“Unprecedented” Number of Shareholders Reject Re-election of Walmart Directors
Posted on June 5, 2012 by jway
Top Walmart executives and the Board of Directors faced a sharp rebuke from shareholders when votes were counted after Walmart’s Annual Shareholders Meeting, held last Friday in Fayetteville, Arkansas. According to the Associated Press, many of the company’s directors up for re-election, including CEO Mike Duke, Chairman and Walton heir Rob Walton, former CEO H. Lee Scott and Audit Committee chair Chris Williams, received unprecedentedly high rates of disapproval from shareholders.
Notably, 15.6% of shares were voted against former CEO Scott. He was at the helm in 2005-2006, when the company’s Mexican subsidiary allegedly paid over $24 million in bribes to local officials, in potential violation of the Foreign Corrupt Practices Act, and executives covered the story up after a whistle-blower exposed the bribery internally. Roughly 13% of shares were voted against Duke, Walton and Williams.
In response to the bribery allegations, which are currently under investigation by the Department of Justice, the SEC and various Mexican agencies, many of the country’s largest public pension funds – including CalSTRS, CalPERS, and New York City Pension Funds – publicly announced in recent weeks that they would vote against some or all existing board members. Two prominent proxy advisory firms, ISS and Glass Lewis & Co., advocated against reelection of multiple directors. Worker activists who are members of the Organization United for Respect at Walmart (OUR Walmart) also waged a get-out-the-vote campaign among employee shareholders before the meeting, urging them to vote against several board members.
The disapproving votes are largely symbolic, as the Walton Family owns just under half of the company’s shares, making it all but impossible for shareholders to fight nominations that company insiders support. Excluding these family and insider shares, 38% of shares were voted against Scott and 31-32% voted against Walton, Duke and Williams. In contrast, last year Walmart’s board, who are re-elected every year, received an average of 98.4% support.
For the annual shareholders meeting the company flew in thousands of hand-picked Walmart employee shareholders from around the world to fill the seats of the Bud Walton Arena at the University of Arkansas, Fayetteville. Despite the friendly crowd and the star-studded cast of performers, including Justin Timberlake, Taylor Swift, Celine Dion, Ladysmith Black Mambazo and Juanes, as well as a prerecorded video from Bill Clinton, there was no getting around the company’s management issues in the meeting. Walton, Duke and other execs were forced to mention the bribery scandal multiple times, and they awkwardly stressed the importance of “integrity” during the meeting and in activities for associates earlier in the week. Employee shareholder Jackie Goebel, an OUR Walmart member and 24-year Walmart veteran, mentioned the scandal in her 3-minute shareholder proposal presentation advocating for increased transparency and strictness in the calculation of executive compensation. Goebel also received spontaneous applause from the crowd when she mentioned problems with scheduling and under-staffing in stores across the country.
This post was written by Rebecca Cassler.