Wal-Mart Stores Inc.'s chief executive, answering critics of the discounter's pay and promotion practices, said Friday that he would cut executive bonuses if the company fails to meet diversity goals.

Bentonville-based Wal-Mart, which employs 1.3 million people in the United States, faces several lawsuits alleging sex discrimination and wage violations, including claims that it allows employees to work off the clock.

"We have to do things correctly," chief executive H. Lee Scott Jr. said at Wal-Mart's annual shareholder meeting in northwest Arkansas.

Wal-Mart said it would raise wages for some workers, though it would not say by how much or how many workers would be affected. Wal-Mart pays full-time workers an average hourly wage of about $9.64, the company said. "No one's pay will be reduced," Scott said.

To combat potential wage and hour abuses, the world's largest retail chain said it would notify U.S. workers if managers change information on the employees' timecards. The company also plans to introduce technology designed to insure employees take mandatory breaks. For example, cash registers at Wal-Mart stores will automatically shut down if an employee fails to stop work for lunch. The proposals are designed, in part, to keep managers from interfering with breaks and timecards.

The company will reduce executive bonuses by up to 7.5 percent this year and 15 percent next year if the chain fails to promote women and minorities in proportion to the number that apply for management positions.

"No single one of these is earth-shattering," Scott said. "But when you put them all together, it is major progress."

Greg Denier, a spokesman for the United Food and Commercial Workers Union, which is trying to organize Wal-Mart employees, said the proposals "appear to be an attempt to insulate the company against further legal action."

It has been a tough year for Wal-Mart, which has been accused of such things as using undocumented workers to clean its stores and locking in employees overnight. Yesterday, top Wal-Mart executives called on employees to defend the company and help repair its image.

"We're under scrutiny like we never have been before, and we've got to tell our story like we never have before," Betsy Reithemeyer, vice president of corporate affairs, told a crowd of Wal-Mart workers.

Wal-Mart, which operates more than 3,000 stores in the U.S., reported sales of $256 billion and income of $9 billion in 2003. Executives said the chain will build an additional 50 million square feet of retail in 2004, or the equivalent of about 250 new supercenters.

In addition to criticism for its labor practices, the chain has encountered fierce opposition to its Supercenters in some parts of the country, notably California, where residents of Inglewood voted down a new store in April. But Scott said the Wal-Mart "continues to believe we can grow our Supercenters."

The theme of this year's shareholder meeting was "It's My Wal-Mart" and speaker after speaker urged employees to proudly "tell your story.

"How many of you have heard something negative" about Wal-Mart? asked M. Susan Chambers, executive vice president of benefits. "Well, there is something you can do about it."

The meeting, held at the Bud Walton Arena, named for the chain's co-founder, was repeatedly interrupted by the Wal-Mart cheer -- "Give me a W! Give me an A! Give me an L!" -- delivered in several different languages. An estimated 16,000 Wal-Mart employees from around the world attended the meeting.

Wal-Mart's shareholder meeting has earned a reputation as part pep rally, part rock concert, and this year was no exception. There were appearances by Paula Abdul, Halle Berry, Susan Lucci and Patti LaBelle. Abdul, Berry and Lucci were there to speak on behalf of products they represent that are sold at Wal-Marts, while LaBelle was there to perform.

Not everyone was impressed with the performances or the stream of videos shown throughout the shareholder's meeting, each telling the story of a Wal-Mart worker from around the world. One shareholder, Barbara Aires, a member of the Sisters of Charity of Elizabeth, proposed that Wal-Mart prepare a report disclosing the number of women and minorities on its payroll. "We need to see what the facts are," she said. "Not merely pictures and presentations." The proposal was voted down.