BKD.NYSEBrookdale Senior Living INC
10-K/A: Brookdale Senior Living Files Amendment No. 1 to Form 10-K/A, Addressing Omitted Information and Executive Changes
Sentiment:
Form 10-K/A Amendment
Brookdale Senior Living files an amendment to its annual report to include previously omitted information regarding directors, executive compensation, and corporate governance, while also detailing executive leadership changes.
Worse than expectedThe company's 2024 year-over-year growth in same community RevPAR was 5.8%, corresponding to an achievement level below threshold for the 2024 tranche of the performance-based long-term incentive awards granted to the named executive officers in 2024.
Summary
- Brookdale Senior Living Inc. filed Amendment No. 1 to its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024.
- The amendment includes information required by Part III of Form 10-K, which was not included in the original filing due to the company's definitive proxy statement not being filed within 120 days of the fiscal year-end.
- The document details information about the company's directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees.
- Denise W. Warren was appointed Interim Chief Executive Officer and Chairman in April 2025, following the departure of Lucinda M. Baier.
- An Office of the CEO was established, comprising Denise W. Warren, Dawn L. Kussow, and Chad C. White.
- George T. Hicks, Executive Vice President Finance and Treasurer, will retire on May 21, 2025.
- The amendment also includes certifications from Denise W. Warren, Chad C. White, and Dawn L. Kussow, stating that the report does not contain untrue statements or omissions of material facts.
- The aggregate market value of common stock held by non-affiliates on June 30, 2024, was approximately $1.3 billion, using a per share price of $6.83.
- As of February 17, 2025, there were 200,189,063 shares of common stock outstanding.
Sentiment
Score: 5
Explanation: The document contains both positive and negative elements, such as leadership changes and missed performance targets, resulting in a neutral sentiment score.
Positives
- The company is addressing previously omitted information, enhancing transparency.
- The establishment of an Office of the CEO provides interim leadership during the CEO search.
- The company has stock ownership guidelines in place for executives to align their interests with those of stockholders.
- The company has a clawback policy in place to recover erroneously awarded compensation.
Negatives
- The departure of the CEO indicates potential instability in leadership.
- The company's definitive proxy statement was not filed within 120 days of the fiscal year-end, necessitating the amendment.
- The company's 2024 year-over-year growth in same community RevPAR was 5.8%, corresponding to an achievement level below threshold for the 2024 tranche of the performance-based long-term incentive awards granted to the named executive officers in 2024.
Risks
- The ongoing search for a permanent CEO creates uncertainty.
- Failure to meet performance targets for executive compensation could impact executive motivation.
- Breaches of restrictive covenants by executives could lead to financial repercussions.
- The company's reliance on key personnel could pose a risk if they leave or are unable to perform their duties.
Future Outlook
The company is in the process of searching for a new Chief Executive Officer and is focused on achieving its financial and strategic objectives for 2025.
Industry Context
The senior living industry is facing increasing competition and evolving consumer preferences, requiring companies to focus on improving resident satisfaction and operational efficiency.
Comparison to Industry Standards
- The document references a compensation peer group including Acadia Healthcare Company, Inc., Community Health Systems, Inc., and Select Medical Holdings Corporation.
- The company benchmarks executive compensation against this peer group to ensure market competitiveness.
- The company's performance is evaluated based on metrics such as RevPAR and Adjusted EBITDA, which are common industry benchmarks.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| President and Chief Executive Officer | Lucinda M. Baier | Denise W. Warren (Interim) | April 13, 2025 | Departure of Lucinda M. Baier |
| Executive Vice President Finance and Treasurer | George T. Hicks | TBD | May 21, 2025 | Retirement of George T. Hicks |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Establishment of Office of the CEO | The Board established an Office of the CEO, comprising Denise W. Warren, Dawn L. Kussow, and Chad C. White, to manage the company during the CEO search. | April 13, 2025 | Provides interim leadership and ensures continuity of operations. |
Related Party Transactions
- The company has ongoing lease and management agreements with Ventas, a related party due to its warrant to purchase shares of common stock.
- The company entered into exchange and subscription agreements with BlackRock and Deerfield, related parties due to their beneficial ownership of more than 5% of the company's common stock, in connection with the issuance of convertible senior notes.
Stakeholder Impact
- Shareholders: The leadership changes and financial performance may impact shareholder value.
- Employees: The CEO transition and organizational restructuring could affect employee morale and job security.
- Residents: The company's focus on resident satisfaction aims to improve the quality of care and living experience for residents.
- Creditors: The issuance of convertible senior notes impacts the company's debt structure and creditworthiness.
Next Steps
- The Board will continue its search for a permanent Chief Executive Officer.
- The company will focus on achieving its financial and strategic objectives for 2025.
- The company will monitor and manage its lease arrangements with Ventas.
Key Dates
| Date | Description |
|---|---|
| 2000 | Ms. Warren served as Senior Vice President and Chief Financial Officer of Gaylord Entertainment Company from 2000 to 2001. |
| 2001 | Ms. Warren served as Senior Vice President and Chief Financial Officer of Gaylord Entertainment Company from 2000 to 2001. |
| 2005 | Ms. Warren served as Chief Financial Officer of Capella Healthcare, Inc. from 2005 to September 2015. |
| 2005 | Ray M. Leisure joined Brookdale in 2005. |
| 2006 | Dr. Asher served in several executive roles with Ascension since 2006. |
| 2006 | Frank M. Bumstead Independent Director Director Since: August 2006 |
| 2006 | George T. Hicks became our Executive Vice President Finance in July 2006 |
| 2006 | H. Todd Kaestner served as our Executive Vice President Corporate Development since July 2006. |
| 2007 | Chad C. White joined Brookdale in February 2007 |
| 2007 | Dawn L. Kussow joined Brookdale in March 2007 |
| 2009 | Mr. Ricci has served as the Board Chair of the Rhode Island Assisted Living Association from 2009 to 2011. |
| 2010 | Mr. Kaestner and Mr. Hicks are each party to a separate letter agreement with us dated effective as of August 6, 2010, which provides for certain modifications of the Severance Policy as it applies to Mr. Kaestner and Mr. Hicks |
| 2011 | Mr. Ricci has served as the Board Chair of the Rhode Island Assisted Living Association from 2009 to 2011. |
| 2011 | Dr. Asher served as Chief Medical Officer and Chief Integration Officer of MissionPoint Health Partners from 2011 to 2015. |
| 2011 | In 2011, he was part of Brookdale's acquisition of Horizon Bay and became the Regional Vice President of Operations for the Northeast Region. |
| 2013 | Benjamin J. Ricci joined Brookdale in August 2013 |
| 2013 | Chad C. White joined Brookdale in February 2007 and has served as our Executive Vice President since January 2018, our General Counsel since March 2017 and our Secretary since March 2013. |
| 2014 | Ms. Warren served as Executive Vice President since January 2014. |
| 2014 | Dawn L. Kussow previously served as Vice President and Corporate Controller from February 2014 to January 2016 |
| 2014 | Ms. Mace has more than 30 years of experience in research, economics, and market analysis. Most recently, she served as the Chief Economist and Director of Research and Analytics at the National Investment Center for Seniors Housing & Care (NIC) from 2014 to June 2023. |
| 2015 | Dr. Asher served as the Chief Physician Executive and Senior Vice President of Sentara. |
| 2015 | Dr. Asher served as Chief Clinical Officer and Chief Innovation Officer of Ascensions MissionPoint Health Partners subsidiary from 2015 to 2016 |
| 2015 | Ms. Warren served as Executive Vice President and Chief Operating Officer of WakeMed Health & Hospitals from October 2015 through December 2020 |
| 2015 | Lee S. Wielansky Independent Director Director Since: April 2015 |
| 2016 | Dawn L. Kussow previously served as Senior Vice President and Chief Accounting Officer from January 2016 until January 2023 |
| 2016 | George T. Hicks became our Treasurer in January 2016. |
| 2016 | Jaclyn C. Pritchett joined Brookdale in 2016 |
| 2017 | Chad C. White joined Brookdale in February 2007 and has served as our Executive Vice President since January 2018, our General Counsel since March 2017 and our Secretary since March 2013. |
| 2018 | Dr. Asher brings more than 20 years of expertise and a history of success in large matrixed, mission-based, national healthcare systems. |
| 2018 | Joshua Hausman Independent Director Elizabeth B. Mace Independent Director Director Since: April 2025 Age: 49 Public Company Directorships: Genesis Healthcare, Inc. (2015 2016) |
| 2018 | Lee S. Wielansky served as the Companys Non-Executive Chairman of the Board from February 2018 through December 2019. |
| 2019 | H. Todd Kaestner served as our Executive Vice President Asset Management and Division President Entry Fee since June 2019 |
| 2019 | Victoria L. Freed Independent Director Director Since: October 2019 |
| 2020 | Jordan R. Asher, MD Independent Director Director Since: February 2020 |
| 2020 | Ms. Warren served as Executive Vice President and Chief Operating Officer of WakeMed Health & Hospitals from October 2015 through December 2020 |
| 2021 | Claudia N. Drayton brings more than 20 years of operational and financial experience in healthcare and biotech companies. Currently, she serves on the board of 3D Systems Inc. (NYSE: DDD) where she is the Chair of the Audit Committee and a member of the Compensation Committee. Most recently, she served as the Chief Financial Officer of Quantum-Si Incorporated, a publicly-traded life-sciences company focused on protein sequencing and genomics for the healthcare industry. She held this role from April 2021 until June 2023, and during her tenure she oversaw the companys successful transition to a publicly traded company. |
| 2021 | H. Todd Kaestner became our Executive Vice President Corporate Development and President CCRCs in August 2021. |
| 2021 | Benjamin J. Ricci joined Brookdale in August 2013 and has served as Division Vice President of Operations for the East Division since July 2021. |
| 2022 | Jaclyn C. Pritchett joined Brookdale in 2016 and has served as Executive Vice President Human Resources since March 2022. |
| 2022 | Mark Fioravanti Independent Director Victoria L. Freed Independent Director Director Since: April 2025 Age: 63 Public Company Directorships: Ryman Hospitality Properties, Inc. (f/k/a Gaylord Entertainment Company) (2022 current) |
| 2022 | Dawn L. Kussow served as Interim Chief Financial Officer from August 2022 to October 2022. |
| 2023 | Claudia N. Drayton brings more than 20 years of operational and financial experience in healthcare and biotech companies. Currently, she serves on the board of 3D Systems Inc. (NYSE: DDD) where she is the Chair of the Audit Committee and a member of the Compensation Committee. Most recently, she served as the Chief Financial Officer of Quantum-Si Incorporated, a publicly-traded life-sciences company focused on protein sequencing and genomics for the healthcare industry. She held this role from April 2021 until June 2023, and during her tenure she oversaw the companys successful transition to a publicly traded company. |
| 2023 | Mark Fioravanti was appointed CEO on January 1, 2023, after serving as President and Chief Financial Officer since 2015. |
| 2023 | Dawn L. Kussow joined Brookdale in March 2007 and has served as Brookdales Executive Vice President and Chief Financial Officer since February 2023. |
| 2023 | Ms. Mace served as the Chief Economist and Director of Research and Analytics at the National Investment Center for Seniors Housing & Care (NIC) from 2014 to June 2023. |
| 2024 | Denise W. Warren has served as Brookdales Interim Chief Executive Officer, Chairman and a member of the Office of CEO since April 2025; after having served as the non-executive chairman since June 2024. |
| 2024 | Claudia N. Drayton Independent Director Director Since: June 2024 |
| 2024 | Elizabeth B. Mace Independent Director Director Since: June 2024 |
| 2024 | Ray M. Leisure joined Brookdale in 2005 and has served as Division Vice President of Operations for the West Division since August 2024, after serving as Interim Division Vice President of Operations for the West Division from April 2024 to August 2024. |
| 2024 | The aggregate market value of common stock held by non-affiliates of the registrant on June 30, 2024, the last business day of the registrants most recently completed second fiscal quarter was approximately $1.3 billion. |
| 2024 | For 2024, the financial objectives were our full-year 2024 consolidated portfolio RevPAR and our full-year Adjusted EBITDA, with the target levels of performance generally reflective of our 2024 budget approved by the Board. |
| 2024 | During 2024, the Committee approved an equitable adjustment to the Companys reported actual Adjusted EBITDA solely to exclude the favorable lease accounting impact in the fourth quarter of 2024 resulting from the lease acquisition transactions announced in September 2024. |
| 2024 | In 2024, the Committee determined that our 2024 year-over-year growth in same community RevPAR was 5.8%, corresponding to an achievement level below threshold for the 2024 tranche of the performance-based long-term incentive awards granted to the named executive officers in 2024. |
| 2024 | For 2024, the ratio of the total annual compensation of Ms. Baier as reported in the Total column of the Summary Compensation Table ($9,793,423) to the median of the annual total compensation of all of our other employees was 332:1. |
| 2025 | As of February 17, 2025, 200,189,063 shares of the registrants common stock, $0.01 par value, were outstanding (excluding restricted shares and restricted stock units). |
| 2025 | Mr. Bumstead has notified the Board that he will not stand for re-election at the Companys 2025 annual meeting of stockholders. |
| 2025 | On April 13, 2025, Lucinda M. Baier ceased serving as our President and Chief Executive Officer and as a member of the Board. |
| 2025 | In connection with Ms. Baiers departure, on April 13, 2025, the Board appointed Ms. Warren as Interim Chief Executive Officer. |
| 2025 | The Board appointed Ms. Warren, Ms. Kussow, and Mr. White to serve as members of the Office of the CEO, in each case, effective as of April 13, 2025. |
| 2025 | Mr. Hicks has notified the Company that he will be retiring on May 21, 2025. |
| 2025 | In connection with the appointment of Ms. Warren as Interim Chief Executive Officer and Mses. Warren and Kussow and Mr. White to the Office of the CEO, the Committee approved the following additional compensation arrangements on April 27, 2025. |
| 2025 | As of April 28, 2025, the total number of shares of our common stock beneficially owned, and the percent so owned, by (1) each person known by us to beneficially own more than 5% of our common stock, (2) each of our directors and named executive officers and (3) all current directors and executive officers as a group, based on 234,347,862 shares of our common stock outstanding as of that date (excluding RSUs and restricted shares, other than with respect to outstanding awards scheduled to vest within 60 days of that date). |
| 2025 | Ventas holds a warrant (the Warrant) to purchase shares of our common stock at a price per share of $3.00, which is exercisable at Ventas option at any time and from time to time, in whole or in part, until December 31, 2025. |
| 2026 | Amendment No. 5 to the Master Lease entered into during 2024 provides that beginning January 1, 2026 we will continue to lease 65 communities and the remaining 55 communities that are not renewed will either be sold by Ventas or transitioned, with such transitions commencing on or after September 1, 2025. |
| 2026 | Ventas holds a warrant (the Warrant) to purchase shares of our common stock at a price per share of $3.00, which is exercisable at Ventas option at any time and from time to time, in whole or in part, until December 31, 2025. |
| 2027 | Amendment No. 5 also provides that Ventas will fund capital expenditures at the communities of up to $35 million during the years 2025 to 2027, provided that, with respect to any such amounts funded by Ventas, the annual rent under the Amended Master Lease will prospectively increase by the amount of each reimbursement multiplied by the greater of (i) 8% and (ii) the United States 10-Year Treasury Rate plus 3.5%. |
| 2029 | On October 3, 2024, pursuant to the Exchange and Subscription Agreements, we issued $369.4 million aggregate principal amount of our 3.50% convertible senior notes due 2029 (the 2029 Notes). |
Keywords
executive compensation, corporate governance, directors, senior living, Brookdale, amendment, Form 10-K, CEO, officers
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