Wal-Mart Stores Inc (WMT.N) shareholders voted in far larger numbers than in the past against the re-election of Chief Executive Mike Duke and others to the company's board in a rebuke after a Mexican bribery scandal.
Still, with a strong majority of votes cast in favor of each director, a boardroom shake-up at the world's largest retailer is unlikely.
In addition to Duke, former Wal-Mart CEO Lee Scott, Chairman Rob Walton and others were targeted by large pension funds and activist groups after allegations that Wal-Mart de Mexico WALMEXV.MX, or Walmex, spent $24 million to bribe officials to expand quickly in Mexico last decade, and Wal-Mart executives squelched an internal probe.
On Friday, Wal-Mart said all 15 prior board members were re-elected, a foregone conclusion as the family of founder Sam Walton controls roughly one-half of the company's shares. Google Inc (GOOG.O) executive Marissa Mayer was elected for the first time, as expected, bringing the board up to 16.
Tallies released on Monday showed dissent among some shareholders pushing for change was based on an April report in the New York Times. Scott, who was CEO during the mid-2000s when the bribery and squelched probe allegedly occurred, received the most votes against, 15.65 percent of shares voted.
A total of 13.1 percent voted against current CEO Mike Duke, who was president of Wal-Mart International during the time in question, while 12.6 percent voted against Rob Walton, a son of Wal-Mart founder Sam Walton. Only 3.2 percent of shares were voted against Rob Walton's younger brother Jim.
Christopher Williams, chairman of the audit committee, had 13.3 percent of votes cast against him.
"It's a strong vote of no confidence in the leadership and sends a strong message to the board," said Michael Garland, executive director for corporate governance for New York City Comptroller John Liu.
According to Garland's calculations, 38.4 percent of outside shares voted against Scott, 32.8 percent voted against Williams, 32.2 percent voted against Duke, and 31.2 percent voted against Rob Walton. The calculations presumed that more than 1.7 billion insider shares voted in favor of all of the board members.
But corporate governance experts had said that votes of more than half the outside shareholders would be needed to make Wal-Mart take notice.
"I don't think that's quite enough for the company to want to make any changes to the board," said Paul Hodgson, senior research associate at GMI Ratings, a governance research firm.
As of March 30, 1.705 billion shares, or 50.12 percent of Wal-Mart's shares, were owned by the Walton family, directors and named executive officers.
Despite the bribery allegations and ongoing government and internal probes, Wal-Mart shares have been trading near their highest levels in 12 years as investors look for safe returns in an uncertain economic environment.
The shares rose 0.7 percent to $65.98 on Monday.
"Short run, they're a safe haven. But they've had a nice pop, and Target (TGT.N) is now cheaper with greater flexibility and upside," said Patricia Edwards, chief investment officer at Trutina Financial. "When there is headline risk for a stock, whether because of governance issues or bribery scandals, that is a negative until resolved."
LAST YEAR, HIGHER NUMBER OF VOTES FOR BOARD
Last year, all candidates received about 98 percent or more votes in favor of re-election, Wal-Mart said. This year, only 6 of 16 got 98 percent or more of votes cast in their favor.
Wal-Mart stood by its board as it announced the percentages for and against each board member.
The directors were nominated by a committee of independent board members, Wal-Mart spokesman David Tovar said.
"Obviously a substantial majority of our shareholders supported their election," he said.
At the annual meeting on Friday, Duke and Walton stressed integrity and said they would not stand for unethical behavior.
"If you work for Wal-Mart, there is no gray area between right and wrong. It's either the right thing to do, or it shouldn't be done at all," Duke said.
Wal-Mart has said repeatedly it would not comment on the allegations until the investigations were complete.
(Reporting by Brad Dorfman, Jessica Wohl and Nivedita Bhattacharjee in Chicago; editing by John Wallace, Jeffrey Benkoe and Leslie Gevirtz)