unwilling to buy any stock of the Company on the open market, thereby perpetuating their misalignment with stockholders. We do not believe a Board comprised of such misaligned and uncommitted independent members should continue to deny a critical mass of stockholders a say in the Company\u2019s future.<\/p>\n<\/li>\n
  7. \nThe Board has refused to include Guy P. Sansone and Joseph Berardo, Jr., who we put forth as director candidates, in its purported refreshment process. This is the case despite Messrs. Sansone and Berardo having valuable experience with liquidity-constrained companies in the healthcare services industry. We seriously question how these directors can be so arrogant as to try to pick their own colleagues and replacements above the clear objections of major stockholders.<\/p>\n<\/li>\n<\/ol>\n

    How can a group of misaligned directors who oversaw the destruction of significant value, who stood by anti-stockholder actions and inaction, who ignored the will of more than 82% of the voting stockholders at the recent Annual Meeting, who endorsed countless related-party transactions, who presided over dubious material transactions, and who continue to stand behind Dr.<\/span><\/i><\/b>Hernandez and a business strategy that has clearly failed have any credibility with Cano stockholders?<\/span><\/i><\/b><\/p>\n

    \nWe believe the facts demonstrate that this Board has acted irresponsibly and opted to remain oblivious to the deteriorating performance of the Company. It seems that we and our fellow stockholders need to once again communicate our collective disdain for the status quo and desire for an alternative strategy. As far as we are concerned, the following steps are essential:<\/p>\n