By Mike Boyer
The Cincinnati Enquirer
MASON - Even though Cintas chairman Richard Farmer is founder of the uniform supplier and its largest shareholder, he is no longer a member of a board committee to nominate board directors.
Farmer disclosed Tuesday during a packed and, at times, contentious annual meeting of shareholders at the company's headquarters that he had been voted off the board nominating committee by its five remaining non-executive members.
"I don't agree with it. But the board agreed with you,'' he told a questioner who asked why, as a company insider, Farmer was on the nominating committee.
The independence of corporate directors from management has drawn increased attention since the scandals at Enron, WorldCom and Tyco. The Securities and Exchange Commission this week is expected to adopt new rules to improve independence of corporate boards, including requiring independent board nominating committees.
Cintas, target of a national labor organizing campaign by UNITE and the Teamsters union, faced four shareholder resolutions on corporate governance at the meeting - three more than it has faced in its entire 20 years as a public company.
Farmer said after the meeting that he thought the proposals were triggered by UNITE, which is attempting to pressure Cintas to recognize it and the Teamsters as bargaining agents for employees without secret votes by employees.
Although the uniform supplier has posted 34 years of higher sales and earnings, including last year despite the slower economy, the meeting was dominated by discussion of the shareholder proposals and the UNITE campaign.
All the shareholder proposals, opposed by management, were rejected - including one by the AFL-CIO asking the board to create a nominating committee solely of independent directors.
The union group said Farmer, as a salaried executive of the company and father of CEO Scott Farmer, shouldn't be on the committee charged with picking independent directors to represent outside shareholders.
Brandon Rees of the AFL's office of investment said the union group was pleased the board removed Farmer from the nominating committee and by the shareholder response.
The AFL proposal lost, with 62.7 percent opposed and 37.3 percent for, but Rees said that represented about half of total shareholders not affiliated with management.
Also defeated were:
A proposal by the American Federation of State, County and Municipal Employees to expense employee stock options, 66.6 percent opposed and 33.4 percent for.
A proposal by Trowel Trades S&P Index fund asking that the board consist of two-thirds independent directors, 66.6 percent opposed to 33.4 percent for. With the retirement of longtime director James Gardner, five of the remaining eight directors are outsiders.
A proposal by Walden Asset Management and Domini Social Investments, asking the board to report on the compliance of offshore vendors with the company's code of conduct, 91.7 percent against and 8.3 percent for.
In support of the resolution, Timothy Smith, Walden's senior vice president, said HAACOSA, a Haitian supplier to Cintas, violated Haitan minimum wage laws, intimidated employees and forced overtime and terminated workers without due process.
A Cintas spokesman said later that the company had never heard of HAACOSA and it is "not someone we do business with.''
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