Does This Spell Doom for Wal-Mart Board?
The Wal-Mart (NYSE:WMT) leadership looks to be in certain trouble after the California State Teachers’ Retirement System said it will use all of its 5.3 million shares in the company to vote out the retail chain’s board of directors.
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CalSTRS, the second-largest U.S. public pension fund, had earlier said that allegations of bribery in Mexico and the following cover-up by the top management at the company had raised several questions. On Tuesday, CalSTRS confirmed that the group was protesting the board’s actions in the alleged scandal, saying there had been a “breakdown in internal controls.”
“CalSTRS believes former and current Wal-Mart executives and board members breached their fiduciary responsibilities,” CalSTRS chief executive Jack Ehnes said in a statement. “CalSTRS will vote its more than five million investor shares against the entire board’s reelection at Wal-Mart Stores, Inc. annual meeting. We encourage our fellow shareholders to do the same.”
Earlier this month, CalSTRS had also filed a lawsuit against several Wal-Mart executives and board members, alleging that their alleged cover-up could hurt shareholders. The suit said company management failed to act despite “overwhelming evidence that corporate malfeasance and bribery were taking place in Wal-Mart’s expansion operations in Mexico.”
CalSTRS manages $153 billion in pension funds for 856,000 California public school teachers. It is an index investor that is required to hold shares of the retailer, which is a component of the Dow Jones Industrials Average.
“As a long-term investor, CalSTRS wants Wal-Mart to have long-term value for our members, the teachers of California,” Ehnes added. “CalSTRS also thinks that ethical corporate governance practices lead to sustained profitability. Wal-Mart has established high principles for ethical behavior. Now it needs to live by them, not just on the retail level, but in the executive suites and the boardroom.”
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