CalPERS and the New York City and Connecticut retirement systems pledged to vote their shares in Wal-Mart Stores Inc. against some of the retail giant's directors over allegations of bribes by executives of a Wal-Mart subsidiary to Mexican government officials.
However, CalSTRS, which is suing the Bentonville, Ark.-based company over the alleged bribes, also announced it will vote its 5.3 million shares against all 15 members of the Wal-Mart board because of the bribery allegations, said Jack Ehnes, the $152.9 billion retirement system's CEO, on May 22.
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 officials of Wal-Mart's Mexican subsidiary had paid bribes in 2005 to help the company expand operations in that country.
“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.”
The $229.4 billion California Public Employees' Retirement System, Sacramento, will vote its 7.6 million shares against the re-election of nine board members.
Brad Pacheco, CalPERS spokes-man, said the retirement system is taking a more selective approach. “We are withholding our votes from nine directors who were in a position of authority, oversight or management of Wal-Mart's business operations during the period in question around the bribery allegations as opposed to the entire board who consist of members who may have not had oversight,” Mr. Pacheco said.
Also, Denise Nappier, Connecticut state treasurer and principal fiduciary of the $24.7 billion Connecticut Retirement Plans & Trust Funds, Hartford, said she will vote the funds' shares against the re-election of seven Wal-Mart board members. The pension system owns $38 million in Wal-Mart stock and bonds.
“If the allegations surrounding the Mexican subsidiary are proven true, and the board was unaware of the bribery, then Wal-Mart's board has badly failed its shareholders and must move swiftly to bolster its oversight mechanisms,” Ms. Nappier wrote in a May 15 letter to James Breyer, presiding director of Wal-Mart. “At a minimum, the board must determine who was responsible for failing to keep the board informed and remove them from the company.”