Tenet Board Shrinking as Challenges Loom

Tenet's (THC - Cramer's Take - Stockpickr) board continues to undergo reconstructive surgery.

The company's governing body -- altered significantly during a tumultuous 2003 -- is about to lose more than a quarter of its members. Three directors, including one newcomer, are resigning. A fourth may follow suit next year.

The company, which has no plans to replace the three departing directors, will be left with an eight-member board after next month's annual meeting. Tenet critics have repeatedly called upon the company to expand the board -- and make it truly independent.

"With a reduction to eight members, Tenet's board is too small to adequately staff the six board committees and to function properly," Tenet Shareholder Committee Chairman Lee Pearce said on Monday. "The board needs at least five more independent directors. [But] in view of the multiple problems, it will be hard to recruit highly qualified individuals to help fix this broken company."

Tenet is losing a new independent director and two veteran directors who have enjoyed special relationships with the company in the past. Robert Nakasone, the former CEO of Toys R Us (TOY - Cramer's Take - Stockpickr), resigned last month. Meanwhile, both Lawrence Biondi and Sanford Cloud have decided against seeking reelection when Tenet hosts its annual meeting May 6 in Dallas.

Tenet just welcomed Nakasone to its board less than a year ago.

"The addition of Bob Nakasone demonstrates the seriousness of our commitment to adding high-caliber independent directors," former CEO Jeffrey Barbakow announced last May.

Tenet gave no reason for Nakasone's departure. But it did say that Biondi and Cloud are leaving "to focus their energies on other endeavors."

Pearce, for one, is glad to see the two "holdover members from the scandal-plagued Barbakow era" leaving the board.

"Their failure as chairs of the two key board committees ... justified their removal much earlier, as we had recommended," Pearce said on Monday.