By Jack Cumming
On Thursday, October 2, Brookdale Senior Living announced the end of its search, led by Spencer Stuart, to find a new CEO for its once-dominant business. Recent years have seen Brookdale shrink from over 1100 communities at its peak to roughly half that now, and Brookdale’s Board has announced further shrinking to come [Click here].
A Fresh Face
The new CEO is Nick Stengle. The bulk of Mr. Stengle’s career, after graduating from the Air Force Academy with an engineering degree, has been as a fighter pilot. His “handle” in the Air Force was “Purge.” Now “Purge” will be setting the future course for Brookdale, presumably in alignment with the board that has chosen him.
At about the same time as the Brookdale announcement, the Anglican Crown Nominations Commission announced a new Archbishop of Canterbury, in effect the CEO of the worldwide Anglican Communion. The contrast in the two announcements could not have been more pronounced. We immediately heard publicly from the archbishop. We have had silence from Mr. Stengle.
The comparison is not as far-fetched as it may seem. Both organizations are committed to serving the weak and vulnerable. For Brookdale, the corporate purpose is to house and sustain those rendered vulnerable and increasingly weaker through advancing age. The Church, in the larger sense as the presence of God on earth, is dedicated to making the world safe for humanity (to paraphrase the message of the new Archbishop). This love of neighbor through the love of God is common to all religious entities that I know of.
Brookdale’s Aspiration
Brookdale, in contrast, is dedicated to profit and shareholder value. Caring for the vulnerable, to interpret the message Brookdale’s Board presents to investors, is merely the means to that end of investor profitability. As a resident, my empathy is with the customers.
Do I want to do business with an enterprise that only sees customers as a means to an end? The answer is obvious, and it ought to be obvious to the Brookdale board. If customers are the means, then they are essential. Given Brookdale’s mantra of money for us before value for you, the business may push sales, but its reputation will not help.
Today’s news is the selection of Nick “Purge” Stengle to be Brookdale’s new CEO. Will he have a new vision for Brookdale, or will he follow the guidance from the board’s money interests? That remains to be seen.
A Lengthy Resume
Mr. Stengle has a varied resume. 11 years after the Air Force Academy as a “top gun” fighter pilot, 3 years with the Boston Consulting Group, 2 years with Marriott, 4 years with HMS Host, 2 years with a private equity firm, 4 years with Gentiva interrupted by a one-year stint at Sunrise Senior Living. It’s not surprising that one comment on the Brookdale news concludes:
We have not heard why his tenure at Sunrise Senior Living was so short, and given his recent history, it looks like he may be a bit of a job hopper, which is not what Brookdale needs. The largest company in the sector needs stability at the top. We hope we are wrong and that he does a good job and stays.
Another senior living news outlet sees value in this rotational training program.
That background suggests Stengle could be well-suited to lead the company down several paths, and I’m assuming – given the shareholder pressure that Brookdale has been under – that his first priorities will be on whatever action he can take to drive earnings as quickly as possible.
Senior Housing News quotes Stengle from a Brookdale press release as saying:
“Brookdale has a strong foundation in place with compelling long-term growth drivers, and I believe the company is well positioned to extend its leadership position in the industry as we enter the next chapter and capitalize on attractive industry demographics. I look forward to building on the company’s recent success and to capturing the significant opportunities ahead to drive shareholder value.”
Mr. Stengle may be less known than some others in positions like those he has filled, but he did speak in 2022 at the Senior Living Innovation Forum, and you can access that event by clicking on this sentence. There’s not much comfort in these early comments to suggest that Brookdale’s residents will see much improvement despite the recent nominal uptick in occupancy. Ultimately, it will be the marketplace that will determine if Brookdale is able to reverse its shrinking footprint and to begin to grow toward its potential.
Disclaimer. I have a personal interest in Brookdale since I bought shares in the company when it was trading at $37. It steadily lost value over the years I’ve owned it, but recently, there was an uptick after occupancy rose above 80% in an industry in which average occupancy is generally well above 85%.
Your observations are always insightful, Steve. The CEO is caught between Scylla and Charybdis, and we shoudl remember that Odyseus only got through by being lashed to the mast, which in this context should be long-term financial incentives for Mr. Stengle. Thanks for your excellent reporting and comments.
Your Odyseus analogy made me chuckle, Irving; thanks for the laugh! Jack was the writer of this article, however, not Steve, but they both appear to share this obsession with Brookdale.