Boardroom 'Swamp' Tires Tenet Holders

Not long ago, Tenet (THC - Cramer's Take - Stockpickr) shareholders re-elected a director who resembles the very CEO they had just cast aside with such glee.

Despite warnings from a vocal group of dissidents, institutional investors last summer elected Van Honeycutt to another three-year term on Tenet's board. Honeycutt -- viewed by some as an "imperial CEO" in his own right -- won the lucrative seat despite serving on three important board committees accused of failing shareholders miserably.

Best known as the top gun at Computer Sciences (CSC - Cramer's Take - Stockpickr), Honeycutt pulls extra duty as a member of Tenet's audit, compensation and corporate governance committees. He joined Tenet's board the same year the company adopted an unsustainable growth strategy that relied on aggressive Medicare billings that were never questioned, or apparently even detected, by the company's audit committee.

He also serves on the compensation committee that voted to grant ousted CEO Jeffrey Barbakow millions of stock options -- cashed in with impeccable timing for $111 million -- as well as rocketing bonuses and a multimillion-dollar golden parachute. In addition, he works for the very corporate governance committee that's designed to protect shareholders from executive abuses.

Even so, Honeycutt and another "holdover" director -- ethics committee chairman Lawrence Biondi -- won their re-election bids during a contentious shareholder meeting last July. Both incumbents prevailed despite warnings from the same Tenet Shareholder Committee that predicted imminent disaster in a failed proxy fight a few years back.

"Why should two board members who ... failed to react when we pointed out the problems three years ago now be continued for another term?" challenged M. Lee Pearce, the Florida physician who chairs the shareholder committee. "Tenet desperately needs a majority of strong, independent board members to lead this company out of the swamp -- not holdover directors who, at a minimum, were present during the creation of the swamp."