After shareholders voted against the recommendations, CEO John Standley and three new directors were still elected at the annual meeting. The voting results little, much-needed, change will come about at Rite Aid (RAD). With fundamentals likely to worsen under the same leadership, why is the stock up over 25% from yearly lows and in just a few trading sessions following the vote?

Rite Aid did at least two things right: It added new board members and removed the chairman title from CEO Standley. Second, shareholders voted against a “say on pay” proposal. If the company compensates management accordingly to business performance, investors have a slim chance of getting better leadership to steer the company out of trouble. Competitor Walgreens Boots Alliance (WBA) is winning investor confidence: Shares traded just off their 52-week high. WBA stock is valued at 11.3 times forward earnings compared to Rite Aid’s 18.92 times forward P/E. From a value perspective, Walgreens could continue to outperform Rite Aid on the stock market.

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