Batesville Herald Tribune, Batesville, Indiana

March 11, 2014

Founding family no longer an influence at Hill-Rom

Debbie Blank The Herald-Tribune
The Batesville Herald-Tribune

---- — For the first time, there is no Hillenbrand among directors on the Hill-Rom board.

At the company’s shareholders meeting March 7 in Batesville, board Chairman Rolf Classon explained Gus Hillenbrand’s absence. He noted that charter documents spell out age guidelines. “When director nominees reach the age of 72 during the term to be voted on … those directors are expected to not stand for re-election ... (Gus Hillenbrand) actually reached that age last year. He served one year longer than our age guidelines. He and his wife Nancy couldn’t be here today” to be honored.

Speaking on behalf of his colleagues, Classon expressed gratitude to the longtime board member and Batesville resident “for absolutely outstanding service to the company.” Hillenbrand joined Hillenbrand Industries in 1959 “and dedicated 55 years to this company. I have served with Gus on the board of Hillenbrand and Hill-Rom for 12 years. He has been a tremendous source of knowledge, passion and inspiration.”

After voicing his effusive thanks to the retired director, there was prolonged applause by the senior management team and a few shareholders in attendance.

Three customary proposals ratified by shareholders were announced (please see box). With no questions from shareholders and no major speeches by company executives, the meeting adjourned in less than 10 minutes. Afterwards, President and CEO John Greisch reported he has been traveling nonstop to Hill-Rom facilities abroad.

In the annual report (www.hill-rom.com, click on Annual Report at the bottom of the page), Greisch admitted, “2013 was another difficult year for all medical device companies – particularly those in the capital sector – and Hill-Rom was no exception. The ‘new normal’ appears to be a global economy in flux and any stability we do see appears tentative. In our more mature markets, hospitals everywhere are looking for ways to cut costs; more than ever before, hospitals are being thoughtful about the level of service they want to provide, deciding what is essential and what isn’t, looking for what truly will make a difference in outcomes, and discarding what will be merely incremental.”

He added, “Despite the difficult conditions, we were able to increase revenue by 5 percent,” from $1.63 billion in 2012 to $1.72 billion in 2013. The operating cash flow rose slightly to $263 million from $262 million in 2012.

In addition to integrating 2012 acquisitions Völker and Aspen Surgical, the president observed, “We were able to deliver on our most important financial strategic priorities: investing for growth and providing meaningful returns to shareholders.”

According to the company’s 2013 annual review (Hill-Rom.com/2013AnnualReview), “Research is the future of Hill-Rom and in 2013 we continued to invest significantly in it.” About $70.2 million was spent on research and development last year, a 4.9 percent increase over 2012.

The report stated, “We brought four major new products to the market and launched 13 additional products or product enhancements. In addition, we made significant progress on numerous other development programs. These new and emerging products deliver meaningful benefits for our patients and their caregivers, characterized not only by new features but, more importantly, by providing solutions to critical problems, such as:

• Preventing patients in the intensive care unit from sliding down the bed as the head is raised, a seemingly simple, yet serious problem.

• Delivering a spine table that eliminates a “fatal flaw” of the other tables on the market, enhancing patient and staff safety while offering a better footprint at a better price point.

• Designing one device that can deliver three airway clearance therapies.

• Helping caregivers throughout the hospital remember to clean their hands and providing automatic data collection for administrators who must report compliance rates.

“There are insights you can only have by watching,” said Brian Lawrence, senior vice president and chief technology officer, in the report. “When you observe an operating room team complete a procedure or follow a nursing staff over the course of the shift, you can see all the things they do and the problems, big and small, that they face while doing them. Armed with that knowledge, we develop products that improve care and simplify the job of caring.”

According to the 2013 review, “Being a committed partner in our communities is a natural extension of our work and an essential responsibility of our company .... Hill-Rom’s Hospital Beds for Humanity® program, now in its fifth year, is the centerpiece of our employee volunteer and corporate giving program. Through the program, Hill-Rom employees in the United States and Europe volunteer to refurbish and renew medical equipment for hospitals and other health care facilities which have urgent need for Hill-Rom’s products. Although the name focuses on hospital beds, the program has been expanded to include products from nearly every product line at Hill-Rom,” including hospital furniture, The Vest® Airway Clearance System, mobility devices and surgical instruments.

Over 250 workers met monthly to recondition and refurbish used Hill-Rom products that employees reclaimed from customers. In all, 2,312 products were renewed and delivered to 15 countries in Central and South America, Africa, Asia and the U.S.

In the citizenship area, the report continued, “2013 was a year marked by heart-breaking natural disasters that devastated the lives of millions. Hill-Rom has long admired and supported the work of the Red Cross in providing urgent care to those affected. This year, Hill-Rom donated $224,000 to the Red Cross in support of its work helping those affected by disasters, including Superstorm Sandy in the U.S., devastating floods in Canada and Europe and tornadoes in Oklahoma” and other U.S. areas.

Employee-led giving last year delivered help to a wide array of groups in communities around the world. Some of the efforts: 1,700 cans of food were delivered to a local food pantry; 133 Relay for Life participants raised $25,000 for the American Cancer Society; 121,000 meals were packaged and shipped to African communities; 510 coats were mended and donated to a winter coat drive; $4,600 was raised for Parkinson’s research by a small team of cyclists; $10,000 was collected in two hours for a service group during a phone-athon; 4,000 flower bulbs were planted to renew a nursing home garden; and $2,400 was raised in one week for childhood cancer research via donated lunch money.

In the annual report, Greisch concluded, “We are fortunate to work in a business that can directly improve life’s most precious commodity – health. It’s an honor and a responsibility that motivates all of us at Hill-Rom. We are proud of the impact we have had in the year just past, and eager to achieve even more in 2014.”

Debbie Blank can be contacted at debbie.blank@batesvilleheraldtribune.com or 812-934-4343, Ext. 113.

 

Shareholders vote • About 90 percent of shareholders, who own at least 51.9 million shares of Hill-Rom stock, were represented at the meeting either in person or by proxy, reported Susan Lichtenstein, senior vice president of corporate affairs, chief legal officer and secretary. • Shareholders approved a trio of proposals: Eight board members (Rolf Classon, James Giertz, Charles Golden, John Greisch, William "Hank" Kucheman, Ronald Malone, Eduardo Menasce and Dr. Joanne Smith) were re-elected and new board member William Dempsey was elected to one-year terms. Classon and Golden have the longest tenures, serving on the board since 2002. Shareholders OK'd a nonbinding resolution on executive compensation. They also voted to retain PricewaterhouseCoopers, Indianapolis, for the fiscal year ending Sept. 30. • Hill-Rom Holdings (NYSE: HRC) leaders announced March 7 that its board of directors has increased the company's fiscal year 2014 second quarter dividend 11 percent to $0.1525 per share, a news release stated. This dividend is payable March 31 to shareholders of record as of the close of business March 20. This brings the annualized dividend rate per share to $0.61 from $0.55. Jay Saccaro, senior vice president and chief financial officer, noted the dividend is 22 percent higher than the quarterly rate a year ago. "This increase is consistent with our commitment to enhancing shareholder value by returning a substantial portion of operating cash flow to our shareholders."