Wal-Mart to face unhappy shareholders
By Peter Whoriskey,
The Wal-Mart annual shareholders meeting, a spectacle set in an Arkansas stadium, typically hews to a tight script that is more celebration than deliberation.
This year’s meeting, which unfolds Friday, could be different.
Embroiled in a bribery scandal from Mexico and besieged by complaints about its membership in a conservative political organization, the world’s largest retailer and its board are facing an unusual level of dissent.
Several large pension funds with significant stock holdings have said they will vote to remove at least some members of the board amid allegations that company executives bribed Mexican officials to win permission to open stores there, and that the board failed to adequately investigate the matter.
“We are taking this extraordinary step in light of the recently reported cover-up in 2005 and 2006 of alleged widespread bribery in Mexico,” said a letter from New York City Comptroller John C. Liu on behalf of pension funds that control 5.6 million shares.
In the letter, Liu said that a key board committee at the time “was stonewalling repeated shareowner demands for a comprehensive, independent” review.
Pension funds in California and Maryland have similarly promised to vote for removal of some or all of the company’s board members.
The controversy comes after the company spent years seeking to undo its image as a retail behemoth that mistreats workers and crushes mom-and-pop competitors.
Because the family of founder Sam Walton controls almost half of the company’s stock and his son S. Robson Walton is the board chairman, some company observers believe the efforts at removing key board members are unlikely to win approval.
Likewise, other reform votes on the shareholder ballot — including one that would force the company to compile a report on political spending and another on how executive pay is tied to company performance — may face difficulties.
“We . . . continue to strengthen our anti-corruption programs around the world,” Wal-Mart said in a statement regarding the alleged bribery. “A thorough investigation will take time and we are in the early stages. It would be inappropriate to comment further on the specific allegations, or for us or others to come to specific conclusions until the investigation is finished.”
The annual meeting has drawn an unusual amount of scrutiny.
The company has long faced grievances from unions and other fair-pay groups, but this year the chorus has been joined by a large number of shareholders who have complained about a variety of company practices.
“They don’t treat you right,” said Sharon Ramirez, 53, a cashier and sales associate at the Wal-Mart in Severn who attended a protest in front of the company’s District headquarters Thursday. “They intimidate you. The employees are so afraid of losing their jobs. I made a decision not to be afraid.”
Ramirez has worked for the company for four years and makes $11.10 an hour, she said.
At a microphone, she mocked the company’s sales slogan.
“ ‘Save Money. Live Better,’ ” she said. “Like hell.”
The company also has drawn unflattering publicity because of its membership in the American Legislative Exchange Council, a conservative group that encouraged states to pass “stand your ground” legislation, which became a focus of attention in the wake of the fatal shooting of Trayvon Martin in Florida.
The company this week withdrew from the organization.
Maggie Sans, Wal-Mart’s vice president of public affairs and government relations, told ALEC leaders in a letter that there were concerns that the group had strayed “from its core mission ‘to advance the Jeffersonian principles of free markets.’ ”
But by far the issue that appears to have aroused the most shareholder concern is the allegations of systematic bribery in Mexico — now the focus of a Justice Department criminal inquiry.
The investigation was launched in December after Wal-Mart met voluntarily with Justice officials. The company revealed then that it was looking into whether its Wal-Mart de Mexico unit had bribed officials.
Some shareholders have questioned why it took so long for the company to examine reports of wrongdoing, which allegedly date back several years.
“There is one man who has had the ability to steer the company on the correct course at every crossroads, at the time of the original investigation and again today — Chairman S. Robson Walton,” said a report from ISS Proxy Advisory Services, an influential group that advises shareholders in voting.
On key matters relating to the company’s investigation of the allegations, “Walton could have acted in his fellow shareholders’ best interests . . . but from all outward appearances has failed to do so.”