Chemed shareholder chastises company for purchase of $9 million jet

By Lisa Kerner

Charlotte, N.C., April 2 - Chemed Corp. investor MMI Investments, LP urged chairman George J. Walsh III to "dismantle Chemed's culture of corporate largesse," citing the company's purchase of a $9 million jet in November.

The purchase, according to MMI president Clay B. Lifflander, accounted for more than 36% of Chemed's 2008 capital expenditures.

"We fear that Chemed's management and board simply do not understand that they are merely stewards of stockholder capital - not owners of it," Lifflander said.

Chemed bought a 15-seat 2001 Hawker 800XP aircraft when it already owns a 15-seat Hawker 700, Lifflander said in a Thursday letter to Walsh.

"An analysis of Chemed's new plane's activities since its purchase shows it reaching such highly-trafficked locations as Boston, Miami, New York, Chicago, Nashville, Atlanta, Philadelphia and Las Vegas," the letter said.

Lifflander said it appears the most "inconvenient location" the new plane has been used to access is Bloomington, Ind., near where a current Chemed director and a former director live.

According to Lifflander, Chemed failed to mention the purchase on its fourth-quarter conference call.

Chemed also failed to disclosure "why 2008 corporate level capital expenditures were nearly 50 and 70 times 2007 and 2006 levels, respectively" in its 2008 10-K filing with the Securities and Exchange Commission, said Lifflander.

In March, MMI announced that it plans to nominate a slate of five director candidates to stand for election at Chemed's 2009 annual meeting on May 18.

As previously reported, MMI said it believes a tax-free spinoff of Chemed's Roto-Rooter and Vitas businesses could boost Chemed's per-share price.

The company said it wasn't the right time to implement such a strategy.

Chemed is a Cincinnati-based company that provides hospice care services through Vitas and plumbing services through Roto-Rooter.

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