Walmart (WMT) is gearing up for a battle over gun sales with an influential New York parish.
Located in the heart of Manhattan's financial district, Trinity Wall Street is an Episcopal church where George Washington once worshiped and which became a symbol of New York's resilience after the Sept. 11 terrorist attacks. It now has a new mission: it wants Walmart to stop selling assault rifles with high-capacity magazines. Walmart, for its part, is arguing that the church's plan would interfere with its "ordinary business operations."
While selling guns with high-capacity magazines is controversial in its own right, the heart of the battle is over whether Trinity, as an investor in Walmart, has the right to place proposals about a company's day-to-day operations -- such as its inventory mix -- onto shareholder ballots. Given the rise of activist investors, who have in recent years pressured companies to ditch board members and spin off business units, an anti-Walmart precedent could add fuel to the movement.
In Walmart's view, that's not a good thing.
"The issue is Trinity's proposal would interfere with Walmart's ordinary business decisions by seeking to regulate Walmart's daily decisions on the hundreds of thousands of products sold in our stores," Walmart spokesman Randy Hargrove told CBS MoneyWatch. "It's not just guns" that could end up on the chopping block if Trinity is successful, he noted.
While Trinity's proposal specifically calls out the gun sales a problem, it is also asking that shareholders be allowed to vote on whether Walmart should sell a product that "especially endangers public safety and well-being"; impairs the company's image; and could be considered "offensive to the family and community values" that are core to Walmart. That could apply to many different items, ranging from movies to video games.
Trinity originally sought to get the proposal on Walmart's 2014 annual meeting proxy materials, but the church was blocked after the SEC agreed with Walmart that it could bar the proposal because it relates to products sold at the store. But the case moved forward after Trinity filed suit with the U.S. District Court in Delaware, which ruled that the proposal doesn't interfere with day-to-day operations.
A three-judge panel is expected to rule on the issue in early April, before Walmart publishes its 2015 proxy materials later that month.
While it's unclear whether Walmart's shareholders would vote in favor of the proposal if it makes it on the ballot, Trinity sees the case as important to holding corporations accountable.
"We intend to campaign vigorously for the adoption of our proposal, and we feel it is important to raise the issue of board responsibility and accountability for good corporate citizenship," Trinity's Rev. Dr. James H. Cooper wrote in a December blog post.