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Troubled Apria Group Brings Three New Directors on Board

From Times Staff and Bloomberg News

Apria Healthcare Group Inc.'s board named three new directors, as the money-losing provider of home health-care services moves to return to profitability and boost its flagging stock price.

Costa Mesa-based Apria, which provides services such as delivery of oxygen equipment to patients’ homes, said it will compensate its nine board members with stock options, instead of cash, in a bid to “better align” their interests with those of shareholders.

“By compensating directors with options rather than cash, we intend to not only reduce expenses but, most importantly, to create incentives that ensure the board is 100% focused on building shareholder value,” Apria Chairman Ralph Whitworth said in a statement.

On Tuesday, the company granted every director an option to purchase 25,000 shares at an exercise price equal to the company’s stock price, a company spokesperson said.

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The options replace the $18,000 cash retainer that each director received annually.

Apria this year has replaced its senior management and two-thirds of its board after losing $273 million in 1997, as customers cut the rates they’re willing to pay for home health-care services and Apria’s board failed to sell the company during a yearlong search for a buyer.

The company’s stock has tumbled 62% over the past year. Apria shares on Tuesday fell 6 cents to $6.69. The company disclosed the appointments after the close of trading on U.S. stock markets.

The directors named Tuesday were Philip R. Lochner Jr., 55, senior vice president of Time Warner Inc.; Beverly Benedict Thomas, 55, a commissioner of the Los Angeles City Employees Retirement System, and Stephen J. Trafton, 51, chairman of Glendale Federal Bank.

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They fill vacancies created last month by the resignations of Orange County developer George L. Argyros; Terry Hartshorn, chairman of PacifiCare Health Systems Inc., and Vincent M. Prager. The new directors will stand for reelection at the company’s annual meeting on July 28.

Trafton’s appointment was endorsed by mutual fund firm Franklin Mutual Advisors, Apria’s second-largest shareholder with 8.6% of outstanding shares, Apria said.


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