HealthSouth to reimburse shareholder expenses for proxy solicitation campaign

HealthSouth Corporation (NYSE: HLS) today announced that its Board of Directors has authorized the Company to amend its bylaws to adopt procedures relating to shareholder nominations for the election of directors. At its October 22, 2009 regular meeting, the Board approved the general terms of an amendment to the Company's Bylaws that will provide for reimbursement of shareholder expenses in connection with a proxy solicitation campaign, subject to certain conditions including the Board's determination that reimbursement is consistent with its fiduciary duties. The Board expects to adopt the final form of this Bylaw amendment this week. The final amendment will be included in a Form 8-K to be filed with the Securities and Exchange Commission when approved.

HealthSouth will become one of first public companies to adopt an alternative to the various initiatives relating to proxy access.

"HealthSouth believes there is a close correlation between good governance and good performance," said Jon F. Hanson, non-executive Chairman of the Board. "By reimbursing shareholders under certain conditions for reasonable expenses relating to director nominations, we believe we will further enhance director accountability and permit shareholders to have a greater say in the running of their company. This far-reaching amendment to our Bylaws will be good for our shareholders, our Board and our Company."

The Board also approved the general terms of an executive compensation recoupment, or clawback, policy. This policy will allow the Company in certain instances to require return of any bonus or incentive compensation paid to a member of senior management after January 1, 2010 if that officer engages in certain misconduct. The final terms of the policy will be included in a Form 8-K to be filed with the SEC when approved.

"Given the history of HealthSouth under its prior management team, we believe this Company should be innovative and a leader in corporate governance issues among public companies," said Charles Elson, Director and Chairman of Nominating and Corporate Governance Committee. "Based on my experience, HealthSouth has become such a leader." Mr. Elson is the Edgar S. Woolard, Jr. Chair in Corporate Governance and has served as the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

The Company's filings with the SEC will also be available after filing on the Company's Web site www.healthsouth.com in the investor section.