Shareholder seeks changes in Sunrise board, improved governance as SEC begins investigation

By Lisa Kerner

Charlotte, N.C., May 29 - Sunrise Senior Living, Inc. shareholder the SEIU Master Trust wants the company's board to remove its outside directors and replace them with "truly independent directors who have the range of abilities and experiences necessary to rectify the company's leadership problems," according to a company news release.

The shareholder's request follows Sunrise's announcement that the Securities and Exchange Commission began a formal investigation of the company.

"This board is failing," SEIU Master Trust executive director Stephen Abrecht said in the release. "In the last year we have seen an accounting review that keeps expanding, four straight quarters without filing financial statements, admission of material weaknesses in internal controls, multiple SEC inquiries, an expanding special committee investigation, the dismissal of the chief financial officer, and now the SEC investigation."

SEIU Master Trust is the national pension fund for the Service Employees International Union. In a letter to the Sunrise board, the fund raised concerns about the outside directors' personal and business ties to Sunrise and its management. According to the letter:

• Ronald V. Aprahamian served as a consultant to the company while he was a director and sold shares just two weeks before the company announced its accounting review. Previously, he was charged by the SEC with leaking inside information about an impending takeover, according to the letter;

• During his entire tenure as a director, Craig R. Callen has worked at companies that have done significant business with Sunrise;

• Thomas J. Donohue is a good friend of chief executive officer Paul Klaassen and his wife, Teresa Klaassen, who is also a board member. Mr. Klaassen worked for Donohue at the U.S. Chamber of Commerce; and

• William G. Little is a former chairman and current director of the Chamber board and is the current chairman of the National Chamber Foundation, where Klaassen and Donohue are directors.

The SEIU Master Trust also want Sunrise to improve its corporate governance by declassify the board, establishing majority voting for directors, separating the chairman and CEO positions and removing the "poison pill."

In November, the investor raised concerns about insider stock sales, questionable accounting practices and the timing of stock option grants at Sunrise.

Sunrise Senior Living is a McLean, Va.-based provider of senior living services.

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