Debbie Blank
Strong was the word used most often at the Hill-Rom annual shareholders' meeting March 4.
The company is coming out of the recession in a "very, very strong financial position," declared President and CEO John Greisch, on the job for two months.
Reviewing the fiscal year, which ended Sept. 30, 2009, he cited Hill-Rom's "strong cash flow performance" and "very strong presence in Europe."
Financially, the company shows an upward trend, the leader noted. Its operating margin increased 26 percent in 2010's first quarter and the stock price rose by that same percentage from October to March 3.
Change at the top was acknowledged during the concise 40-minute meeting attended by about 40 mostly employees, but also a few shareholders who do not work there, including one woman who was knitting.
Chairman Rolf Classon told Greisch "how excited we are to have you on board. You are joining a fantastic company with tremendous assets, people and brand loyalty from our customers." Greisch responded later in the meeting, "The history of Hill-Rom is second to none" because of its brand and market position. "I'm thrilled to be here and look forward to working with the board and management team and representing the shareholders as well as I can."
The chairman also recognized Peter Soderberg, who led Hill-Rom for almost four years before resigning in early January, and his wife, Elsa.
Both arrived just before the meeting started. Classon said Soderberg left quite a mark, praising his "insight and understanding. You are leaving behind a company that is very different and much stronger." Then he announced to applause that the couple were celebrating their 43rd anniversary that day.
"Social responsibility ... is as important as anything we do," the new president reflected. "The company does a great job in recognizing the obligations we have to improve not only the quality (of equipment), but access to health care. We have a Hospital Beds for Humanity Program we're all very proud of." The initiative began last year when 70 Hill-Rom employees in Batesville volunteered on two June Saturdays to repair older beds removed from hospitals. Fifty of those beds and surfaces were delivered to a hospital in an underprivileged area of Mexico's Yucatan Peninsula.
"Unfortunately, as we've moved into this year, the Haiti and Chile (earthquakes) have required additional efforts," Greisch noted. The company contributed over $100,000 in products plus $60,000 in cash (half of those dollars were given by employees) to the Haitian relief effort. Now similar help is being organized for Chile.
Greisch briefly listed Hill-Rom's accomplishments last year:
"The Liko acquisition has done very well. That business (of patient lifting and mobility devices) has been a great addition to the portfolio."
"In November Hill-Rom agreed to own 60 percent of a joint venture with Encompass Group, which will sell a range of surface replacement systems.
"Peter brought an expanded orientation to global R&D; (research and development) efforts."
"One of our more exciting product launches is a medical-surgical bed" just beginning to be shipped into the marketplace. The Advanta 2 improves on Hill-Rom's best-selling Advanta bed by combining new design features that will improve safety, ease of use and patient comfort.
"Our overbed table was recognized last year with the very prestigious (Nightingale) award" presented by a nursing association.
Key objectives in 2010 are to accelerate organic growth, expand margins, re-invest in R&D; and continue to generate operating cash flow, the president said. The 14 company officers will be doing that with 300 fewer employees. Hill-Rom shrank from 6,800 to 6,500 during the past fiscal year, according to the annual report.
Hugh Kuzmich, South Bend, who called himself "a proud shareholder,"closed the meeting with two questions. He wondered how proposed health care legislation would affect Hill-Rom. Classon said, “That is a very good question and a very important question. It's not easy to give you a very precise answer." With that, he pawned the question off on Greisch to chuckles. "Nobody knows what the exact impact is going to be. Uncertainty around where the reform is going will have a dampening effect" on sales. He pointed out, "Capital is scarce to begin with in nonprofit hospitals" and long-term care facilities. He predicted purchasing decisions would be delayed if reform legislation is passed.
Kuzmich said, "I think to me the biggest growth may be in the international markets." He asked if the company has much competition abroad. The chairman answered, "I think there is a tremendous opportunity for Hill-Rom to do more and grow faster and expand our business internationally ... This is an issue that is high on our agenda."
SHAREHOLDERS VOTE
Three proposals to amend the Articles of Incorporation that shareholders approved at the meeting “are the result of ongoing review of corporate governance matters by the Hill-Rom Board of Directors. The board, assisted by the Nominating/Corporate Governance Committee, considered the advantages and disadvantages of each of these measures, and for reasons described in the the company's current proxy statement, made the recommendations,” said Lauren Green-Caldwell, corporate communications and public relations director. Company leaders want their actions to be more transparent to shareholders. “They looked at what are the best practices.”
- Shareholders decided to elect the entire board of directors annually starting in 2013. Now three of the nine are elected each year to serve three years. The proxy statement explained the move “can provide ... further assurance that the directors are accountable to shareholders while maintaining appropriate defenses to respond to inadequate takeover bids.”
- Supermajority voting provisions requiring approval by two-thirds of shareholders instead of a simple majority were eliminated. The rationale, according to the statement, is requiring a supermajority makes it “more difficult for shareholders to change important rules relating to the election of directors or other governance matters.”
- Starting at the 2011 annual meeting, shareholders voted to have a “say on pay” of the five executives who earn the most. It is considered nonbinding and advisory.
Class 2 board director Greisch was elected and directors Ronald Malone and Eduardo Menascé were re-elected to three-year terms and Class 1 directors Katherine Napier and James Giertz to two-year terms. One Hillenbrand family member, Gus, remains on the board. He has served since 1972, while the next most seasoned members, Classon and Charles Golden, were appointed in 2002.
