Friday, September 3, 2004

Cintas plans labor report on suppliers

'Sweatshop' accusation settled

By Mike Boyer
Enquirer staff writer

Cintas Corp. said it will report to shareholders on the labor practices of its suppliers, a year after its board opposed such a report.

The Mason uniform supplier said it would post the report on its Web site by the end of this fiscal year, next Aug. 31.

At the same time, the company has settled a defamation suit it filed earlier this year against a Boston investment firm and one of its executives, who offered the report proposal at last year's annual meeting.

Wade Gates, Cintas spokesman, said that the settlement of the suit against Boston Trust & Investment and Timothy Smith, senior vice president at its Walden Asset Management unit, "had nothing to do" with the board's decision to support a proposal similar to Smith's on this year's shareholder proxy statement filed Wednesday.

Last October, Walden and New York-based Domini Social Investments asked Cintas shareholders to request that the board prepare a report evaluating vendors' compliance with Cintas' code of conduct. The Cintas board urged investors to reject the proposal, arguing its supervision of vendor compliance was adequate and "a special report is not necessary."

Cintas shareholders voted against the proposal, roughly 9-to-1. But at the meeting, Smith referred to a Cintas supplier in Haiti as "a poster child for sweatshops."

Cintas executives denied Smith's allegations and said they believed they were triggered by UNITE, the union trying to represent Cintas hourly employees.

Terms of the lawsuit settlement weren't disclosed, but Kevin Baine, a Washington lawyer for Boston Trust, said no money changed hands. He said both sides exchanged information regarding the Haitian vendor.

In a letter to Cintas dated Aug. 20, Smith said that based on the third-party audit materials provided by Cintas, "I would not have described this facility as a 'sweatshop,' and I regret any harm that may have caused to Cintas."

In the proxy statement filed Wednesday, Cintas said its board is urging shareholders to support a proposal that it report on suppliers' compliance with its code of conduct.

By next Aug. 31, Cintas said it would post on its Web site a summary of supplier audits for the previous year, corrective actions requested by the company, supplier response and a summary of terminations because of noncompliance.

The new proposal was submitted by the Office of the Comptroller of the City of New York and the general board of pension and health benefits for the United Methodist Church.

Vidette Bullock Mixon of the United Methodist Church pension board, which holds about 56,000 Cintas shares, said her organization was concerned with the company's response to last year's vendor report proposal and raised the issue with the company.

After submitting the new shareholder proposal in May, she said, company representatives subsequently indicated the board would support it. She said the church fund was encouraged by the company's response.

Cintas spokesman Gates said the move wasn't a change in the uniform supplier's thinking but reflected finding a way to provide information to investors while protecting vendor confidentiality.

"Our commitment to our code of conduct and our audit program hasn't changed," Gates said. He said the board's opposition to the proposal last year dealt mainly with how to protect proprietary information from vendors.

"Our audits are very detailed, with a lot of confidential information supplied by vendors," he said.


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