Here’s Why Wal-Mart’s CEO is Shaking in His Boots
Proxy advisory firm Egan Jones has recommended Wal-Mart (NYSE:WMT) shareholders vote against re-electing chief executive Michael Duke and former CEO Lee Scott to the company’s board. The firm said it was basing its recommendation on recent reports that the two failed to properly investigate allegations of widespread bribery by company officials in Mexico, a key foreign market for Wal-Mart.
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Egan Jones also wants shareholders to vote against a nonbinding proposal on executive compensation, and vote in a proposal requesting regular reports to shareholders on the company’s political spending.
Wal-Mart has been faced with criticism from shareholders and activists after a New York Times report that Wal-Mart de Mexico, or Walmex, allegedly paid bribes of up to $24 million to help the it grow in Mexico and that company top executives then tried to cover up the investigation.
Wal-Mart announced on Thursday that the U.S. Department of Justice and the Securities and Exchange Commission, as well as a number of government agencies in Mexico, were investigating the allegations. Wal-Mart has said that it “can provide no assurance that these matters will not be material to its business in the future,” adding that costs related to investigations and potential lawsuits may affect the company.
However, Wal-Mart also announced on Thursday that sales grew 8.6 percent to $112.27 billion last quarter, ahead of analysts’ forecast of $110.54 billion. Same-store sales rose 2.6 percent and topped company forecasts of flat to up 2 percent growth, and analysts’ average forecast of 1.4 percent. U.S. same-store sales have now risen for three straight quarters following nine consecutive quarterly declines for the company, while store traffic has risen for two straight quarters after six declines.
The company’s shares gained 5.3 percent, or $3.22, to be at $62.39 at midday on Thursday.
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