UNIVERSAL HEALTH SERVICES, INC. | Elect each director annually at UNIVERSAL HEALTH SERVICES, INC.

Status
AGM passed
AGM date
Previous AGM date
Proposal number
3
Resolution details
Company ticker
UHS
Lead filer
Individual
Resolution ask
Amend board structure
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
Stockholders ask that our Company take all the steps necessary to reorganize the Board of Directors in order that each director stands for election at each annual meeting.
Supporting statement
Although Universal Health Services (UHS) can adopt this proposal topic in one-year and one-year implementation is a best practice, this proposal allows the option to phase it in.

Classified Boards, like the Universal Health Services Board, have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School.

Arthur Levitt, former Chairman of the Securities and Exchange Commission said, “In my view it’s best for the investor if the entire board is elected once a year. Without annual election of each director shareholders have far less control over who represents them.”

A total of 79 S&P 500 and Fortune 500 companies, worth more than $1 trillion, have adopted this important proposal topic since 2012. Annual election of each director could make directors more accountable, and thereby contribute to improved performance and increased company value at no extra cost to shareholders. Thus it was not a surprise that this proposal topic won majority support at Tesla in 2024 even when the biased insider shares, which voted every eligible share, were opposed.

Annual election of each director gives shareholders more leverage if Directors perform poorly. For instance if Directors approve excessive executive pay shareholders can soon vote against Directors on the executive pay committee instead of potentially waiting 3 long years under the current setup.

This proposal at minimum is a reminder that there are limitations to any corporate governance improvements or increased shareholder rights that can be expected at UHS due to UHS being a controlled company where insiders have voting power outrageously out of proportion to their money at risk in UHS. UHS officers and Directors own 16% of UHS common stock yet have 90% of the voting power.

This in turn negatively impacts the long-term performance that shareholders can expect from UHS stock. Shareholders who consider good corporate governance important thus may be wise to diversify away from UHS.

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