Sunrise Senior Living Shareholders Show Up, Despite Obstacles, But Most Board Members Do Not

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Five of seven independent board members fail to attend; Sentiment appears to support declassification.

We expect a majority of shares in attendance were voted in favor of our resolution, and we call on the board to enact major governance reforms promptly, including full declassification of the board.

Two messages were delivered today at the shareholder meeting of Sunrise Senior Living, Inc. The first message came from shareholders, who showed up en masse in a clear indication of their high level of concern about the direction of the company (http://www.sunriseshareholders.org). The second message came from the board of directors, five of whom did not bother to attend.

“It is disrespectful,” said Aaron Brenner, who represented the SEIU Master Trust at the meeting. “This is a company facing serious outstanding questions that need answers from the directors, and shareholders had to go through hoops to get to this unusual meeting, yet five directors did not have the courtesy to attend. One of them, Craig Callen, was up for re-election. This attitude explains why we urged shareholders to withhold their support from Mr. Callen.”

The five directors who did not attend were Craig R. Callen, Ronald V. Aprahamian, Thomas J. Donohue, J. Douglas Holladay, and William G. Little. The only two independent directors who attended were: Lynn Krominga, a recent appointee to the board under a settlement with activist hedge fund shareholder Millenco; and Stephen D. Harlan, who was appointed to the board earlier this year following demands by the SEIU Master Trust for new independent directors on the board.

The meeting, which followed a shareholder lawsuit against Sunrise and a modified court order (case #3255, Chancery Court of New Castle County), had only three agenda items: the election of three directors, the SEIU Master Trust’s shareholder resolution to declassify the board, and the Amalgamated Bank’s shareholder resolution calling for an executive compensation “claw back” policy.

Because the company has not filed up-to-date financial statements, it cannot solicit proxies, meaning shareholders had to attend the meeting in person or by proxy agent if they wished to vote their shares. Despite this hurdle, turnout appeared to be quite strong. Informal discussions with shareholders attending the meeting suggested between 25% and 40% of shares, excluding those held by insiders, were in attendance, an astonishing turnout given the circumstances.

“The turnout is clear evidence that shareholders are concerned and that they expect accountability from the board as it tries to right the ship and possibly sell the company,” said Brenner. “We expect a majority of shares in attendance were voted in favor of our resolution, and we call on the board to enact major governance reforms promptly, including full declassification of the board.”

The SEIU Master Trust, with total assets of more than $1.7 billion, is an active proponent of sound corporate governance as a vital means to protect and enhance shareholder value.

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Julie Eisenhardt
SEIU
312-235-5933
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