HealthSouth to reimburse activist investors for expenses

Well now the company has new management and things have changed: HealthSouth announced today that it will become the first major company in US history to offer to reimburse activist investors for their expenses in mounting proxy fights.

"HealthSouth believes there is a close correlation between good governance and good performance," said Jon F. Hanson, non-executive Chairman of the Board. "By reimbursing shareholders under certain conditions for reasonable expenses relating to director nominations, we believe we will further enhance director accountability and permit shareholders to have a greater say in the running of their company. This far-reaching amendment to our Bylaws will be good for our shareholders, our Board and our Company."

Of course it makes perfect sense, and this is how it should be at every company in America: Allowing incumbent directors to defend their positions with shareholder assets while forcing outsiders to raise their own cash is completely unfair -- Imagine if incumbent politicians could spend as much taxpayer cash on reelection as they wanted but challengers had to panhandle for donations. Under HealthSouth's new rule, any investor who mounts a challenge and gets at least 40% of the vote can have reasonable expenses reimbursed.

The problem, as usual with corporate governance innovations, is that they only happen at the companies that don't need them.