Wal-Mart Board Ignores Shareholder Dissatisfaction About Mexico Bribery Allegations
June 6th, 2012
June 6th, 2012
Now, nearly a month and a half since the article was published in the NY Times, many shareholders of Wal-Mart have displayed dissatisfaction. In a shareholders meeting on Friday, June 1, in Fayetteville, Arkansas, a vote for the Wal-Mart Board of Directors illustrated the rising disapproval of Wal-Mart’s actions.
Excluding votes from family and insider share holders, 32% of share holders voted against Wal-Mart CEO Mike Duke, 38% voted against former CEO Mike Scott and 31% voted against chairmen Rob Walton, the three top leaders of the company. With descendants of the Walton family owning nearly 50% of Wal-Mart shares, votes from activist shareholders are little more than protests. Wal-Mart spokesman, Dave Tovar, pointed this out in a press release from Monday, June 2, saying, “obviously a substantial majority of our shareholders supported their election.”
Michael Garland, representative of the New York City Comptroller’s Office, said about Wal-Mart leaders, “This is unprecedented opposition to the key leadership of the company… The burden is on the board to take actions to restore investor leadership.”
Garland is right. The Wal-Mart Board of Directors and Walton family shareholders are ignoring the voices of non-family shareholders and the public when they should be doing just the opposite. The Wal-Mart Corporation is facing a tarnished reputation as well as potential hefty fines under the Foreign Corrupt Policies Act (FCPA).
German communications giant Siemens was fined in December, 2011 a global record US$800 million by the U.S. Justice Department and the Security and Exchanges Commission in addition to another US$800 million by Germany. The reason for the fine was for Siemens’ proven bribes to the Argentinean government in order to receive a US$1 billion government contract. Business Insider speculated that Wal-Mart’s potential FCPA fine, if the allegations are proven true, could reach as high as US$13.1 billion.
While the Wal-Mart board currently sits comfortably on their 12-year high share values, the risk of a bad investor reputation and an enormous FCPA fine potentially (even likely) loom in their future. You can’t blame the Wal-Mart shareholders, even if they are in the minority, for trying to hold the management of their company accountable for what was not only a horrible moral decision, but ultimately bad for business.