June 1 (Bloomberg) -- Wal-Mart Stores Inc. Chief Executive Officer Mike Duke told employees and shareholders at the company’s annual meeting today that the retailer, whose executives are accused of bribing Mexican officials, is committed to ethical behavior.
Speaking before 14,000 people in Fayetteville, Arkansas, Duke addressed an ongoing bribery investigation by the U.S. Justice Department and U.S. Securities and Exchange Commission. He said the world’s largest retailer was built by founder Sam Walton on a foundation of ethics and trust and will continue to behave that way. His comments followed similar statements by Rob Walton, the company’s chairman and son of the founder.
For the first time since acknowledging an investigation into bribery allegations in April, Duke spoke about the accusations and demanded ethical behavior from his company. He said Wal-Mart is investigating the allegations and will get to the bottom of the matter.
“It’s either the right thing to do or we won’t do it at all,” Duke said. “This is my standard. This was Sam Walton’s standard. We will not accept anything less than integrity.”
Wal-Mart fell 0.4 percent to $65.55 at the close in New York. The shares have gained 9.7 percent this year.
Wal-Mart said that all 15 directors were reelected and one new director, Marissa Mayer, who is vice president of Local and Maps for Google Inc., was elected to the board. The Walton family owns more than 47 percent of the stock, effectively controlling the voting power of the shareholder base.
The meeting also included two proposals asking for more clarity from the company. One proposal asked for more transparency on the executive bonus structure, while another called for more disclosure of political donations. Both proposals, and another that sought to nominate a director with healthcare experience to the board, were rejected.
The comments from Duke and Walton came after several state pension funds recommended that shareholders vote against some or all of the retailer’s board members, including the chairman. Pension funds in California, Connecticut, Maryland, Massachusetts and New York all said they would vote against some directors.
“This goes to the core of how the company is run,” Charles Elson, executive director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said in a phone interview yesterday. “People have questioned their employment practices and that kind of thing in the past but this is alleging real problems in oversight and management. It’s a tough one for them.”
New York City Comptroller John Liu, whose office manages the New York City Pension Fund, said in a statement that he was not convinced by the company’s talk about integrity.
“Wal-Mart’s promise that integrity is central to its business rings hollow,” Liu said. “The board must demonstrate by its actions, not rhetoric, that it is responsive to shareowners and looking out for our interests.”
The pension fund voted against five Wal-Mart directors.
When presenting the shareholder proposal to scrutinize executive bonuses, Wal-Mart employee Jackie Goebel said the company’s push for growth led to the alleged bribery.
“Our company is placing too much emphasis on growth at all costs,” said Goebel, who works at a Wal-Mart store in Kenosha, Wisconsin and owns shares through her retirement plan.
Both Walton and Duke said that the bribery investigation is ongoing. The two top executives both said that the company will get to the bottom of what happened. Wal-Mart will take the investigation “wherever it leads,” Walton said.
“Acting with integrity is not negotiable,” Walton said, from a stage with a mock-up of Sam Walton’s original Five and Dime store. “You have my word. We will act the right way.”
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