{
  "docId": "019dd923-622c-750b-8b98-ce8e8f2b4a97",
  "docSlug": "c5a10320e53e",
  "documentTitle": "Cintas Corp. (CTAS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-11-13 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 8,
  "pageCount": 73,
  "prevPage": 7,
  "nextPage": 9,
  "slideType": "villain_critique",
  "function": "name_villain",
  "density": "overcrowded",
  "nDataPoints": 4,
  "notes": "The slide uses a 'villain' framing by linking the auditor to a past accounting scandal at Papa John's and questioning the independence of the audit committee.",
  "elementsJson": [
    "headline_text",
    "bullet_list",
    "callout_box"
  ],
  "metadataConfidence": 0.95,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b98-ce8e8f2b4a97/8",
  "deckHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97#slide-8",
  "components": [
    {
      "bbox": {
        "h": 0.7,
        "w": 0.13,
        "x": 0.02,
        "y": 0.24
      },
      "kind": "callout",
      "text": "Governance Concerns Include Closeness of Management With The Auditor. Current Audit Partner Linked To Papa John Accounting Fiasco",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "14b02ebb-23f0-49ce-98b6-1a2b802644c6",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.83,
        "x": 0.15,
        "y": 0.24
      },
      "kind": "list",
      "text": "Spruce Point has various concerns about the Board including a lack a separation between its Chairman and CEO, Board and family relationships that are not independent, unjust compensation practices, and the closeness of Cintas with its auditor",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "1f72085e-7eca-4a42-b709-1a1f7d32106c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.83,
        "x": 0.15,
        "y": 0.34
      },
      "kind": "list",
      "text": "Ernst & Young has been Cintas’ auditor since 1968. The engagement partner at Ernst & Young is Craig Andrew Marshall. Mr. Marshall is also the audit engagement partner at Papa John’s International (Nasdaq: PZZA)",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "2b0163bd-459b-45aa-800b-20a4984f9230",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.83,
        "x": 0.15,
        "y": 0.8
      },
      "kind": "list",
      "text": "Cintas’ annual incentive plan is based on sales and EPS growth, along with non-financial goals. In 2019, 41.75% of CEO Farmer’s bonus was tied to EPS performance... Cintas adopted a new revenue recognition method that boosted pre-tax income by $22.3m and Diluted EPS by $0.15 cents.",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7848c256-b40a-4698-8c0f-d9176cc9d3fe",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.83,
        "x": 0.15,
        "y": 0.62
      },
      "kind": "list",
      "text": "Cintas’ just appointed Karen Carnahan to its Audit Committee. Cintas claims she is “independent”, yet as a 30 year former Cintas veteran and Treasurer connected to CEO Farmer, we question why is she joining now in light of our views that Cintas is experiencing financial stress?",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "83310e4a-e4ef-4ec5-82d4-b4e59c88af60",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.83,
        "x": 0.15,
        "y": 0.72
      },
      "kind": "list",
      "text": "Cintas management, with the blessing of the Board, claimed great performance for the G&K deal. Special bonuses were awarded to executives for completing the deal, despite our evidence it has weakened the overall financial profile of Cintas",
      "attrs": null,
      "subkind": "bullet",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f219c545-afa5-4f27-8f60-fcc62b883046",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.96,
        "x": 0.02,
        "y": 0.17
      },
      "kind": "title",
      "text": "Warning On Audit Partner And Management Extracting Unjust Compensation With Questionable Results",
      "attrs": null,
      "subkind": "action-title",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "244771b9-6cfd-42df-b43b-2f1718b1c992",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.7,
        "x": 0.28,
        "y": 0.02
      },
      "kind": "title",
      "text": "Spruce Point Estimates 60% – 75% Downside Risk At Cintas Corp. (NYSE: CTAS)",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "aef07481-342a-4f10-af35-4b40240d1631",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "antagonist-introduction",
      "slug": null,
      "matchId": "351ceb6f-54d0-4eb8-8fae-626b1756a343",
      "evidence": "The slide explicitly frames the auditor and management as the source of governance failure.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 20,
      "from": 6,
      "beatId": "b73990d4-fb73-4140-9aad-c369561e3c5d",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Monster",
      "beatSlug": "overcoming-monster-the-monster",
      "evidence": "The deck presents extensive evidence of Cintas' bad business practices.",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Hook",
      "parentBeatSlug": "hook"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}