Wal-Mart Under Scrutiny At Annual Meeting
FAYETTEVILLE, Ark. (AP) -- Wal-Mart Chairman Robson Walton, son of the company's late founder, told employees to "go for it" if they see a better way of serving customers, and said he feels newly anointed CEO Doug McMillon can take the company into the future.
"He's an associate CEO," said Walton, referring to McMillon who is a 23-year veteran and started out as an intern. "He reminds us all that Wal-Mart is a place of unlimited possibilities."
McMillon, who took the reins from Mike Duke in February, is leading a company at a time of changing consumer habits, a tough global economy and intense scrutiny in how it does business overseas.
The annual Wal-Mart shareholder's meeting on Friday drew about 14,000 people, including its workers around the globe.
Typical of Wal-Mart's shareholders' meetings in the past, the meeting kicked off with plenty of entertainment. Singer Pharrell Williams sang "Happy" on stage with employees. Actor Harry Connick Jr. is serving as the master of ceremonies.
Nevertheless, the company is under scrutiny on all fronts.
Revenue at established Wal-Mart stores in the U.S. has declined for five consecutive quarters. Meanwhile, the number of customers has fallen six quarters in a row at the division, which accounts for 60 percent of the company's total sales, which reached $473 billion last year.
Like many other retail chains that cater to working-class Americans, Wal-Mart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are increasingly looking for lower prices at online rivals like Amazon.com and at small stores like dollar chains and pharmacies. Walton promised the company will keep innovating.
"Dad knew that the secret of being successful is to give customers what they want," Walton told shareholders.
Wal-Mart is expected to show investors how it's fighting back by accelerating its expansion of smaller store formats with names like Neighborhood Markets and Wal-Mart Express while pushing online grocery services in several markets. It's also adding new services catering to serving the needs of its low income shoppers such as its new money transfer service that it says cuts fees for customers by up to 50 percent compared with similar services elsewhere.
At the same time, Wal-Mart is still battling labor-backed critics who argue that its workers' wages are too skimpy, and is facing tough ethical questions overseas as it continues to confront concerns over how it handled bribery allegations that surfaced in April 2012 at its Mexican unit. The company is also being pressured to increase its oversight of factories abroad following a building collapse in April 2013 in Bangladesh that killed more than 1,100 garment workers. Wal-Mart wasn't using any of the factories in the building at the time of the collapse, but it is the second-largest retail buyer of clothing in Bangladesh.
During the annual meeting, which is to be held at the University of Arkansas's Bud Walton Arena in Fayetteville, Arkansas, 30 miles from the company's headquarters in Bentonville, Arkansas, shareholders in the audience are expected to present three proposals.
One pushes for an independent chairman that doesn't serve as an executive at Wal-Mart. Last week, Institutional Shareholder Services, a prominent proxy advisory firm, asked shareholders to back the resolution for the appointment of an independent chairman. It also recommended that shareholders vote against the re-election of board members Walton, the company's chairman, and Mike Duke, who was recently Wal-Mart's CEO. The ISS cited the failure of the board to provide more information to shareholders about specific findings of the investigation into bribery outside of the United States.
But Wal-Mart, fired back in a regulatory filing, saying that ISS's request for disclosure of "specific findings" in regard to possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials, is "contrary to the best interests of the company" because such a disclosure could interfere with the ongoing investigations.
Allegations first surfaced two years ago that Wal-Mart failed to notify law enforcement that company officials authorized millions of dollars in bribes in Mexico to speed up building permits and gain other favors. Wal-Mart has been working with government officials in the U.S. and Mexico on that investigation. Wal-Mart has said that it has spent about $500 million on investigations and bolstering its compliance programs around the world.
With descendants of Wal-Mart's founder owning more than 50 percent of Wal-Mart's shares, activist shareholders have little chance of passing shareholder proposals. But this year's meeting could show the third year in a row of a loss of faith in board members, particularly when the votes of Walton family and members and others are excluded.