CalSTRS intends to vote its 5.3 million shares in Wal-Mart Stores Inc. against the re-election of the retail giant's entire 15-member board at its June 1 shareholders meeting, Jack Ehnes, the $152.9 billion retirement system's CEO, said Tuesday.
The California State Teachers' Retirement System, West Sacramento, filed in Delaware Chancery Court in Wilmington on May 3 against Wal-Mart board members and top executives, claiming they had covered up the results of an investigation that found that officials of Wal-Mart's Mexican subsidiary had paid bribes to Mexican government officials to help the company expand operations in Mexico.
“CalSTRS believes former and current Wal-Mart executives and board members breached their fiduciary responsibilities,” Mr. Ehnes said in a statement. “They did so by failing to respond to indications of a pattern of unethical conduct in the company's foreign operations. Beyond that, CalSTRS believes that in some cases, Wal-Mart leadership actively suppressed an internal investigation which would have brought these improper actions to light.
“Based on these allegations, which indicate a breakdown of corporate governance and lack of oversight that should have averted this situation, CalSTRS does not have confidence that the current board has the independence and leadership needed to address these difficult issues,” he continued.
Wal-Mart officials did not respond to e-mails and phone calls seeking comment.
The family of Wal-Mart founder Sam Walton controls roughly half of the company's shares, according to regulatory filings. CalSTRS' shares amount to about 0.41% of the company's holdings.