named Robert May nonexecutive chairman and added governance gadfly Charles Elson to its board.

The moves come just a month after the struggling rehabilitation center chain named a new chief. The Birmingham, Ala., company hired its new CEO, Jay Grinney, away from hospital giant


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May has been a member of HealthSouth's board since October 2002 and had previously served as interim CEO before Grinney's arrival.

The company also named Joel C. Gordon chairman emeritus. Gordon had been interim chairman since March 2003. HealthSouth said last December that Gordon would serve as interim chairman until its turnaround was largely accomplished.

HealthSouth said Elson, 44, would join the board and its special committee effective Sept. 1. Elson is the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. He has served as an adviser to the HealthSouth board's governance committee since early 2003.

The board changes come just a week after the company resolved a dispute with some of its bondholders. The bondholders, who had been demanding additional payments from HealthSouth to compensate them for the company's high credit risk, signed off last Thursday on a pact changing the terms of the debt, putting the company in compliance with its $2.6 billion in publicly held debt.

HealthSouth technically defaulted on its credit agreement more than a year ago, when it admitted that its past financial statements were unreliable. The disclosure followed news of a multibillion-dollar accounting fraud allegedly ordered by disgraced founder Richard Scrushy, and dating back to HealthSouth's earliest days as a public company.

Scrushy is headed for trial this summer in an effort to defend himself against federal fraud charges.

On Wednesday, HealthSouth rose 7 cents in pink sheets trading to $5.97.