Sunday, October 12, 2003

P&G, Cintas travel 2 roads

Shareholder meetings are on Tuesday

By Mike Boyer and Cliff Peale
The Cincinnati Enquirer

When two of Greater Cincinnati's biggest companies face shareholders Tuesday, one will be under pressure from union activists while the other will be riding a crest that has taken its stock price to a three-year high.

Cintas Corp., which meets at its Mason headquarters, is the target of a major organizing campaign by UNITE and the Teamsters. But it is a shareholder proposal by the AFL-CIO that could take center stage at the meeting.

Meanwhile, Procter & Gamble Co. shareholders will gather downtown at the Aronoff Center for the Arts, and many undoubtedly will be happy because of the performance of P&G stock. The price topped $95 a share last week for the first time since early 2000.

The meetings traditionally have been at opposite ends of the newsmaking scale. The Cintas meeting has typically been a quiet affair, with few, if any, shareholder proposals. This year, the company's proxy has four, more than anyone can remember.

The AFL-CIO, in a proposal it says is unrelated to the organizing effort, is urging Cintas investors to support creating a directors nominating committee composed only of independent directors.

In July, in anticipation of new stock exchange rules, Cintas created a nominating committee including chairman Richard Farmer, the company's founder and largest shareholder.

The AFL-CIO opposes Farmer's inclusion and asked investors to vote against his re-election to the board.

P&G's meeting, however, usually draws animal-rights protesters, shareholder activists and often national attention. And with the company exceeding its own earnings estimates in most quarters, shareholders should be happy.

But the companies are similar in that they've been two of the region's most reliable performers, both in earnings and stock prices.

P&G went through turmoil three years ago with a new chief executive officer and $40 billion in lost market value. Cintas, struggling with slower uniform sales because of the sluggish economy, is the target of a national organizing campaign led by the New York-based UNITE. A union spokesman didn't respond to calls last week inquiring about whether it will send representatives to the Cintas meeting.

The other shareholder proposals on Cintas' proxy, all opposed by management:

• Urging the company to expense employee and director stock options.

• Requiring two-thirds of the board be composed of independent directors (now five of nine board members are outsiders).

• Requiring a report evaluating the company's code of conduct for vendors.

Analysts don't expect the P&G meeting to be controversial. There are only two shareholder proposals, one for annual election of the board of directors, and another on labeling of genetically engineered products.

George Strietmann, vice president of local money manager Bahl & Gaynor, which manages 3.2 million P&G shares, said it's still a core holding for most Bahl & Gaynor clients.

"They're picking up market share in most of the major divisions," Strietmann said. "The profit margins are expanding, and that makes the company much more valuable."

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