Risk & Compliance

Scrushy Resigns from HealthSouth Board

Last week the company filed its 2004 financials and scheduled an annual meeting for December 29, its first such meeting since 2002.
Stephen TaubDecember 6, 2005

Richard Scrushy has finally resigned from HealthSouth Corp.’s board of directors.

According to the Birmingham News, the company’s founder, former chairman, and former chief executive officer claimed in a letter to the board that HealthSouth has reduced his role as a director and chairman to virtual non-existence. Scrushy complained that he was not informed about board meetings or other company business and will not give him access to an office at the company to carry out his duties, according to the paper.

“HealthSouth has repeatedly asked for Mr. Scrushy’s resignation,” HealthSouth spokesman Andy Brimmer told the paper. “With the upcoming meeting of shareholders to elect new directors, we are pleased Mr. Scrushy has complied with our numerous requests for him to resign from the board. This is an appropriate and long-overdue decision.”

Last week the company filed its 2004 financials and scheduled an annual meeting for December 29, its first such meeting since 2002.

Scrushy was fired in March 2003 after the discovery of a $2.7 billion accounting fraud. Earlier this year he was acquitted of criminal charges for his role in the scandal. He still faces a civil suit, which is not expected to begin before 2007.

In his resignation letter, Scrushy asserted that HealthSouth still owes him compensation and benefits. He has also claimed that the company should pay his legal fees. The News pointed out that at a recent press conference, Scrushy said those costs now exceed $30 million.

According to the report, Scrushy plans to vote against some of the current board members up for election at the annual meeting later this month. He also said he would try to get one of his own candidates on the board of directors, possibly in 2006.

“I plan to nominate one or two individuals to serve on the HealthSouth board at the coming or the next annual meeting of stockholders,” he reportedly said. “I have hired an independent consultant who has identified a few outstanding candidates who are completely independent of me and HealthSouth, but who could provide the type of leadership and ideas that the company needs. I recognize that I will not be part of the board or the management team of HealthSouth. Still, I built the company and remain a major shareholder of the company and regardless of what anyone says, I want the best for HealthSouth.”