Current Proxy Statement Omits Material Information Regarding Farmer Family Related-Party Transactions
NEW YORK- LAWFUEL – Legal News Network – Sept. 14, 2006–
Shareholders Asked to Withhold Vote for Farmer Family Directors
in the wake of a drop of over a billion dollars in market value at Cintas (NASDAQ:CTAS) over the last nine months, Unite Here and the Teamsters are urging shareholders to withhold their votes for Director candidates Chairman Richard Farmer and CEO Scott Farmer. The “vote-no” initiative aims to reduce the domination of the Cintas Board of Directors by the Farmer family.
Unite Here and the Teamsters, some of whose members’ pensions are invested in employee benefit trusts that hold Cintas stock, hope the vote will put an end to self-interested business activities by the Farmers, which they do not believe are in the best interests of shareholders. The effort also supports two proposals, submitted by other shareholders, which would require the chairman of Cintas to be an independent Director and a majority-voting standard for Board of Director elections.
Today, Unite Here also filed a lawsuit in the U.S. District Court for the Southern District of New York against Cintas Corporation seeking injunctive relief to remedy the effects of Cintas’ alleged false and misleading definitive proxy statement filed on or about September 1, 2006 with the Securities and Exchange Commission (“SEC”). The proxy statement was distributed to the company’s shareholders along with a notice of its annual meeting, currently scheduled for Tuesday, October 10, 2006.
The complaint alleges that the proxy statement fails to disclose material information necessary for Cintas shareholders to make an informed decision about how to vote their proxies, in violation of SEC requirements.
“Cintas has omitted important information in its latest proxy statement,” said Ahmer Qadeer, a spokesman for UNITE HERE. “If the election of Directors is allowed to go forward based on the existing proxy statement, Cintas’ shareholders will be deprived of the right to understand the true nature of how Cintas operates.”
“We believe that the use of corporate jets for personal travel, steering corporate sponsorships to personal business interests and transacting business with familial related parties undermines the integrity of the Cintas Board of Directors,” said C. Thomas Keegel, International Brotherhood of Teamsters General Secretary-Treasurer.
Specifically, the complaint alleges that the proxy fails to disclose information concerning related-party transactions, including:
— The use of Cintas’ private jets by the Farmer family.
— The extensive business relationship with the Cincinnati-based KMK law firm, where Richard Farmer’s son-in-law and Scott Farmer’s brother-in-law, is a partner.
— Richard Farmer’s ownership in Kentucky Speedway LLC, a stock car speedway with which Cintas has a sponsorship contract and an entity that has sued NASCAR, a longtime business partner of Cintas.
UNITE HERE is North America’s union for laundry, apparel, hospitality, and gaming workers. The union represents nearly half a million workers.
Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States and Canada.
For more information or a copy of the complaint and letter please contact Ahmer Qadeer at 646-872-2256.