<PAGE> 1
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TENET HEALTHCARE CORPORATION
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(Name of Registrant as Specified in Its Charter)
TENET SHAREHOLDER COMMITTEE, L.L.C.
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<PAGE> 2
NOMINATING STATEMENT FOR DOCTOR PEARCE AT THE
TENET HEALTHCARE ANNUAL MEETING OF SHAREHOLDERS
October 11, 2000
My fellow shareholders and members of the Tenet Healthcare Corporation:
I stand before you, on behalf of my fellow nominees, as victorious
catalysts for change, grateful for the support of other shareholders who,
together with us, have persuaded Tenet to take several meaningful first steps
toward mainstream corporate governance and who have compelled management to
focus on core economic issues and the need for improved performance.
Today, I am proud to nominate for election to the Tenet Board of
Directors the four nominees proposed by the Tenet shareholder Committee. In
addition to myself, they are Ambassador Joseph M. Rodgers, former United States
ambassador to France from 1985 - 1989 and recipient of the French Legion of
Honor. He served as chief fundraiser for the Reagan-Bush 1984 Presidential
Campaign and built over 200 HCA hospitals. He serves on the board of directors
of many publicly traded companies, including: AMR Corporation/American Airlines,
Inc., Gaylord Entertainment Company, Lafarge Corporation, and SunTrust Bank.
Michael E. Gallagher is both a CPA and an MBA. He is an experienced hospital and
healthcare executive, consultant, operator and the former Chairman, President
and CEO of Healthnet. For the Board seat that Tenet eliminated following her
nomination, I nominate Claire S. Farley, the past President of a Texaco unit
with over $25 billion of annual revenues, a director of Boise Cascade
Corporation and one of Fortune Magazine's Fifty Most Powerful Women In Business
in 1998. Recently, she became the President and CEO of a healthcare internet
start-up. As for myself, I have been a licensed physician for 45 years, and a
former board member of three major health care companies. They are American
Medical International ("AMI"), OrNda Health Corp., and Ivax Corporation. The
first two companies, AMI and OrNda, are now part of Tenet Healthcare. I was a
founder, builder and principal operator of three first-rate Florida hospitals.
In each instance, my dedication to quality patient care and the pursuit of
shareholder and investor interests, substantially increased the level of service
for patients and the value received by all.
I want to thank each of the nominees for the courage they demonstrated
in persevering with me during this campaign to make Tenet better.
Tenet has a miserable record on corporate governance. Indeed, it is one
of the poorest in the S&P 500. Until we issued a wake up call, Tenet's directors
and management who own less than 0.5% had forgotten that the company belongs to
the other shareholders who own over 99.5% of the Company, who have no rights,
except to elect a board over three years.
Because of the pressures we - along with Institutional Shareholder
Services ("ISS") and CalPers - have applied, Tenet has finally promised
significant changes in corporate governance. These must not be empty pledges.
Tenet must comply with the twice-expressed demand of its shareholders to abandon
its staggered board.
<PAGE> 3
It should do so, effective immediately, for all directors. It must appoint new,
truly independent directors who are qualified, knowledgeable about healthcare,
and free of any financial entanglements with the Company. Each director must own
a meaningful equity stake in the Company, so that his interests are financially
aligned with those of the shareholders.
In addition, it must bury the poison pill and the blank check preferred
stock. It must never ever again indulge in special stock deals, like Broadlane,
that create incentives for senior management that conflict with the best
interests of all shareholders. And it should join the vast majority of its
fellow S&P 500 companies by reincorporating in Delaware, where shareholder's
rights are more clearly defined. Credible studies have established that
mainstream corporate governance practices, like those we have championed, and
incorporation in Delaware increase shareholder value. Tenet's directors must
direct management and hold them accountable. They must insist upon management's
full disclosure of all material information concerning the Company - the good
and the bad. Our nominees are committed - as we believe all directors should be
- to bringing Tenet into the mainstream of American corporate governance.
In July, the Tenet Shareholder Committee challenged the Tenet Board to
create sustainable economic growth for shareholders, rededicate Tenet to quality
patient care and abandon Tenet's unacceptable corporate governance practices. On
the economic front, we focused on improving cash flow, reducing debt, making
Tenet's debt investment grade, enhancing receivables management and expanding
EBITDA margins. In the last two quarters, Tenet has shown some improvement along
with improving industry fundamentals. But two quarters do not make a track
record of sustainable growth; nor does a substantial rise in stock price, even
if it continues for another quarter or two. Keep in mind that Tenet's stock sold
at $40.00 per share in April, 1998.
The debt is still not investment grade and 97% of the much heralded
fourth quarter reduction of $787 million was the result of asset sales, and only
3% was attributable to operating earnings. That is not a sustainable strategy
for improving Tenet's debt to equity ratio and debt rating. Accounts receivable
deteriorated from the fourth quarter of 1999 when compared to the first quarter
of 2000. The 35 day difference between Tenet's accounts receivable aging of 80
days, and HCA's, 45 days, is indefensible and requires Tenet to borrow an
additional $1 billion per year. Our nominees are committed - as we believe all
directors should be - to a sustained focus on core economic issues for long-term
sustainable growth in shareholder value.
We strongly believe that healthcare is a profession and not merely a
business. Unquestionably, there is an important financial component, but
doctors, nurses, technicians and administrators are not fungible commodities to
be exploited for short- term financial gain.
<PAGE> 4
Quality patient care, delivered by dedicated professionals, must be the
centerpiece of any hospital company. I say this as both a physician and as
someone who knows how to profitably operate healthcare businesses. A quality
hospital can never achieve profitability at the expense of patient care. In
plain English: Quality patient care is an absolute prerequisite for good
business and sustainable internal growth in this industry. Conscientious
directors must be irrevocably committed to streamlining the corporate
decision-making processes so that hospital administrators and care providers
have the equipment, personnel and support they need to provide top quality
patient care in each and every hospital and operating room. Directors must have
the knowledge, the integrity and the fortitude to stamp out the fraud and abuse
that is, unfortunately, all too prevalent in our Nation's health care delivery
system. Our nominees are committed - as we believe all the directors should be -
to sustained focus on the delivery of quality health care and the iron clad
prevention of fraud and abuse.
This proxy contest was totally avoidable. It was caused by an arrogant
and entrenched management that refused to discuss or address the mainstream
reform we proposed in our letter to the board, dated August 1, 2000.
We are proud of what we have accomplished for all Tenet shareholders in
the short period since July. In addition to the rising tide, our efforts,
including this proxy contest, spurred the company to improved performance and
contributed to the increased stock price. We urge you to vote for our slate. But
win or lose, we intend to remain vigilant in holding Tenet's directors
accountable to its shareholders on economic issues, on the delivery of quality
health care, on the iron clad prevention of fraud and abuse, and on dramatically
improved corporate governance. We again call upon management and the Board to
fix the broken Tenet and unlock the unrealized potential of its franchise.
Thank you.
<PAGE> 5
THE TENET SHAREHOLDER COMMITTEE, L.L.C.
FOR IMMEDIATE RELEASE
Contact: Josh Pekarsky
Sarah Zitter Milstein
Kekst and Company
(212) 521-4800
TENET SHAREHOLDER COMMITTEE SUCCEEDS IN BRINGING TENET'S
CORPORATE GOVERNANCE ISSUES INTO SHARP FOCUS
-- WILL CONTINUE HOLDING MANAGEMENT ACCOUNTABLE --
NEW YORK, NY, OCTOBER 11, 2000 - M. Lee Pearce, M.D., Chairman of the Tenet
Shareholder Committee, today presented the committee's slate of four nominees
for election to the Board of Directors of Tenet Healthcare Corporation (NYSE:
THC) at the Company's annual meeting of shareholders held in Beverly Hills,
California.
Excerpts of Dr. Pearce's remarks follow:
I stand before you, on behalf of my fellow nominees, as victorious
catalysts for change, grateful for the support of other shareholders who,
together with us, have persuaded Tenet to take several meaningful first steps
toward mainstream corporate governance and who have compelled management to
focus on core economic issues and the need for improved performance.
Today, I am proud to nominate for election to the Tenet Board of
Directors the four nominees proposed by the Tenet Shareholder Committee. I want
to thank each of the nominees for the courage they demonstrated in persevering
with me during this campaign to make Tenet better.
Tenet has a miserable record on corporate governance. Indeed, it is one
of the poorest in the S&P 500. Until we issued a wake up call, Tenet's directors
and management who own less than 0.5% had forgotten that the company belongs to
the other shareholders who own over 99.5% of the Company, who have no rights,
except to elect a board over three years.
Because of the pressures we - along with Institutional Shareholder
Services ("ISS") and CalPERS - have applied, Tenet has finally promised
significant changes in corporate governance. These must not be empty pledges.
Tenet must comply with the twice-expressed demand of its shareholders to abandon
its staggered board. It should do so, effective immediately, for all directors.
It must appoint new, truly independent directors who are qualified,
knowledgeable about healthcare, and free of any financial entanglements with the
Company. Each director must own a meaningful equity stake in the Company, so
that his interests are financially aligned with those of the shareholders.
<PAGE> 6
In addition, it must bury the poison pill and the blank check preferred
stock. It must never ever again indulge in special stock deals, like Broadlane,
that create incentives for senior management that conflict with the best
interests of all shareholders. And it should join the vast majority of its
fellow S&P 500 companies by reincorporating in Delaware, where shareholders'
rights are more clearly defined. Credible studies have established that
mainstream corporate governance practices, like those we have championed, and
incorporation in Delaware increase shareholder value. Tenet's directors must
direct management and hold them accountable. They must insist upon management's
full disclosure of all material information concerning the Company - the good
and the bad. Our nominees are committed - as we believe all directors should be
- to bringing Tenet into the mainstream of American corporate governance.
In July, the Tenet Shareholder Committee challenged the Tenet Board to
create sustainable economic growth for shareholders, rededicate Tenet to quality
patient care and abandon Tenet's unacceptable corporate governance practices. On
the economic front, we focused on improving cash flow, reducing debt, making
Tenet's debt investment grade, enhancing receivables management and expanding
EBITDA margins. In the last two quarters, Tenet has shown some improvement along
with improving industry fundamentals. But two quarters do not make a track
record of sustainable growth; nor does a substantial rise in stock price, even
if it continues for another quarter or two. Keep in mind that Tenet's stock sold
at $40.00 per share in April 1998.
The debt is still not investment grade and 97% of the much heralded
fourth quarter reduction of $787 million was the result of asset sales, and only
3% was attributable to operating earnings. That is not a sustainable strategy
for improving Tenet's debt to equity ratio and debt rating. Accounts receivable
deteriorated from the fourth quarter of 1999 when compared to the first quarter
of 2000. The 35 day difference between Tenet's accounts receivable aging of 80
days, and HCA's, 45 days, is indefensible and requires Tenet to borrow an
additional $1 billion per year. Our nominees are committed - as we believe all
directors should be - to a sustained focus on core economic issues for long-term
sustainable growth in shareholder value.
We strongly believe that healthcare is a profession and not merely a
business. Unquestionably, there is an important financial component, but
doctors, nurses, technicians and administrators are not fungible commodities to
be exploited for short-term financial gain.
Quality patient care, delivered by dedicated professionals, must be the
centerpiece of any hospital company. I say this as both a physician and as
someone who knows how to profitably operate healthcare businesses. A quality
hospital can never achieve profitability at the expense of patient care. In
plain English: Quality patient care is an absolute prerequisite for good
business and sustainable internal growth in this industry. Conscientious
directors must be irrevocably committed to streamlining the corporate
decision-making processes so that hospital administrators and care providers
have the equipment, personnel and support they need to provide top quality
patient care in each and every hospital and operating room. Directors must have
the knowledge, the integrity and the fortitude to stamp out the fraud and abuse
that is, unfortunately, all too prevalent in our Nation's healthcare delivery
system. Our nominees are committed - as we believe all the directors
<PAGE> 7
should be - to sustained focus on the delivery of quality healthcare and the
iron clad prevention of fraud and abuse.
This proxy contest was totally avoidable. It was caused by an arrogant
and entrenched management that refused to discuss or address the mainstream
reform we proposed in our letter to the Board, dated August 1, 2000.
We are proud of what we have accomplished for all Tenet shareholders in
the short period since July. In addition to the rising tide, our efforts,
including this proxy contest, spurred the company to improved performance and
contributed to the increased stock price. We urge you to vote for our slate. But
win or lose, we intend to remain vigilant in holding Tenet's directors
accountable to its shareholders on economic issues, on the delivery of quality
healthcare, on the iron clad prevention of fraud and abuse, and on dramatically
improved corporate governance. We again call upon management and the Board to
fix the broken Tenet and unlock the unrealized potential of its franchise.
# # #
