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Rite Aid shareholder resolutions defeated at meeting

By , - Last modified: June 22, 2012 at 9:23 AM

Four shareholder resolutions proposing reforms to Rite Aid Corp.'s corporate governance were defeated at the pharmacy company's annual meeting Thursday afternoon.

AFL-CIO representative Patrick O'Meara presented the first two resolutions on behalf of various union pension funds; shareholder Steve Krol, a vehement critic of Rite Aid's management practices, presented the second two.

The four resolutions called for:

• ending "gross-up payments," a practice in which the company pays taxes on top executives' compensation.

• adding additional criteria to the company's metrics for awarding bonuses.

• strengthening the criteria for determining if board members have insider relationships with company management.

• changing the rules for executive bonuses to delay vesting and permit clawbacks under certain circumstances.

Two leading corporate governance advisory services — Institutional Shareholders Services and Glass, Lewis & Co. — both endorsed the unions' resolutions, O'Meara said.

Krol blasted the board, saying its members lack independence.

"There is a credibility problem with this board," he said.

During the meeting's open-comment period, union representatives aired grievances, including alleged age discrimination involving the firing of older warehouse workers.

Staffing is so tight that pharmacists are cleaning toilets at some stores, one representative said.

Union members sought publicity for their cause before the meeting at a small rally outside the venue, the Holiday Inn Harrisburg-East, under the watchful eyes of a half-dozen police officers.

In a statement issued after the meeting, Rite Aid said: "We provide an excellent wage-and-benefit package and our associates continue to have a significant voice in improving our operations."

"Rite Aid does not discriminate on the basis of age," the statement said. "Rite Aid takes any allegation of discrimination seriously, we have internal processes to address any concerns and we will investigate and follow-up appropriately whenever a complaint is made."

Krol is "off point" in his allegations of board cronyism, Rite Aid CEO John Standley said.

Rite Aid, based in East Pennsboro Township in Cumberland County, is the nation's third-largest drugstore chain. Its shares trade on the New York Stock Exchange under the ticker symbol RAD.

The company has struggled with debt since acquiring the Brooks-Eckerd chain in 2007. On Thursday, it reported a quarterly loss of 3 cents per share, its 20th consecutive such loss.

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