Wal-Mart CEO committed to 'integrity'

Mike Duke, president and CEO of Walmart Stores Inc. speaks during the Walmart shareholders' meeting in Fayetteville, Ark., on June 1, 2012. AP Photo/April L. Brown

(CBS/AP) FAYETTEVILLE, Ark. - Wal-Mart Stores Inc. (WMT) CEO Mike Duke said Friday that the retailer is committed to integrity in the wake of recent bribery allegations.

Duke joined a chorus of executives including 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 and that integrity is the "bedrock" of the business.

"We've all heard about the recent allegations about the company," Duke said to a crowd of about 16,000 "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."

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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 were forced to spend much of the meeting reassuring shareholders that the company will be able retain its integrity as it continues to expand globally.

The address, which caps a weeklong slate of events, comes on the heels of a story by The New York Times in April that 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.

Federal authorities in the U.S. and Mexico reportedly are investigating Wal-Mart for potential violations. Investors have filed lawsuits against top executives. And some shareholders have called for the removal of several board members, including Walton, CEO Mike Duke and former CEO Lee Scott.

Preliminary results showed all directors up for re-election were re-elected. Finally results will be announced Monday. Three shareholder proposals were also defeated. 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. But any lack of support for the leaders is a blow to the retailer.

Wal-Mart has said it is overhauling its compliance program and has launched an internal investigation. It disclosed last month that it also plans to widen its internal investigation to other countries.

At Friday's meeting, the company went back-and-forth between addressing the allegations and talking about other things at the annual meeting, which was held 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 Walton'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."

Duke later said that integrity is what Wal-Mart was built on: "You can't build a company of our size, over that time period, during so much change in the world, on a weak foundation. It requires bedrock that runs deep, building blocks that stay strong and mortar that binds it all together.''

Earlier, Robson Walton echoed that sentiment. "Let me be clear. Acting with integrity is not a negotiable part of our business," he said. "We will do the right thing and the right way. You have my word on that."

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 did not materialize.

"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.

Its namesake U.S. unit also 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 and refocused on keeping prices low.

Its strategy is just beginning to pay off. Wal-Mart reported better-than-expected first-quarter profit in the first quarter. Its U.S. namesake unit, which accounts for 60 percent of net sales, turned in its best performance in three years. And its shares have recovered to trade around $65 after falling by more than 7 percent right after the bribery allegations surfaced.

But the accusations still threaten to distract the retailer at a critical time when it's trying to continue its momentum. For its part, Wal-Mart officials have said in recent weeks that the accusations haven't impacted its plans for growth in the U.S. or overseas.

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