Walmart Directors Re-elected Despite Mexico Bribery Investigation

Three shareholder proposals -- asking the company to provide semi-annual reports on political contributions, nominate at least one director from the healthcare industry due to the company’s increased focus on pharmacy and healthcare services, and report to shareholders on incentive compensation programs -- were all rejected by shareholders, according to Duke. A company advisory vote to approve Walmart’s compensation plan for executive officers passed.

Walmart Chairman Rob Walton said early in the meeting, prior to a reading of shareholder proposals, that “we may be joined by people who want to interrupt our meeting,” referring to expected fallout over the Mexico situation. But the celebrity-studded event appeared from the webcast to go as orchestrated with a minimum of dissension.

The shareholder meeting, a celebration of Walmart’s 50th anniversary, proved to be largely a cheerleading event peppered with song and dance performances from a multi-cultural selection of performers. The company’s meticulously-staged shareholder festival was a combination pop music concert and light show, family reunion, pep rally, variety show, multimedia scrapbook of company history, and PR campaign. The 4-hour spectacle included appearances by emcee Justin Timberlake in a hula skirt, a song-and-dance number with Broadway singer Victoria Matlock, performances by the Zac Brown Band, Juanes, Take 6, Lionel Richie and Ladysmith Black Mambazo, numerous videotaped employee testimonials and live rah-rah speeches by Walmart and Sam’s Club execs. Timberlake interviewed Taylor Swift on stage about her favorite Walmart store in Nashville, which was followed by a musical performance by Swift that was blocked from the webcast by her record label, Big Machine Records.

Timberlake spoke of responsibilities that come with being “a global leader in retail,” citing Walmart’s energy and sustainability goals. The program cut to a videotaped appearance by former President Bill Clinton speaking of his years in Arkansas when he knew Walmart founder Sam Walton and how proud Walton would be of how the company plans to live out its next 50 years. Clinton said in 2005 Walmart “decided to stand up and be counted” on environmental sustainability and set “big goals to be powered by 100 percent renewable energy, create zero waste and sell products that sustain people and the environment.” Stating there’s “still a long way to go,” Clinton said Walmart has “shown everyone that sustainability is good business and changed how business is done.”

In its 50-year history, Walmart has sold more than $5 trillion worth of merchandise, said Chief Financial Officer Charles Holley, saying Walmart’s stock price has moved from $53.66 to $65.82 in the past year. From its start in one store in Arkansas, it took Walmart 18 years to have its first billion-dollar year, and by the 1970s, the company posted $1 billion in sales in every year, Holley said. The company reached $1 billion in sales monthly in the 1980s, he said, and by the end of the ‘90s, sales hit $1 billion each week. Today, Walmart rings up more than $1 billion in a day, he said.

CEO Mike Duke returned to the stage near the end of the marathon event to report that all 16 nominated directors were elected and that the three shareholder proposals were voted down. He briefly addressed the Mexico matter, saying the company is “committed to compliance and integrity everywhere that we operate.” He said the company is doing everything it can to “get to the bottom of this matter, and we will take the appropriate actions when the investigations are complete. … If you work for Walmart, there is no gray area between right and wrong. It’s either the right thing to do or we shouldn’t do it at all.” Duke spoke about the companies “enduring values” including community, family and creating opportunity. The event ended with a performance by singer Celine Dion that was not blocked to webcast viewers.

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Speaking with analysts after the annual meeting, Duke said managing the company’s reputation during the investigation into alleged Mexican bribes will be a “challenge” short term, but long term offers an opportunity “to be a better company.” Leslie Dach, executive vice president of corporate affairs, said the company has been doing a lot to improve compliance around the world in sustainability and women’s economic empowerment efforts even before news of the investigation into Mexican operations became public. Walmart is making a concerted effort to strengthen its e-commerce business, said Neil Ashe, CEO Global eCommerce, and is transforming from a “retail company to a consumer company.” That includes integrating the store shopping experience with e-commerce because that’s the way consumers will shop in the future, he said. “We're going to do it the way the customer wants to shop and not try to drive them” as the company has done in the past, he said. Through mobile device apps, Walmart will use geofencing to enable customers’ smartphones to be personal GPS devices and remote controls, he said. Walmart is also planning a mobile checkout pilot program for later in the year, he said. In Walmart’s “endless aisle” plan, customers can scan a QR code for a product that’s not available in store, scan Web-based inventory for the product and have it delivered to the store the next day, he said.