Friday's annual shareholders meeting was the first time that Chairman Rob Walton, a son of Wal-Mart founder Sam Walton, publicly addressed the issue of possible bribery in Mexico. Both he and Chief Executive Mike Duke were named in an April New York Times report which suggested that Wal-Mart executives knew of bribes paid to officials in Mexico and squelched an internal investigation.
Despite the scandal, Wal-Mart's meeting served largely as a 50th anniversary party. The upbeat event was hosted by actor, singer and entrepreneur Justin Timberlake and featured performances from Taylor Swift, Lionel Richie, Celine Dion and other entertainers.
"Acting with integrity is not a negotiable part of this business. It is our business, we will not tolerate violations of the FCPA or ethical wrongdoing of any kind," Walton said, referring to the U.S. Foreign Corrupt Practices Act, which prohibits bribing foreign officials.
The New York Times reported that management at Wal-Mart de Mexico, or Walmex, allegedly had orchestrated bribes of $24 million to help it grow quickly and that Wal-Mart's top brass had tried to cover it up. Now, the U.S. Department of Justice, the U.S. Securities and Exchange Commission and government agencies in Mexico are investigating the allegations while Wal-Mart conducts an internal probe.
The allegations in the New York Times piece also have spawned 11 derivative lawsuits, which seek recovery for the company rather than shareholders, and one securities lawsuit, Wal-Mart disclosed in a regulatory filing hours after the events finished on Friday.
"Let me be clear: Wal-Mart is committed to compliance and integrity everywhere we operate," Duke said in a forceful tone.
"If you work for Wal-Mart, there is no gray area between right and wrong. It's either the right thing to do, or it shouldn't be done at all."
Large pension funds and a scrappy group of employee shareholders were among those who had called for the removal of leaders such as Walton and Duke from the board for their alleged connection to the bribery scandal. But that attempt failed; every company nominee was elected. The number of shares voted for and against each of 16 board members will be disclosed on Monday, Wal-Mart said.
"We have seen what happened with Mexico, when some people were so focused on growth at any cost they forgot our code of ethics," said Jackie Goebel, 60, a company employee for 24 years.
Goebel belongs to the Organization United for Respect at Walmart, which is affiliated with a major grocery union and spent the last couple of days encouraging stockholders to vote against Duke and Walton.
Shareholders who tried to oust board members knew their efforts would only be symbolic since the Walton family controls roughly half of the retailer's 3.4 billion shares.
Voters also defeated three shareholder proposals.
The meeting was largely upbeat and nostalgic. To start the early morning affair, the children of founder Sam Walton -- Rob, along with his younger siblings Jim and Alice -- spoke about the work they used to do in the stores when the chain got its start.
After the family's comments, Timberlake came out on stage in a hula skirt. Sam Walton donned such an outfit on Wall Street in 1984 after losing a bet, an event memorialized in a photo shown on the large screens at the meeting.
BRIBERY SCANDAL REMAINS A CONCERN
Wal-Mart has repeatedly said that it would not comment on the specific allegations until the investigations are complete.
"The executives have delivered a consistent message throughout the week about integrity, as well as the opportunity for growth," said Stewart Samuel, senior analyst with IGD, a global food and grocery research firm.
The company did not take investor questions during the meeting. A question-and-answer session held following the formal shareholders meeting was not open to the media.
Some shareholders believe that current board members, including Walton, Duke and former CEO Lee Scott, knew about the Mexico bribery and should have taken corrective action years ago. Several large U.S. public pension funds, including the California Public Employees' Retirement System, said they had planned to vote against certain board members.
Change-seeking shareholders had said the outcome of the election would not discourage them. No protests were seen at the meeting itself, though some had been planned in other parts of the country.
"If at first you don't succeed, try, try again," said Carlton Smith, 51, who works in a Paramount, California, store and owns Wal-Mart stock. "We'll be back."
One difference from the previous three annual meetings was that Wal-Mart did not announce a new share repurchase plan. The company still has $9.7 billion remaining under last year's $15 billion program.
Wal-Mart stock, holding near 12-year highs, slipped 0.4 per cent to close at $65.55, while the broad Standard & Poor's 500 stock index fell 2.5 per cent amid concerns over a disappointing U.S. jobs report and other weak global economic signals. Wal-Mart shares traded at $53.66 a year ago.
"Many companies are still struggling, but not your company," said Chief Financial Officer Charles Holley, adding that sales, operating income and earnings per share are all growing.
Some 14,000 employees and shareholders attended Friday's festivities, held in the arena named after James "Bud" Walton, who helped pay for the basketball facility's construction and was Sam Walton's brother.
Copyright @ Thomson Reuters 2012