NEW YORK (AP) — Wal-Mart's final shareholder vote for its board of directors shows some dissent against key executives and board members, including CEO Mike Duke, in the wake of allegations of bribery in Mexico.
According to the tally, released by the world's largest retailer Monday, 13 percent of the 3.4 billion shares were voted against the re-election of Duke. The election results also showed that nearly 13 percent were against Chairman Robson Walton, the son of founder Sam Walton, and 15.6 percent against former CEO Lee Scott. A little over 13 percent of the votes were cast against Christopher Williams, chairman and CEO of The Williams Capital Group, who serves on Wal-Mart's audit committee,
Wal-Mart announced that these four executives, along with 11 other incumbents, were re-elected to the board at Friday's shareholders' meeting in Fayetteville, Ark. A new candidate, Marissa Mayer, who is vice president for local, maps and location services at Google Inc., was also elected.
With descendants of Wal-Mart's founder owning about 50 percent of Wal-Mart's shares, activist shareholders had little chance of voting out the board members. But the numbers show a dramatic erosion of support compared with recent years.
Over the previous five years, Wal-Mart's board had received on average 98.4 percent support, according to Michael Garland, who represents the New York City Comptroller's Office, which oversees the public pension funds of New York. The group, which owns 5.6 million shares of Wal-Mart, voted against five members of the board including Scott, Duke and Walton.
The shareholders' meeting comes after a story by The New York Times published in April said the world's largest retailer allegedly failed to notify law enforcement after finding evidence that officials authorized millions of dollars in bribes in Mexico to get speedier building permits and other favors. Duke was head of Wal-Mart's international business at the time of the probe in 2005, and Scott was CEO. It's not clear what board members like Walton knew.
Following the allegations, it has been reported that federal authorities in the U.S. and Mexico are investigating Wal-Mart for potential violations. Investors are suing top executives. And shareholder groups, including the nation's two largest public pension funds, called for the removal of several board members.
Two leading proxy adviser firms, ISS and Glass Lewis & Co. Inc., recommended to Wal-Mart shareholders to vote against certain board members up for re-election as well. They said executives neglected their responsibility relating to the alleged bribery scheme.
Wal-Mart's shares rose 43 cents, to $65.93 on Monday, hovering around a 12-year high. That more than makes up for the 7 percent drop in price after the bribery allegations surfaced.
In a story released Friday, CEO Duke suggested that the retailer was committed to integrity in wake of the bribery allegations.
Duke joined Chairman Robson Walton, the son of founder Sam Walton, at the company's annual meeting on Friday in pledging that Wal-Mart will get to the bottom of the allegations.
This comes after the world's largest retailer said in recent weeks that it is overhauling its compliance program and expanding its internal investigation into the accusations to other countries.
"We've all heard about the recent allegations about the company," Duke said to a crowd of about 14,000. "Let me be clear: Wal-Mart is committed to compliance and integrity everywhere we operate. I want to personally assure you, we're doing everything we can to get to the bottom of this matter."
The meeting could have been a triumphant moment for the world's largest retailer, which is celebrating its 50th anniversary and seeing its U.S. results make a comeback. But instead executives spent much of the meeting reassuring shareholders that the company will be able retain its integrity as it continues to expand globally.
Wal-Mart disclosed in a regulatory filing late Friday that several executives including Duke, Scott, and Walton are the target of 11 "derivative" lawsuits, a type of legal action that seeks to change corporate governance. The lawsuits charge that the executives neglected their responsibilities in handling the alleged bribery scandal. Wal-Mart also noted in its filing that a securities class action lawsuit was filed against the company on May 7.
Descendants of Wal-Mart's founder own about 50 percent of Wal-Mart's shares, so activist shareholders have little chance of voting out the board members.
On Friday, Wal-Mart went back-and-forth between addressing the allegations and talking about other things during the annual meeting, which was held in the basketball arena at University of Arkansas. That's about 30 miles from Wal-Mart's headquarters in Bentonville.
The event opened with Walton walking on stage to a replica of his dad's first store. Walton then swapped stories with his siblings, Jim and Alice, about the early days of working with their father.
"It's a family business. It's just grown a lot," said Robson Walton. He also noted that his father didn't measure success by financial achievement, but rather by "the lives we improved."
Pop singer Justin Timberlake hosted the event, arriving in a hula skirt to symbolize a story told about the founder dancing a hula on Wall Street after losing a bet. Musical interludes included performances by R&B legend Lionel Richie, singers Celine Dion and Taylor Swift, gospel jazz group Take 6 and Latin singer Juanes.
Protests were expected during the meeting, but none took place.
"Some folks want to interrupt our meeting, but we're hoping they respect all of you," Walton said at the start of the meeting. "But don't be surprised if we do have some interruption."
Another interruption is the last thing Wal-Mart needs at a time when it's beginning to turn around its business.
The discounter had struggled during the U.S. economic downturn as its core low-income customers were hard hit by joblessness and other challenges in the weak economy. At the same time, its namesake U.S. unit had veered away from its "everyday low prices" strategy and got rid of popular merchandise.
But Wal-Mart last year began adding back 10,000 products. The company also refocused on keeping prices low. Its strategy is just beginning to pay off.
Wal-Mart reported better-than-expected first-quarter profit. Its U.S. namesake unit, which accounts for 60 percent of net sales, turned in its best performance in three years. And its shares are at a 12-year high, trading at about $65. That more than makes up for the 7 percent drop in price after the bribery allegations surfaced.
But the accusations still threaten to distract the retailer as it tries to continue its momentum. Wal-Mart officials have said in recent weeks that the accusations haven't impacted its plans for growth in the U.S. or overseas.
In fact, Wal-Mart executives say they plan to use this crisis as an opportunity to strengthen controls across all areas, including food safety.
"We will be a better company because of this," Duke told analysts after the shareholders' meeting.