UPDATE 2-Goldman nominates ex-Wal-Mart CEO to board

* Lee Scott nominated to join Goldman board

* Rajat Gupta will not stand for reelection

(Recasts lead, adds details on Wal-Mart and comment)

By Steve Eder

NEW YORK, March 19 (Reuters) - H. Lee Scott Jr, the former chief executive of Wal-Mart Stores Inc (WMT.N), a company chided by critics for underpaying employees, is primed to join the board of Goldman Sachs Group Inc (GS.N), which has faced a backlash for paying too well.

Wall Street's dominant firm said on Friday Scott will be up for election at the bank's annual shareholder meeting. Rajat Gupat, who has served on the board since 2006, will not seek reelection, Goldman said.

If elected, Scott will join Goldman's board at a time when the firm is facing scrutiny over its pay practices and has been criticized by lawmakers for paying billions of dollars to employees soon after taxpayers rescued the banking industry.

Scott is chairman of the executive committee of Wal-Mart's board. He served as Wal-Mart's president and CEO from 2000 to 2009 after joining the company in 1979.

Wal-Mart's culture emphasizes frugality and stifles unnecessary costs.

For example, Wal-Mart is known for asking traveling executives to share rooms in inexpensive hotels. Founder Sam Walton, whose fortune landed him at the top of the Forbes 400 list of richest Americans, drove a beat-up pickup truck and chafed over the media attention that came with that wealth.

Goldman, on the other hand, paid its employees $16.2 billion, an average of $498,000 per person in 2009. It's top executives were paid $8.9 million all-stock bonuses for 2009, which was considered a show of restraint by the firm's standards.

Wal-Mart has 2.1 million associates worldwide and pays an average hourly wage of $11.75, according to its corporate web site.

As CEO, Scott helped Wal-Mart navigate public relations woes stemming from the company's pay practices, environmental concerns and concerns new Wal-Mart locations displaced community businesses.

The backlash has dissipated somewhat as the company has encouraged suppliers to improve labor conditions and provided disaster relief. It won plaudits when it was able to deliver clean water and other emergency supplies to victims of Hurricane Katrina faster than government rescue workers could.

That image-related experience could be helpful to Goldman's board as it deals with its own public relations woes, said Michael Robinson, a financial and crisis public relations consultant with Levick Strategic Communications.

"No one preaches like the converted," Robinson said. "It is a good way of bringing some very practical experience to the boardroom."

Gupta, who joined Goldman's board in November 2006, is a former managing director of McKinsey & Co.

McKinsey has faced scrutiny since Anil Kumar, a former executive, plead guilty to charges stemming from his role in the insider trading scandal centered on the Galleon hedge fund. (Reporting by Steve Eder in New York; additional reporting by Emily Kaiser in Washington and Jessica Wohl in Chicago; editing by Steve Orlofsky and Andre Grenon)