For Cintas, It's Business As Usual

Oct 15, 2008 at 6:08 pm

Two proposals by institutional shareholders designed to increase independent oversight at Cintas Corp. failed to gain a majority of votes Tuesday at the company’s annual meeting.

The proposals included one by the North Carolina Retirement Systems, which represents the pension investments of unionized North Carolina state government workers. It sought to have an independent chairman — unconnected to the Farmer family — appointed to the board of directors to enhance oversight and improve the company’s abysmal safety record.

The other proposal sought an advisory shareholder vote on executive pay.

As the meeting was conducted, more than 300 protesters comprised of Cintas workers from across the nation and their local supporters rallied outside of the company’s Mason headquarters (pictured above), demanding an end to what they described as egregiously unsafe working conditions at the uniform supplier’s industrial laundries.

A proposal by another institutional shareholder — CtW Investment Group — was also defeated that would have blocked the appointment of David Phillips to the Cintas board due to what it described as an undisclosed conflict of interest and weak leadership in his role as the company’s Nominating and Corporate Governance Committee chairman.

(See my recent news article "Cintas Under a Microscope" for background on these shareholder proposals.)

Cintas didn’t reveal the vote totals for board appointments. CtW representatives said about 35 percent of outside shareholders opposed Phillips’ appointment, which amounted to a “vote of no confidence.”

CtW had alleged that in his role as committee chairman, “Mr. Phillips bears responsibility for many of the company’s questionable governance practices, which include … inadequate response to legitimate governance concerns."

Further, CtW disliked that Phillips serves as trustee of Cincinnati Works, which received more than $200,000 in charitable contributions from foundations controlled by Cintas insiders and affiliates.

Each of the proposals had been endorsed by the Union of Needletrades, Industrial and Textile Employees (UNITE), an organization trying to unionize Cintas workers for more than five years.

Some Cintas employees who were given proxies by shareholders were denied access to the annual meeting, according to UNITE.

The U.S. Occupational Safety and Health Administration (OSHA) has cited at least 10 Cintas facilities nationwide in just over a year for safety violations, including one that resulted in the death of a worker. Since 2003 Cintas has been cited for more than 170 OSHA violations in its facilities, including more than 70 citations that OSHA deemed could cause “death or serious physical harm."

(Photo of protest outside Cintas annual meeting on Oct. 15 by Cameron Knight. See more photos here)