Frequent fliers don’t get much more frequent than the beleaguered Rite Aid Corporation (RAD), which we’ve written about more than we (or the company) probably would have liked. And now, because of the proxy filed last Friday shortly after 4 pm, here we go again.
We’ll skip over the topic of huge increases in executive compensation, since John Kell at the Wall Street Journal did a fine job of reporting that here.
But there’s still the matter of outgoing Chairman and former CEO Mary F. Sammons’ compensation. Sammons gave up her title as CEO to John T. Standley in June, 2010; bucking the trend of separating the roles of Chairman and CEO, Rite Aid just announced that Standley will also become Chairman next month after the annual meeting. Topping the Directors’ Compensation list, Sammons’ total compensation was $804,806 in the last fiscal year. That includes a salary of $350,000, stock awards of $90,000, a non-equity bonus of $88,200, Rite Aid’s $240,000 contribution to her SERP, and other odds and ends.
There are also a trio of noteworthy shareholder proposals that urge the company to improve various practices, all of which the board opposes:
Shareholder proposal 5 asks the board to adopt a policy that will prevent Rite Aid from giving its “senior executives any tax gross-up payment…, except for Gross-ups provided pursuant to a plan, policy or arrangement applicable to employees of the Company generally.”
Even meatier is Proposal 6. The New York City Comptroller, John Liu, filed that resolution on behalf of the City Employees’ Retirement System, the Fire Department Pension Fund, the Teachers’ Retirement System, the Police Pension Fund and the Board of Education Retirement System, which own more than 1.2 million shares, collectively. The groups want the Compensation Committee to use more transparency and accountability when it establishes performance measures for top executives, asking that it
“…include multiple weighted metrics that correctly reflect both individual and business accomplishments over an established multiyear period; and, excluding proprietary information, disclose to the shareholders any changes made in the basket of metrics during the multiyear period.”
And Proposal 7 is noteworthy, too. Submitted by Steven Krol, who owns 254,625 shares, the proposal has two parts intended to limit the relationships of directors. It states:
1. Except for current Rite Aid executives or other companies enjoying contractual agreements which allow Board nominees of their choosing, that all other nominees will have no former or existing business or personal relationships, either directly or indirectly, with the senior management or the Company, and
2. All qualifying board members be paid fees and awards for board service only.
Krol reminds the board on p. 41 of the proxy that its “primary responsibility… is to protect shareholder assets and ensure they receive a decent return on their investment.” But if the past is any indication, that admonition may fall on deaf ears.
As longtime readers know, we’ve written a lot about Rite Aid’s long history of operational problems in recent years (see posts here and here; this recent Bloomberg article reports that the same problems persist in 2012), questionable executive compensation practices (see this post, or this one), and so much more.
It all reminds us of the proverb “The more things change, the more they stay the same.” And if that’s the case, we won’t be surprised to write about Rite Aid again sometime soon.
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