Worldwide Healthcare (WWH) has issued an announcement following up on the results of its AGM on 10 July 2024, where the resolutions to re-elect Doug McCutcheon and Sven Borho as directors of the company had more than 20% of votes cast against the respective resolutions (all other votes passed comfortably). The board acknowledges that some shareholders deemed Mr. McCutcheon not to be independent due to his length of service on the board (11 years) and that Mr. Borho should not be a director due to his role as a managing partner at OrbiMed Capital LLC, WWH’s Portfolio Manager. WWH says that it is actively engaged with its shareholders on these and other matters.

The board says that it shares the widely accepted view that length of service does not in itself impair a director’s ability to act independently and that, on the contrary, it believes that long serving directors’ perspectives can add value to the deliberations of the board. [QD comment: we would question the statement of this being a widely accepted view as it flies in the face of all convention regarding length of service of board members. Having been established in February 1995, WWH is not a new fund and so there has been plenty of time for the board to evolve and achieve a good rotation of directors – unlike say a newer fund where all the directors approach a decade of service at the same time. Although events can occur that can disrupt succession plans, good planning should ensure that, on the whole, directors do not need to serve more than a decade.]

WWH says that Mr. McCutcheon was asked by the board to take on the role of board chair from July 2022 for a period of three to five years to oversee the renewal of the board composition, to provide continuity and to ensure an orderly succession. In October of this year, WWH appointed two new additional independent directors, Sian Hansen and William Hemmings. With these appointments, four of WWH’s six independent directors have joined the board in the past 14 months. WWH says that to enable sufficient overlap with the newly appointed directors, Mr. McCutcheon is now expected to retire as chair after four years at the 2026 AGM.

Mr. Borho was appointed a director of the company in June 2018 and is the only director deemed not to be independent by the board due to his role at OrbiMed Capital. Having a representative of the management company on the board has been a feature of WWH since its launch, with Mr. Borho taking over from Sam Isaly who had held the position since inception. WWH’s board says that it believes that the trust benefits from his extensive knowledge and experience in investment matters and that the board routinely takes steps to avoid any potential conflicts of interest. [QD comment: Given that representatives of the manager of the trust routinely join board meetings to update the board, we struggle to see why Mr. Borho needs to be a director and enjoy the benefits of the board votes this brings. Fully independent boards are now the norm and the investment companies’ space is better for it in our view. This approach of retaining non-independent directors feels out of date now.] WWH says that each board meeting includes a separate session for the independent directors only, which provides the opportunity for open discussion and consideration of any areas where potential conflicts might be relevant. In addition, Mr. Borho does not sit on any of the board’s committees and does not receive a fee for serving as a director.