Walmart advisors urge shareholders to oppose CEO
Walmart president and CEO Michael Duke on July 27, 2011 in Washington, DC. / Win McNamee/Getty Images/File
(AP) NEW YORK - Two leading corporate governance firms are telling Walmart (WMT) shareholders to vote against certain board members up for re-election next week, saying the directors neglected their responsibility in an alleged bribery scheme in Walmart's Mexican operations.
The proxy advisory firms ISS and Glass Lewis & Co Inc. recommended in separate reports that their clients not support CEO Mike Duke and former CEO Lee Scott, among others, for seats on the board.
"We believe that these directors, in their current or former positions as executives with direct responsibilities relating to the matters, should have been aware of the credible threat of widespread bribery involving the company's Mexican subsidiary and acted more proactively to full investigate and resolve the claims," Glass Lewis & Co. said Friday.
ISS said Saturday that it found The New York Times report "troubling." ISS's 1,700 clients include mostly asset management firms and pension funds.
Walmart, with a market value of $214.4 billion and annual revenue of $443.8 billion, is the largest retailer in the world.
Early this month, New York City Comptroller John C. Liu said the five city pension funds he advises will vote against five board members. His office said in a statement then that it asked Walmart in 2005 and 2006 to investigate concerns of legal and regulatory non-compliance.
The latest advice comes four weeks after The New York Times reported that Walmart allegedly failed to notify law enforcement after its own investigators found evidence that $24 million in bribes were funneled through its Mexican unit in exchange for speedier building permits and other favors.
U.S. law forbids American companies from bribing foreign officials.
Glass Lewis's 900 clients include mainly institutional investors. It recommended they vote against seven out of more than a dozen board members up for re-election, including Christopher Williams, chairman and CEO of The Williams Capital Group and head of Walmart's audit committee.
In addition to Williams, Duke and Scott, ISS is advising its clients not support Robson Walton, chairman of the board and a member of Walmart's founding family. Descendants of Sam Walton own 49.5 percent of the company.
The New York pension funds advised by Liu own 5.6 million Walmart shares, according to a statement Monday. That stake is worth about $353.1 million.
Since the initial report from The New York Times, investors have sued top Walmart executives, and federal authorities in the U.S. and Mexico have announced investigations.
CEO Duke said Thursday in a pre-recorded statement that "integrity is the essence of our corporate culture." He reiterated that the company takes compliance with the U.S. Foreign Corrupt Practices Act seriously.
"The investigation is ongoing, and we are working aggressively to determine what happened, and we will take appropriate action if violations of the law or our policies occurred," he said.
Shareholder votes are to be tallied at the company's annual meeting June 1 in Bentonville, Ark., where the company is based.
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