by Chris Bahn
Posted 6/7/2013 11:38 am
Updated 10 months ago
Once again there were multiple celebrities on hand to help Wal-Mart Stores Inc. of Bentonville celebrate its annual shareholders meeting. But the themes of integrity and compliance took center stage on Friday at Bud Walton Arena.
From President and CEO Mike Duke to shareholder representatives stumping for their proposals, integrity was the star of a morning that featured a number of notable names, including actor Hugh Jackman and singer John Legend.
Wal-Mart has come under criticism recently for its handling of bribery allegations in Mexico and safety of overseas operations. Duke, though he didn’t address those issues directly, did reference the recent criticism is his state of the company remarks.
"Our company was founded on integrity," Duke told the 14,000 people on hand and a global audience watching via webcast. "And over the past year, we’ve strengthened our compliance programs by training tens of thousands of associates, hiring more experts and making significant investments in our systems. For Wal-Mart, compliance is an absolute. Make no mistake about it – we will do the right thing."
Wal-Mart’s reputation has taken a hit, but business remained strong. Last year the company added $22 billion in net sales to a year-end total that eclipsed $466 billion. Board members, all 14 of which were approved to new terms during the meeting, announced plans for a $15 billion stock buyback program. This replaces a $15 billion buyback plan voted into effect in 2011.
That fiscal success – and the growth of divisions like Sam’s Club, international and e-commerce — where highlighted throughout the day, but the conversation often came back to the company’s compliance practices. During one especially compelling moment at the meeting, a former garment factory worker presented a shareholder proposal that would have given shareholders the option of calling special meetings.
More than 1,100 garment factory workers died in a factory collapse in Bangladesh earlier this year. Factories in Bangladesh have supplied goods to the retail giant.
"We have a supply chain out of control, and a failed safety inspection system, in [Bangladesh] where apparel workers are dying by the hundreds," she said. "Could there be any more pressing case for a special meeting of shareholders?"
Addressing board chairman Rob Walton, she added: "Making our factories safe would cost just percent of dividends paid to the Walton family."
That attempt to give shareholders a chance at calling special meetings was one of four proposals that failed to pass during the meeting. Also failing to get shareholder support were proposals centered on equity retention for board members, the appointment of an independent chairman of the board and a request for public disclosure of which senior executives have forfeited stock or bonuses as a result of breached company policy. Wal-Mart has policy – referred to as a “clawback” — in place, but not does make it public when an executive loses compensation.
A push for a more transparent clawback policy stems from allegations of bribery as Wal-Mart worked to further establish itself in Mexico. An investigation is also being conducted on operations in China, India and Brazil.
Duke’s defense of the company included spotlighting Rene Garcia, an employee from Chile, who turned down a bribe from vendors wanting better product placement.
Wal-Mart International CEO Doug McMillon offered some general comments about his division’s work to improve perception and bolster actions to fight corruption. He mentioned multiple times that global compliance is a priority for the company.
Board Chairman Rob Walton said that among the steps Wal-Mart is taking are moving legal and ethics work under "one organization." Walton, son of company founder Sam Walton, also noted Wal-Mart meeting compliance goals would be among the triggers for executive bonuses.
Walton told the crowd early in the meeting that he expected protestors during the event, but the meeting was never disrupted. Earlier this week, Wal-Mart was granted a court order preventing protestors from being on company property. There did not appear to be protestors outside the arena in the lead-up to the meeting, though groups did stage demonstrations throughout northwest Arkansas during the week.
Other highlights from the meeting:
- Sam’s Club CEO Roz Brewer announced the launch of a pilot program that will serve as a small business boot camp in about 200 locations nationwide.
- Wal-Mart U.S. added $10 billion in net sales last year.
- Wal-Mart International contributed 30 percent of the company’s net sales.
- Sam’s Club posted $56 billion in net sales.
- Duke said e-commerce is expected to generate $10 billion in sales globally this year.
- In addition to Jackman and Legend, performers/presenters included actor Tom Cruise and singers Kelly Clarkson and Jennifer Hudson.