Slide 1: Presentation in Support of Its Director Nominees at the 2009 Annual Meeting of Chemed
MMI MMI INVESTMENTS, L.P. PRESENTATION IN SUPPORT OF ITS DIRECTOR NOMINEES AT THE 2009 ANNUAL MEETING OF CHEMED CORPORATION ‘May 13%, 2009 ‘THIS PRESENTATION SHOULD BE READ IN CONJUNCTION WITH MMI'S PROXY STATEMENT DATED 4/27/09, ‘WHICH CONTAINS MORE DETAILED DISCUSSION OF 4 NUMBER OF MATTERS ADDRES
Slide 2: Table of Contents
MMI TABLE OF CONTENTS Introduction and Executive Summary [MI Nominees Tax-Free Spin-Off Stewardship Entrenchment Operations Appendices
Slide 3: MMI Introduction
MMI INTRODUCTION + MMI Investments, LP. (“MMI”) is a small-cap value investment fund founded in 1996 + MMlisa long-only fund, makes no meaningful use of derivatives and is a long-term holder of its stocks Clay B. Lifflander, President & Portfolio Manager Jerome J. Lande, Executive Vice President & A
Slide 4: MMI Executive Summary
MMI EXECUTIVE SUMMARY 1. We believe that MMI’s five nominees are superior to the minority slate of incumbents that we oppose in independence, operational experience and strategic expertise + Adding 2 independent directors to an entrenched 11 member board does not constitute good governance. + Adding
Slide 5: Chemed Background
1971 2009 CHEMED BACKGROUND 1971 — Chemed Corp. (“Chemed” or the “Company”) is formed as a subsidiary of W.R. Grace and goes public through an initial public IPO"), 1980 — Chemed acquires Roto-Rooter. 1981 — W.R. Grace and Chemed combine their healthcare businesses, forming Omnicare, and do a subsid
Slide 6: MMI Nominees
MMI MMI NOMINEES + MMs Nominees, James Foy, Scott J. Cromie, Peter A. Michel, Clay B. Lifflander and Carroll R. Wetzel, Jr., bring a strong track record in: + Operational and strategic experience in both healthcare and residential services + Public company board service and effective governance + St
Slide 7: Chemed Incumbent Directors MMI Nominees Oppose
CHEMED INCUMBENT MMI NOMINEES WE OPPOSE + Patrick P, Grace - Son of a former Chemed Chairman and founder of W.R. Grace, Chemed’s former parent corporation, and a professional advisor to philanthropies + Thomas C, Hutton - Son of Chemed’s former long-time Chairman & CEO and an attomey directly employ
Slide 8: MMI Nominees' Superior Credentials
MMI NOMINEES’ SUPERIOR MMI CREDENTIALS Non-Chemed o ‘Cument / Past “Goes ARO Eatty eS ndppadat | Vendof Chenad Operating Experience Chemedora — Chainnan Experience —_Pxperience Related Entity MMI Nominees 70+ Years 9Boards 40+ Years All None None James Foy x x Scott J. Cromie x x Chy B. Liflander >
Slide 9: James Foy
MMI JAMES FOY? President & CEO of Riverside Healthcare System, a $250mm healthcare network, including three hospital sites, multiple clinics, a skilled nursing facility and a nursing school. Chairman, Greater New York Hospital Association Faculty, Mercy College Healthcare Management Program Accompli
Slide 10: Scott J. Cromie
10 MMI SCOTT J. CROMIE + Former ServiceMaster (NYSE:SVM-acquired) Group President overseeing American Home Shield, AmeriSpec, ServiceMaster Clean, Furniture Medic, Merry Maids and InStar Services. + Former CEO, President & COO of American Home Shield (subsidiary of ServiceMaster). AHS is a provider
Slide 11: Peter A. Michel
i MMI PETER A. MICHEL + Former President & CEO of Brinks Home Security (“BHS”), provider of high-tech home protection services. + CEO, President & Director of iSECUREtrac Corporation (OTCBB: ISEC) a provider of electronic monitoring products for the corrections market using Global Positioning Satell
Slide 12: Clay B. Lifflander
12 MMI CLAY B. LIFFLANDER + President of MMI and Millbrook Capital Management, Inc. a diversified private investment firm. + Former Co-Chairman and CEO of Key Components LLC, a diversified manufacturing company and SEC registrant. + Former Managing Director, M&A Group (coverage including healthcare)
Slide 13: Carroll R. Wetzel, Jr.
13 MMI CARROLL R. WETZEL, JR? + Director focused on corporate governance and value creation for companies in transition. + Director of Exide Technologies (NASDAQ:XIDE) + Director of Brinks Home Security Holdings, Inc. (NYSE:CFL) + Former Director of Laidlaw International, Inc. (NYSE:LI - acquired).
Slide 14: MMI's Proposed Tax-Free Spin-Off
14 MMI’S PROPOSED TAX-FREE SPIN MMI OFF + Value Creation Potential: 29% to 82% from May 8" closing price + Trading comparables: 29% to 41%! + Transaction comparables: 68% to 82%° + Taxation Poison Pill: Without a tax-free spin-off at these multiples we believe the potential tax leakage could be $10
Slide 15: Chemed Response
15 MMI CHEMED RESPONSE + Chemed Board’s response of March 16 acknowledges benefits and ease of a spin-off + “We [Chemed Board] agree with the statement in your letter that, ‘A spin-off of one of Chemed's businesses would be relatively simple...” + “.,.a separation could create substantial shareholde
Slide 16: Chemed's Shortsightedness
16 MMI} CHEMED’S SHORTSIGHTEDNESS * Market weakness is no excuse to put off long-term strategy + Spin-offs take time: + Spin-offs take time to execute — on average more than eight months.” + As the current market rally suggests, the market malaise will not last forever — a board should position itse
Slide 17: Stewardship
17 MMI STEWARDSHIP We believe Chemed’s response amounts to “Trust us.” Let’s consider their record: * Management has reversed positions on the attractiveness of a tax-free spin-off several times. * They have reversed positions on the practicability ofa tax-free spin-off. * They have compensated them
Slide 18: Comments Made at Time of Vitas Acquisition
18 MMI COMMENTS MADE AT TIME OF VITAS ACQUISITION * Tim O’Toole® + “[the company has] no interest in selling Vitas, though would “investigate the opportunity of it becoming a public company, independent from us.” + “We do not see long-term running one business with two divisions — one plumbing and o
Slide 19: Recent Comments Prior to MMI's Letter
RECENT COMMENTS PRIOR TO MMI MMI’S LETTER * Kevin McNamara + “.,.the two companies will remain joined at the hip.”!? + “People are quick to say ‘well what about a tax-free spinoff?” . . . I wouldn’t expect that to happen, it still doesn’t create much value.” 7 * “Roto-Rooter probably wouldn’t exist
Slide 20: Reactive, Not Proactive
MMI} REACTIVE, NOT PROACTIVE + According to Chemed’s proxy “in response to MMI’s announcement that it would nominate five candidates for election to the Board” Chemed added two outside directors, Ernest J. Mrozek and Thomas P. Rice, to its slate. + Chemed “approached certain of its large stockholder
Slide 21: Culture of Entrenchment
a1 MMI) CULTURE OF ENTRENCHMENT + The current members of the Board have averaged nearly 17 years of service. * Despite seven board members being deemed independent by a literal reading of the NYSE listing standards, in our view, the true independence of ten of the eleven current members of the Board
Slide 22: Current Chemed Board
MMI CURRENT CHEMED BOARD Employee! Direcior of Entity with Chemed | Past Chemed | Past Ties to | Chemed$to | Family Employee | Employee Chemed Employer __| Relationships Joel F. Gemunder* %: Patrick P. Grace! 2 x ‘Thomas C. Hution® x x x Walter L. Krebs! a Sandra E. Laney" See not e) 2 x ‘Andrea R.
Slide 23: Current Chemed Board
23 MMI} CURRENT CHEMED BOARD 2) Mr. Geyaunder hasbeen CEO of Omnsat Ine. “Onica”) since May 2001 and President and a detor since May 1981, ‘hen Onurare was fomned fiom Chemed’s and WR. Gnsce €Co's (°W R. Grace”) healthoat busteses ') Patni P. Grace i the son of. Peter Grae (deceased), the longtime C
Slide 24: Board Member Interlocks
MMI BOARD MEMBER INTERLOCKS a4 Jet Aviation Chemed Corp. ere ed eae SSRERSSS ee / eee ve wera iol Das
Slide 25: The MMI Nominees Address Inadequacies of the Board
MM THE MMI NOMINEES ADDRESS I INADEQUACIES OF THE BOARD Healtheare Operating Experience + Despite Vitas representing nearly 70% of Chemed’s revenue, only one director Ms. Lindell, a college dean, has any patient care experience + Mr. Gemunder's experience is in providing services to healthcare facil
Slide 26: Excessive Compensation
MMI 26 EXCESSIVE COMPENSATION Chemed’s Top 5 Executives Total Compensation 2004-2008 ‘Value of in-the- money options Stock and Option as granted 2004- Executive Cash & Other Reported 200515 Total Comp CEO Kevin McNamara $10.7 $9. 1mm $2.1mmn $21.9mm CFO Dave Williams $4.0nmm $3.2 $1.Ommn $8.3mm EVP
Slide 27: Excessive Compensation
a MMI) EXCESSIVE COMPENSATION Compensation + Members of the board who are also employees of the company (Mssrs. McNamara, O'Toole and Hutton) receive stock awards for both roles + Mr. Walsh receives a $135,000 fee as non-executive chairman. + Messrs, McNamara, Williams, O'Toole, Lee & Tucker all are
Slide 28: The Hutton Rules
MMI THE HUTTON RULES « Edward Hutton was CEO of Chemed from 1970 to 2001, executive Chairman from 1993 to 2004 and non-executive Chairman from 2004 to 2009. ¢ His son, Thomas Hutton, has been a Vice President of the company since 1988 and a board member since 1985. * From 2002 to 2008 Edward Hutton
Slide 29: Jet Resources
29 MMI JET RESOURCES + Chemed has an aircraft subsidiary named Jet Resources Ine, which acts as an aviation department for Chemed Executives as well as a charter service for other companies. + Chemed spent nearly $9mm in November 2008 to purchase a 2001 Hawker 800XP which hhas not been licensed for
Slide 30: Jet Resources - Chemed's Response
30 JET RESOURCES — CHEMED’S MMI RESPONSE « Inanews story about our letter questioning the purchase of the new jet, a Chemed source responded": + “Chemed bought the new aircraft in November...and sold the older plane the following month...” + MMI knows this to be false as the old plane was still for
Slide 31: Incumbent Director Self-Dealing
INCUMBENT DIRECTOR SELF- MMI DEALINGS + Cadre Computer was a subsidiary of Chemed that was sold to Sandra Laney, a director of Chemed, who became its President and majority owner in 2001 for a $399,000 note and no upfront payment, In 2002 Cadre borrowed another $150,000 from Chemed. Ms. Laney remain
Slide 32: Operational Issues
MMI OPERATIONAL ISSUES + Roto-Rooter + Job count destined 10% in 2008, + EBITDA margins declined 350bps in 2008 despite only a 1% decline in revenue, + Has not been aggressive with franchise acquisitions + Failed in the HVAC market and had to exit the business during the last recession. + Outdated m
Slide 33: Vitas Improvement Opportunities
VITAS IMPROVEMENT MMI OPPORTUNITIES * Operational Management: Pro-active, not reactive + Augment operational staff + Labor management and measurement tools + Labor relations + M&A and partnerships with not-for-profits * Intangible Asset Utilization + Better coordination between Vitas and hospice ind
Slide 34: Roto-Rooter Improvement Opportunities
4 ROTO-ROOTER IMPROVEMENT MMI OPPORTUNITIES * Footprint and Scale + More aggressive franchise acquisitions + Potential geographic franchise expansion opportunities + Buying group across the entire Roto-Rooter network + Expansion of brand and services into HVAC, appliance, electrical, etc. * Marketin
Slide 35: Appendices
APPENDICES
Slide 36: Chemed Strategic Divestitures
MMI CHEMED STRATEGIC DIVESTITURES 36 Name Year | Size Method Proceeds Figi Business 1978 [NA Sale of company v Medical Diagnostics 1978 [NA Sale of company ¥ Omnicare togi+ [NA Sub IPO followed by open market sales ¥ Roto-Roater 1985+ [NA Sub IPO followed by repurchase v Vestal Labs 1986 | $67mm | S
Slide 37: Chemed Board: Misaligned with Stockholders
7 CHEMED BOARD: MISALIGNED MMI WITH STOCKHOLDERS * The 11 members of Chemed’s slate own only 320,526 direct shares or 1.4% of the company’s capital stock. * MMI’s Nominees own 800,002 direct shares or 3.5% of the company’s capital stock. « According to Chemed’s proxy disclosure, in the past two year
Slide 38: Chemed's Presentation: The MMI Facts
38 CHEMED’S PRESENTATION: THE MMI FACTS Corporate Overhead Stock Price Returns We believe thatthe company’s total comporate expense is inflated and that two lean organizations can be mn with combined infastructures les than Cleeed cunt has today InChened’s pecetation fed with the SEC on May 2, 202,
Slide 39: The Huttons' Compensation
MMI Eduard Hutto. saay Bane 2002 LTH Payouts Split dolla Bemis Rethonat Pane ‘Tem L¥s hemance Uresrited ce Agent @taxretmaburonment Compury Cos Uhisleed ‘Total Peeion Peston THE HUTTON’S COMPENSATION + sm me 2002 _ oes nos =| sae s2l6s0 sas0p00 0,750 SRS sEISNOD aSp00 saISPM | saJEO MIE opm —“iséco
Slide 40: Perks: Chemed's 2009 Proxy Disclosure
PERKS: CHEMED’S 2009 PROXY DISCLOSURE ‘The table below describes each component ofthe All Other Compensation column in the Summary’ Compensation Table: Ki. be. rs. Ss. AY. McNamara _Willlams __O*Toole Lee Tucker Company coutsbutions to non-qualified deferred compensation plans (a) S 368.766 6 S 1628
Slide 41: Spin-Off: Trading Multiples
MMI SPIN-OFF: TRADING MULTIPLES Potential Spin-Off Value Assuming Trading Comp Multp es (intone, except wrshae deta) vases tio Retr) rom a a ae a a RiacmDAm DNS BBS Hed Ttne Comp thipie) 126 ete Toph rin Yobe 2 TeTD. BSNS LL naDencaaye wan wan ‘Equity Value per Share wols se S27 STL Lo 2009 Marke St
Slide 42: Spin-Off: Transaction Multiples
42 MMI SPIN-OFF: TRANSACTION MULTIPLES Potential Spin-Off Value Assuming Transaction Multiples Ginniins, exept po-shre cit) Wiss) Rote-Roter(a) TOTAL Lit 700 Tupa_2009 2008 7000 ‘Soin. Vatu ‘Adjusted EBITDA @) mugo «SASS gore Tnsucion Bhples ©) lose oak de tke ote Implied Baaprie Value $1206 $lfon7
Slide 43: Tax-Free Spin-Off: Potential Tax Leakage
MMI TAX-FREE SPIN-OFF Potential Tax Leakage on Sale of Vitas or Roto-Rooter (Sinmilons, excent ver she de) iis saa Rote Rooter i Sold Fait 2008 Lt 2000 M&4 Situation ‘Adjusted EBITD A apo | ss ste $559 Trasaction Comps Blipe lose 988 Lx le Implied Baaprice Vane Bigs Gipoat ware gases ese Bxinated To
Slide 44: Selected Precedent Transactions
MMI SELECTED PRECEDENT TRANSACTIONS 44
Slide 45: Vitas vs. Odyssey
45 MMI VITAS vs. ODYSSEY Odyssey Healthcare, Inc. (NASDAQ:ODSY) is a publicly traded provider of hospice services with a market capitalization of approximately $350mmn. ‘VITASve. ODSY
Slide 46: Roto-Rooter vs. Rollins
MMI} ROTO-ROOTER vs. ROLLINS Rollins, Inc. (NYSE:ROL) is a publicly traded provider of pest control services with a market capitalization of approximately $1.7bn, Rote-Rootervs, Rollie Ine, Statice 46
Slide 47: MMI Disclaimer
a7 MMI DISCLAIMER The analyses appearing on the foregoing pages 41 through 46 were prepared by MMI solely for purposes of illustrating MMI 's position with respect to a possible spin-off of one of Chemed’s businesses and it may not be relied on by any other person or used for any other purpose. Whil
Slide 48: Selected Precedent Spin-Off Transactions
MMI funomcenent Bective Tite Dae Dee Som Eni Barat Company ce nUaiie alee 259 FAPETETOTOCH CORD TOL ETA C Es aosame wWewime 49 BRIS HONESEPURITY HOLDING RIMES COTHE ma Liaw? Savane “Re ASCENT NEDIA CORDA DISCOVERY COMMUNICATIONS-A, ry iasame?—sa3a008 16 QUE BURLDING PRODUCTS (GERDA MACSTEEL INE Pa r
Slide 49: Current and Potential Analyst Coverage
MMI CURRENT AND POTENTIAL ANALYST COVERAGE 49 Fine Analyst Coverage Universe (Cunent Chemaed Coverage Barclays Capital ‘Adam Feinstein Healthcare Services Oppenteimer & Co, Michael Wiederhom Healthcare Services Deutsche Bank Danen Lehrich Healthcare Services RBC Capital Markets Frank Morgan Healthca