It must be so confusing to be Walmart these days. The big retailer has been rumbling along happy-faced for years– crushing local competition, squeezing labor in its stores and commanding supply chains abroad with ruthless pressure to produce at ever-lower wages and ever-faster rates. Its stock goes up, Up, UP, so Walmart stockholders have been happy stockholders.
But right now investors are off-with-their heads angry at Walmart brass – their knives are out and shareholders are planning to call for resignations at the June 1 Walmart stockholder’s meeting at corporate HQ in Bentonville, Arkansas.
Investor ire was sparked by news of a bribery scandal that broke in an April New York Times story, which told how a whistleblower had supplied Walmart corporate headquarters with evidence that detailed payouts of a total of $24 million in bribes to grease Walmart’s expansion in Mexico. (Evidently to great effect—according to the NYT, one in five Walmart stores is located there.)
Investigators dispatched by the corporation got plenty more evidence of widespread bribery on Walmart de Mexico’s part. Then Walmart top brass allegedly shut down the investigation.
It seems peculiar: Stockholders evidently blow past Walmart’s wretched labor practices, the Uber-retailer’s withering effects on local business and continuous fights with communities that don’t want a megastore to disrupt the local community ecology; as long as the bottom line looks good, they keep buying stock. But let Walmart officials hush up a bribery scheme in Mexico—and the stockholders chorus becomes: Have you no sense of decency, Walmart?
It may not be about decency though. Stock prices may have recently rebounded but there was a downward lurch of nearly five percent a few weeks ago, prompted by Walmart’s meetings with the U.S. Department of Justice and the Securities and Exchange Commission, along with potential criminal charges for violating the Foreign Corrupt Practices Act. Oh, and the prospect of penalties and legal fees that could cost Walmart billions.
Stock prices are now at the highest level in 10 years. But stockholders are peeved, viewing the recklessness of Walmart’s actions as destabilizing. CNBC reports that two of the country’s largest proxy advisor companies and a few smaller ones are encouraging investors to vote next week against Walmart executives, including present CEO Mike Duke and former CEO H. Lee Scott Jr. The New York City Pension Fund, with 5.6 million shares, also wants to see Walmart execs step down.
CalSTRS, a California teachers pension fund worth $154 billion, has not only called for resignations but has sued Walmart executives, calling out the company for “unethical conduct” and a breakdown of corporate governance. (The CNBC report notes that as an index investor, CalPERS is required to hold Walmart shares.)
And there are hundreds of thousands of present or former Walmart employees who hold shares in the company, the Making Change at Walmart Web site reports. Associate-shareholders have been organizing “proxy parties” to discuss Walmart’s governance and call for the ouster of CEO Duke and Board Chairman (and Walton family heir) S. Robson Walton.
Venanzi Luna, a seven-year Walmart employee and a stockholder, has started an on-line petition calling for a thorough independent investigation and adds another voice in support of Duke and Walton’s resignations.
“For years my co-workers and I have been saying that this company has lost its way. We didn’t know it had gotten this bad,” Luna told the Arkansas- based publication The City Wire.
CNBC points out that all this threatened head-rolling could well come to naught—Walton owns around 50 percent of Walmart’s stock and his say-so is likely to outweigh the opposition’s anger.
But there are still voices that say Walmart’s aggressive strategies are mired in an outdated model and will take the company down in the end.
Forbes contributor Adam Hartung is no union symp—but he is a Walmart critic. He rolls out an impressive list of Walmart bad-behavior and castigates Walmart for its death-grip on an outdated industrial model. He suggests Walmart embrace the digital age instead of clinging to the industrial model that made it King of the Retail Kingdom. But his critique might resonate with all the restive stockholders bound for Bentonville as well as others who have looked askance at the company’s practices.
“WalMart is taking on water, and it has no solution,” Hartung writes. “To prop up results executives keep doing things that are less and less ethical – sometimes even illegal – and providing guidance down through all levels of management and employment to do the same.”
Hartung’s investor advice, however, might well be his most ominous warning: “Sell WalMart, the stock is at best dead money, and soon another Sears, Best Buy or Circuit City.”