UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
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Preliminary
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to 240.14a-12
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Chemed
Corporation
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(Name
of Registrant as Specified In Its Charter)
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CHEMED
CORPORATION RECOMMENDS THAT STOCKHOLDERS
FOLLOW
THE RECOMMENDATIONS OF RISKMETRICS AND GLASS LEWIS
BY
VOTING FOR THE BOARD’S
NOMINEES
Sends
Letter to Stockholders Urging them to Protect their Investment
by
Voting the WHITE Proxy Card
Today
CINCINNATI – May 20, 2009 – Chemed Corporation (NYSE:CHE)
today mailed the following letter to
the Company’s stockholders in connection with the Company’s 2009 Annual Meeting
of Stockholders, scheduled for May 29, 2009. Chemed stockholders of
record as of March 31, 2009 will be entitled to vote at the Annual
Meeting.
Chemed’s
Board of Directors unanimously recommends that the Company’s stockholders vote
today for the Board’s highly qualified nominees by telephone, via the Internet
or by signing, dating and returning the enclosed WHITE
proxy card.
May 20, 2009
PROTECT
YOUR INVESTMENT!
VOTE
THE WHITE PROXY
CARD TO CONTINUE YOUR BOARD’S SUCCESSFUL RECORD OF DELIVERING STOCKHOLDER
VALUE
Dear
Fellow Stockholders:
At
Chemed’s Annual Meeting on May 29, 2009, you will be asked to determine which
director nominees best serve the interests of ALL
Chemed stockholders.
Your
Board unanimously believes its nominees are the right nominees for Chemed.
Your
Board’s nominees include nine of the current members of your Board, as well as
two new, independent and highly qualified individuals, Ernest J. Mrozek and
Thomas P. Rice. Your
Board
urges you to vote the enclosed WHITE
proxy card for Chemed’s highly qualified nominees by telephone or via the
Internet today.
If
you have previously submitted a Gold proxy card, you may vote in favor of the
Board’s nominees by following the instructions on the enclosed WHITE
proxy card to vote by telephone, via the Internet, by signing, dating and
returning the enclosed WHITE
proxy card, or by attending the Annual Meeting and voting your shares in
person.
INDEPENDENT
PROXY ADVISORY FIRMS AGREE THAT
CHEMED’S
NOMINEES ARE THE RIGHT CHOICE
Both
RiskMetrics Group (formerly Institutional Shareholder Services) and Glass Lewis
& Co., widely recognized as the world’s leading independent proxy voting and
corporate governance advisory firms, have recommended that Chemed stockholders
vote FOR all of the Company’s director nominees at Chemed’s 2009 Annual
Meeting. These recommendations reaffirm your Board’s strong belief
that Chemed has the right nominees to continue creating value for all
stockholders by building on the Company’s proven track record of success while
at the same time taking the appropriate steps to facilitate a separation of
Chemed’s businesses when the time is right.
In
reaching its conclusion, Glass Lewis considered Chemed’s proven and prudent
strategy and strong record of value creation, noting, “Overall, we do not
believe the dissident has made a compelling case against the Company’s board or
management…[W]e see no reason to doubt the board’s assertion that a separation
of the Company’s Vitas and Roto-Rooter businesses, while strategically
compelling, is not advisable at this time due to market
conditions. Furthermore, we have found that the Company’s stock price
has continued to outperform relevant indices in recent years.”*
RiskMetrics
also noted, “[O]n balance we conclude the dissident has not met its burden of
proving that board change is warranted…[T]he dissident has not raised any
specific claims that the company has demonstratively underperformed. Rather, the
dissident has raised various operational and governance issues that we feel, in
and of themselves, are not sufficient to warrant board change.”*
Your
Board believes that the proxy advisory firms reached the right
conclusion. The Board recommends that stockholders follow the
recommendations of RiskMetrics and Glass Lewis by voting FOR the board’s
nominees on the WHITE
proxy card today.
VOTE
“FOR” YOUR BOARD’S NOMINEES –
A
FORWARD-LOOKING TEAM THAT
DELIVERS
LONG-TERM VALUE TO STOCKHOLDERS
As
the proxy advisory firms have confirmed, your Board and management team have
been successful, prudent stewards of your investment with a proven track record
of creating long-term value for stockholders through disciplined management and
exploring and implementing a range of strategies. The Board has
created value for stockholders through the execution of well-timed, carefully
considered strategies, not through the blind pursuit of any one strategy – an
approach particularly important in today’s economic climate.
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Increasing
stockholder value through strategic transactions. Your Board has
successfully unlocked value through a number of spin-offs and other
strategic sale transactions, including the Dubois Chemicals, Omnicare and
National Sanitary Supply transactions.1 Since
Chemed’s formation, its Board has approved 12 significant divestitures and
other transactions that have generated $711,000,000 in proceeds and
resulted in $284,000,000 in pre-tax gains. In addition, the
Board has authorized several significant value-creating acquisitions,
including the acquisition of Roto-Rooter in 1980 and VITAS in
2004. Significant divestitures, spin-offs and acquisitions
since 1980 include:
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Sale
of Service America Assets to Service America employees
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2005
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Acquisition
of VITAS
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2004
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Divestiture
of Chemed’s last shares of Omnicare
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2003
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Sale
of Patient Care to a private equity fund
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2002
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Sale
of Chemed’s portion of National Sanitary Supply Company to
Unisource
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1997
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Sale
of The Omnia Group to Banta Healthcare
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1997
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Purchase
of all of the publicly traded shares of Roto-Rooter
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1996
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Sale
of The Veratex Group retail division to Henry Schein
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1995
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Sale
of Chemed’s flagship operation, DuBois Chemicals, to Diversey
Corporation
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1991
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Initial
investment in VITAS preferred stock
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1991
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National
Sanitary Supply IPO on NASDAQ under the ticker NSSX
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1986
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Sale
of Vestal Laboratories to Merck
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1986
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Roto-Rooter
IPO on NASDAQ under the ticker ROTO
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1985
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Omnicare
IPO on NYSE under the ticker OCR
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1981
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Acquisition
of Roto-Rooter
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1980
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Overseeing
superior stock price performance.2 Since
the announcement of Chemed’s acquisition of VITAS in December 2003,
Chemed’s stock has appreciated over 120%, compared to the S&P500,
which was down nearly 19%, and the S&P Healthcare Equipment &
Services index, which was unchanged over the same period. Over
the last year, Chemed’s stock price has increased 10% compared to the
S&P500, which has declined 38%, and the S&P Healthcare Equipment
& Services index, which has declined 25%. Chemed has
outperformed both the S&P500 and the S&P Healthcare Equipment
& Services index over the last one- and five-year
periods. This strong growth in stockholder value is driven by
your Board’s and management’s disciplined strategy and focus on long-term
value
creation.
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Providing
substantial return of capital to stockholders. Chemed has
returned substantial capital to its stockholders through share repurchases
and dividend payments. Since the acquisition of VITAS was
completed in February 2004, Chemed has repurchased $210.6 million of its
stock from stockholders and, since January 2004, it has paid its
stockholders $29.6 million in dividends.
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Delivering
consistent growth. Both of Chemed’s
businesses – Roto-Rooter and VITAS – are industry leaders, and Chemed’s
Board and management team have plans in place to support the continued
success and growth of both businesses. Your Board and
management have proven an ability to achieve long-term growth, as
evidenced by the 27% compound annual growth rate of the Company’s
earnings-per-share (EPS) since 2004.
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2
All stock price returns as of May 15,
2009. Stock price returns since the announcement of Chemed’s
acquisition of VITAS are as of December 18, 2003, one day prior to the VITAS
announcement.
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Producing solid financial
results. Chemed delivered first quarter 2009
Diluted EPS of $0.85, exceeding the consensus estimate of Wall Street
analysts. Revenues grew 3.4%, operating profits rose 16% and
operating margins rose 130 basis points to 12%. The Company’s
solid first quarter results, despite the current global economic downturn,
demonstrate the strength of Chemed’s management and its
businesses.
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YOUR
BOARD AND MANAGEMENT STRONGLY BELIEVE THAT
MMI’S
FIXATION ON A SPIN-OFF THREATENS YOUR INVESTMENT
In
contrast to your Board, MMI Investments L.P. (“MMI”), the dissident hedge fund
that owns 3.5% of Chemed’s outstanding stock and is soliciting proxies to elect
five dissident nominees to your Board, is fixated on one idea for your
Company. MMI continues to push for the immediate separation of
Chemed’s businesses. MMI is making this demand despite your Board’s
conclusion that now is not
the right time to implement a separation of Chemed’s businesses, in light of the
Board’s and its financial advisors’ analysis of the expected valuation of the
businesses as stand-alone entities, current economic conditions and the state of
the capital markets.
MMI
has a history of advocating for immediate spin-offs in companies in which it
maintains stock ownership and has waged multiple proxy fights to advance its
position. For example, MMI nominated directors to the boards of
Unisys Corporation and The Brink’s Company and subsequently forced separations
at those companies. Your Board will not accede to MMI’s “one size
fits all” approach.
Your
Board and management have protected stockholder value by prudently maintaining
Chemed’s corporate structure while at the same time taking the appropriate steps
to facilitate a separation of Chemed’s businesses when conditions are
right. Rather than separating its businesses immediately, which could
impair value for the Company’s stockholders, your Board is committed to
preserving and enhancing value for Chemed’s stockholders.
Do
not be misled by MMI and its overheated rhetoric. Your Board and
management team have said that they will consider effecting a spin-off or any
other transaction, but only if
it is likely to increase stockholder value. Rest assured, when the
time is right, we will do whatever is right for our stockholders.
VOTE
FOR YOUR
BOARD’S NOMINEES ON THE WHITE PROXY CARD
TODAY
Your
Board strongly urges you to follow the RiskMetrics and Glass Lewis
recommendations and vote FOR all of the Company’s director nominees by voting
the WHITE
proxy card.
On
behalf of the Board of Directors, we thank you for your continued
support.
Sincerely,
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/s/
Kevin J. McNamara
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/s/
George J. Walsh III
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Kevin
J. McNamara
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George
J. Walsh III
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Chief
Executive Officer
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Chairman
of the Board
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TIME
IS SHORT AND YOUR VOTE IS IMPORTANT
To
insure that your vote is represented at the meeting, we urge you to vote
TODAY
by
telephone or via the Internet by following the simple
instructions
on
the enclosed WHITE proxy card.
If
you have questions about how to vote your shares, or need additional
assistance, please
contact the firm assisting us in the solicitation of proxies: INNISFREE
M&A INCORPORATED
Stockholders
Call Toll-Free: (877) 825-8631
Banks
and Brokers Call Collect: (212) 750-5833
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Cravath,
Swaine & Moore LLP is acting as legal advisor to Chemed and Lazard Frères
& Co. LLC and J.P. Morgan Securities Inc. are acting as financial
advisors.
*
Permission to use quotations was neither sought nor
obtained.
About
Chemed
Listed on the New
York Stock Exchange and headquartered
in Cincinnati, Ohio, Chemed
Corporation (www.chemed.com) operates two
wholly owned subsidiaries: VITAS
Healthcare and Roto-Rooter. VITAS is the nation’s largest provider
of end-of-life hospice care, and Roto-Rooter is the nation’s leading provider
of plumbing and drain cleaning services.
Forward
Looking Statements
Certain
statements contained in this press release or in other Chemed communications are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect," "hope,"
"anticipate," "plan" and similar expressions identify forward-looking
statements, which speak only as of the date the statement was made. Chemed does
not undertake and specifically disclaims any obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. These statements are based on current expectations
and assumptions and involve various risks and uncertainties, which could cause
Chemed's actual results to differ from those expressed in such forward-looking
statements. These risks and uncertainties arise from, among other things,
possible changes in regulations governing the hospice care or plumbing and drain
cleaning industries; periodic changes in reimbursement levels and procedures
under Medicare and Medicaid programs; difficulties predicting patient length of
stay and estimating potential
Medicare reimbursement obligations; challenges inherent in Chemed's growth
strategy; the current shortage of qualified nurses, other healthcare
professionals and licensed plumbing and drain cleaning technicians; Chemed’s
dependence on patient referral sources; and other factors detailed under the
caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most
recent report on form 10-Q or 10-K and its other filings with the United States
Securities and Exchange Commission (the “SEC”). You are cautioned not to place
undue reliance on such forward-looking statements and there are no assurances
that the matters contained in such statements will be achieved.
Chemed filed with
the SEC, on April 29, 2009,
a
definitive proxy statement in connection with its 2009 annual
meeting, and is mailing
the definitive proxy statement to its stockholders. Investors and
security holders are urged to read the definitive proxy statement
relating to the 2009 Annual Meeting and any other relevant documents filed with
the SEC (when available) because they contain important information. Investors
and security holders may obtain a free copy of the definitive proxy statement
and other documents
that Chemed files with the SEC (when available) at the SEC’s website at
www.sec.gov and
Chemed’s website at
www.chemed.com. In addition, the definitive proxy statement and other documents
filed by Chemed with the SEC (when
available) may be obtained from Chemed free of charge by directing a request to
Chemed Corporation, Attn: Investor Relations, Chemed Corporation, 2600 Chemed
Center, 255 East Fifth Street, Cincinnati, OH
45202-4726.
Certain
Information Regarding Participants
Chemed, its
directors and certain executive officers and employees are participants in the
solicitation of Chemed’s security holders
in connection with its 2009 Annual Meeting. Security holders may obtain
information regarding the names, affiliations
and interests of such individuals in Chemed’s Annual Report on
Form 10-K for the year ended December 31, 2008, which was filed
with the SEC on February 27, 2009, and its definitive proxy statement for
the 2009 Annual Meeting, which was filed
with the SEC on April 29,
2009.
To the extent holdings of Chemed securities have changed since the amounts
printed in the definitive proxy statement for the 2009 Annual Meeting, such
changes have been or will be reflected on Statements of Change in
Ownership on Form 4 filed with the SEC. These documents may be obtained free of
charge (when available) from the SEC’s website at
www.sec.gov and
Chemed’s website at
www.chemed.com.
Contacts
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David
P. Williams
Chemed
Corporation
513-762-6901
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Andy
Brimmer / Andrew Siegel
Joele
Frank, Wilkinson Brimmer Katcher
212-355-4449
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