Publish date:

Sunrise Picture Still Dim

Investors can't get an answer from the board.


Sunrise Senior Living


investors hope that company leaders will finally see the light.

Sunrise shareholders got their chance at Tuesday's annual meeting to push for corporate reforms. But critics fear that Sunrise, which has yet to release any voting results, remains blind to shareholder concerns.

A dissident shareholder group says half of Sunrise's directors -- including an embattled audit-committee member up for re-election -- failed to even attend the meeting. The shareholders say the company offered no good reason for its board's poor showing.

"The excuse we heard from the company was that the judge had imposed this date for the meeting and -- although it was set over a month ago -- the directors were unable to schedule around it," says Richard Clayton, a research director at Change to Win Investment Group. "But even with relatively short notice, a significant number of shareholders managed to attend. ... It was pretty remarkable."

Meanwhile, the dissidents say shareholders showed up in force.CtW urged its followers, including some large union-affiliated pension funds, to show up in person at Tuesday's meeting so that they could cast formal votes showing their displeasure with the company. Specifically, they recommended that shareholders withhold votes for Craig Callen -- who sits on an audit committee that failed to catch serious accounting mistakes -- and support proposals to declassify Sunrise's board and force company executives to return any ill-gotten stock-option gains.

Callen serves on Sunrise's audit committee and its compensation committee to boot. Furthermore, he is viewed as conflicted by some since he holds an executive post at



TheStreet Recommends

, which administers the company's health-related benefits.

"I was really surprised that he was not there," Clayton says, "especially given all the bad press about directors at other companies who have failed to attend meetings."

Even so, Callen will likely retain his current seat on the board. Because Sunrise employs a "plurality" rather than a majority standard for board elections, Clayton explains, uncontested directors win if they secure any votes at all. With Sunrise's CEO and his wife -- who rank as the company's largest inside stockholders -- showing up to cast their votes, Clayton predicts, Callen probably passed that easy test.

Clayton, for one, would like to see the board adopt tougher election rules. He hopes that shareholders managed to pass a resolution that would declassify the company's board -- and subject Callen to another election next year -- in the meantime.

"Actually, it would be reasonable to assume that shareholders would have issues with all of the directors who did not attend the meeting," Clayton says. Meanwhile, "the point behind the campaign

against Callen is a symbolic one that will allow shareholders to register their discontent."

Clayton expects Tuesday's voting results, which are being calculated by an outside firm, to be available soon. Personally, he has high hopes.

"We expect the two shareholder resolutions to pass," he says. "But we won't know anything for sure until the company makes an announcement."

Meanwhile, Sunrise continues to keep its shareholders in the dark. When questioned by

on Tuesday, the company offered no clues about when the results might be available. The company also refused to discuss director attendance at the annual meeting.

That meeting had virtually no effect on Sunrise's stock. The company's shares inched up a penny to $37.89 on Tuesday afternoon. The stock, supported by hopes for a buyout, currently hovers in the upper half of its 52-week range.