SEIU’s National Pension Fund, a Sunrise Shareholder, Calls for Outside Investigation of Nation’s Premier Assisted Living Company
WASHINGTON, D.C.- LAWFUEL – Law News Network –The SEIU Master Trust, a shareholder of Sunrise Senior Living, Inc., is calling on the company to conduct an independent investigation into concerns about insider stock sales, questionable accounting practices, and improbably-timed stock option grants. Sunrise Senior Living (NYSE: SRZ) is the nation’s second-largest operator of assisted living facilities and has a market capitalization of $1.6 billion.
A review of the company’s finances by the SEIU Capital Stewardship Program has now found that:
Sunrise directors and executives sold $32 million worth of shares in the months leading up to the announcement of an accounting review, after which the share price fell 34%, causing shareholders to lose $660 million.
Many of the company’s executive stock option grants were fortuitously timed, with strike prices at or near periodic or yearly stock price lows that preceded rapid and/or long-term stock price increases, raising the possibility of manipulation.
All the members of the audit and compensation committees have had personal and business ties to the company that may impair the independence of judgment needed to protect shareholder value.
“Sunrise shareholders deserve to know what’s going on with the company’s finances,” said Steve Abrecht, administrator of the SEIU Master Trust. “We need a thorough investigation by an outside source to restore shareholder confidence in the integrity of the Sunrise board and the accuracy of its financial statements.”
Concerns about Sunrise Senior Living’s finances and corporate governance have arisen because the company has failed to file financial statements for the past three quarters.
Due to the seriousness of these problems and the apparent involvement of senior management and most members of the board, the SEIU Master Trust has called for an independent “external monitor,” who would retain counsel to conduct a full investigation.
The SEIU Master Trust has asked that the independent counsel recommend remedies for any past misconduct, including restitution of any ill-gotten gains, and methods to fix any deficiencies in the areas of accounting, financial controls, compliance, and corporate governance.
The Master Trust’s letter to the board of directors on November 20th identifies several areas for investigation:
1. The origins, timing, and handling of an accounting review by management and the board’s audit committee, which prevented the company from filing its financial statements for three quarters.
2. The improbable timing of, and accounting treatment for, stock options grants to Sunrise Chairman/CEO Paul Klaassen and other executives.
3. The $32 million in “bullet dodging” stock sales by five of the seven Sunrise directors in the months leading up to the announcement of the accounting review and the ensuing 34% share price decline.
4. The apparent lack of independence of Sunrise directors.
The SEIU Master Trust and other SEIU-sponsored funds, with total assets of more than $11 billion, have held more than 8,000 shares at Sunrise. SEIU-sponsored funds are active proponents of sound corporate governance as a vital means to protect and enhance shareholder value.
SEIU Capital Stewardship Program provides support on investment issues and fiduciary responsibilities to private and public pension funds, including the SEIU Master Trust, where SEIU members participate. It provided the research upon which the SEIU Master Trust’s letter is based.
For more information, including a copy of the letter to the Sunrise Board of Directors, visit www.sunriseshareholders.org.