Press Releases
Teamsters Challenge Executive Pay-For-Failure at Rite Aid Following Albertsons Debacle
(WASHINGTON) – Today, the International Brotherhood of Teamsters called on fellow Rite Aid Corp. (NYSE:RAD) shareholders to vote against the company’s “Say-on-Pay” proposal at the upcoming annual shareholder meeting and reject windfall payouts to executives following two failed merger attempts. The vote comes less than three months after Rite Aid was forced to terminate its merger agreement with Albertsons Companies, Inc. amid widespread investor opposition to the deal, and sixteen months since the collapse of the proposed Walgreen Boots Alliance Inc., (NYSE:WBA) merger.
In a letter to shareholders, the Teamsters took the pharmacy chain to task for paying lucrative retention bonuses to top executives tied to the failed mergers. Calling it one of the most perverse awards imaginable, the Teamsters blasted the agreement to pay CEO John Standley a $3 million bonus if the Albertsons deal did not go through – an award that was duly paid when the merger collapsed on the eve of the planned shareholder vote in early August.
The labor union, whose members’ pension and benefit funds hold over $100 billion in the capital markets, including significant Rite Aid holdings, similarly challenged the Compensation Committee’s decision to use its discretion to pay retention awards to executives that would have otherwise only been payable if the Walgreens merger had been completed.
The letter also criticizes other “pay for failure” practices at Rite Aid, citing the 2015 grant of 1.1 million shares to CEO John Standley, purportedly contingent on the successful integration of the company’s acquisition that year of PBM business, EnvisionRX. The award, carrying a grant date value of $10 million, was paid during fiscal 2018 despite the performance at the business unit, which has resulted in the write-off of approximately a quarter of its $2 billion purchase price in goodwill impairments.
With Rite Aid clearly on the back foot following the failure of the Albertsons’ deal, the Teamsters contend it is vital that the board reassure investors that executives and shareholders share the same fate when it comes to strategic decisions.
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and “like” us on Facebook at www.facebook.com/teamsters.