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Shareholders Press New Apria Management

TIMES STAFF WRITER

Shareholders of Apria Healthcare Group Inc. sharply questioned management Tuesday about plans to restore the loss-ridden home health care giant to profitability.

During the Costa Mesa company’s annual meeting, one shareholder expressed concern that top executives recently hired by the company have no experience in the industry.

The shareholder questioned whether the executives, including new chief executive Phil Carter, formerly in retailing, will have to spend too much time at the outset becoming familiar with the industry.

The company’s chairman, Ralph C. Whitworth, who fielded questions, acknowledged that someone with industry experience would be preferable as a chief executive, but expressed strong support for Carter’s skills as a turnaround specialist.

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Carter, who was recruited by Whitworth, had engineered a turnaround at Dominguez-based Mac Frugal’s Bargains-Closeouts Inc., a 330-store chain.

Shareholders also asked about management pay and severance packages, specifically a $1.3-million severance package for the company’s former chairman and chief executive, Jerry Jones, who “voluntarily resigned” this year.

Whitworth said the severance package for Jones was approved by previous management. He also noted that another Apria executive, whom he did not identify, would be eligible for a sizable severance if he resigns.

He said Carter’s salary is in line with what chief executives receive at comparable companies, but did not elaborate. He said the chief executive also has stock options and cash bonuses.

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Carter briefly sketched out plans to boost the company into the black by the middle of next year. Officials said that in coming months, the company will trim costs and losses by $40 million to $60 million a year by reducing payroll at the company’s corporate headquarters in Costa Mesa and elsewhere, disposing of losing businesses, and trimming expenses.

After the meeting, the board appointed Whitworth’s business partner, David H. Batchelder, to fill a post left open recently when nominee Stephen J. Trafton, Glendale Federal Bank chairman, decided not to serve. Whitworth and Batchelder are officials of Apria’s largest investor, La Jolla-based Relational Investors LLC, which owns a 9.9% stake.

After the meeting, Carter refused to answer questions from the press. When asked about the meeting’s somber air, Whitworth insisted shareholders were upset with the past, not new management.

“Hey, we’re the new people here,” he said. “Nobody’s going to blame us for what happened in the past. We’ve been here for less than 90 days.”

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Whitworth said company morale is the best it’s been in years. He refused to say, however, how many employees in Orange County or elsewhere will lose their jobs as the company restructures itself.


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