Shareholders Propose Code of Conduct Report at Cintas

September 2, 2004 ( - Shareholders of Cintas Corporation have filed a resolution requesting the company's board of directors review and report to shareholders by April 2005 on its suppliers' adherence to its code of conduct for vendors.

The resolution, proposed by New York City’s office of the comptroller, as trustee for city retirement plans, and by the General Board of Pension and Health Benefits of the United Methodist Church, says the reports about potential abusive working conditions at overseas suppliers are necessary for consumer and investor concerns whose could be harmed by costly litigation. The resolution was filed Wednesday with the US Securities and Exchange Commission (SEC), according to a Cincinnati Post report.

Mason, Ohio-based Cintas threw its support behind the proposal.   The company said it has developed a report on the implementation of its code of conduct and its system for auditing vendors’ compliance.   If vendors fail to abide by this code, the company said it can terminate contracts with the offenders.

In addition, the uniform and business services company has also dropped a defamation lawsuit that it filed against the man who introduced the resolution at its 2004 annual meeting.   This after a similar, more-detailed resolution was proposed by other investors at Cintas’ annual shareholders meeting last year.   Following the defeat of the company opposed resolution, Cintas filed a civil lawsuit against Timothy Smith, senior vice president at the investment firm Walden Asset Management, one of the sponsors of the resolution (See  SRI Firm Sued for Speaking Up ).  

Cintas alleged that Smith made false and defamatory statements about the company’s international sourcing operations.   Among those comments Cintas claimed were defamatory was that Cintas was buying uniforms from a Haitian company that was a “poster child for sweatshops.”   That lawsuit has just been settled. Terms have yet to be disclosed.