June 25 Drugstore operator Rite Aid Corp's
shareholders on Thursday voted to change the terms of
payment for its chief executive's golden parachute, supporting a
union-backed investor group over the company's board.
Rite Aid CEO John Standley stands to receive $42 million if
he loses his job in the event of the company being taken over,
including $31.6 million through the accelerated vesting of
outstanding equity awards.
CtW Investment Group, which has a nominal stake in Rite Aid
and advises funds holding a 0.18 percent stake, had proposed to
limit the accelerated vesting, saying the amount should instead
be paid on a pro-rata basis, based on the CEO's performance
until a takeover.
CtW Investment said it sought to rein in the value of
accelerated equity as such payments should not be based on what
an executive might have earned if he or she had not only kept
the position after a takeover but also met performance targets.
According to preliminary results, 58 percent of Rite Aid
shareholders voted in favor of the proposal, according to a
statement from CtW Investment, which is affiliated with Change
to Win, a federation of unions.
Rite Aid was not immediately available for comment.
There has been speculation that Rite Aid could be an
acquisition target. Pharmacy giant Walgreens Boots Alliance Inc
have expressed interest in buying the company in the
While proxy advisory firms Glass Lewis and ISS supported CtW
Investment's proposal, Rite Aid had argued that such a move
would potentially undermine its compensation program and ability
to retain executives.
CtW Investment has asked that if Rite Aid changes its
policy, the move should be applicable to both current and future
CtW Investment owned 865 Rite Aid shares, according to a May
15 regulatory filing, and says it works with pension funds that
are associated with Change to Win and manage $250 billion in
Rite Aid's shares were off 0.5 percent at $8.64 in afternoon
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by