* CalSTRS to vote against all Wal-Mart board members
* Proxy firms advise votes against CEO, others
* Wal-Mart shares hit $63.95, highest level in 12 years
By Jessica Wohl
May 22 CalSTRS, the second largest U.S. public
pension fund, plans to vote all of its Wal-Mart Stores Inc
shares against the entire board in the wake of
allegations that Wal-Mart officials failed to fully investigate
bribery claims in Mexico.
CalSTRS, the California State Teachers' Retirement System,
said on Tuesday it plans to vote its 5.3 million Wal-Mart shares
against the re-election of all board members and encouraged
other shareholders to do the same.
CalSTRS has already sued current and former Wal-Mart
executives, saying allegations the company paid millions of
dollars of bribes in Mexico and a cover-up by Wal-Mart officials
raised the question of whether top executives should remain in
CalSTRS joins a growing call for shareholders not to vote
for at least some Wal-Mart board members, including Chief
Executive Mike Duke and former CEO Lee Scott.
The moves follow an April report by The New York Times that
said Wal-Mart failed to fully investigate allegations in the
last decade of widespread bribery by company officials in
Mexico, a key foreign market.
Still, even with big shareholders such as CalSTRS saying
they will vote against the board, the family of Wal-Mart founder
Sam Walton controls roughly half of the company's shares, making
any such votes unlikely to pass.
"Public shareholders can't really affect any kind of change
at Wal-Mart in any way," said Paul Hodgson, senior research
associate at GMI Ratings, a governance research firm.
If 26 percent of shares were voted against the board,
"that's a majority of the publicly held shares, and therefore
you could consider that a vote of no confidence," he said.
The allegations "indicate a breakdown of corporate
governance and lack of oversight that should have averted this
situation," CalSTRS said in a statement.
CalSTRS added it "does not have confidence the current board
has the independence and leadership needed to address these
LATEST GROUP TO GO AGAINST THE BOARD
CalSTRS is concerned about the independence of the entire
board. It is also voting against Marissa Mayer, a Google Inc
executive who is standing for election to the Wal-Mart
board for the first time.
The board currently totals 15 members, not including Mayer.
Shares of Wal-Mart ended the day up 1.1 percent at $63.73
after rising to $63.95, their highest level since April 2000.
CalSTRS is the latest shareholder to make its voting plans
public ahead of Wal-Mart's June 1 shareholders' meeting.
The New York City Pension Funds, which hold 5.6 million
Wal-Mart shares, are also opposed to the re-election of certain
Proxy advisory firms have suggested shareholders vote
against Chief Executive Michael Duke, former CEO Lee Scott and
some other board nominees.
Scott was CEO during the period of the alleged bribery and
Duke was head of Wal-Mart International when the allegations at
Wal-Mart de Mexico, or Walmex, were being looked at
by the company.
Still, some shareholders plan to support the board despite
the lingering concerns about the bribery allegations.
"We don't think it has a meaningful malignant long-term
impact on the company, we also don't think it's immaterial,"
said Shawn Kravetz, president of Esplanade Capital LLC, which
sold most of its Wal-Mart shares on their recent rise. "At this
moment we'll be siding with the board and its recommendation."
Institutional Shareholder Services, the largest proxy
adviser, recommended votes against Duke, Scott, Chairman Robson
Walton and Christopher Williams, who is chairman of the board's
Glass Lewis recommended shareholders vote against Scott,
Duke and Williams, as well as Aida Alvarez, Michele Burns, James
Cash and Arne Sorenson. It said Williams, Alvarez, Burns, Cash
and Sorenson served on the audit committee when there was a
failure to fully investigate the bribery allegations.
Egan Jones recommended shareholders withhold votes for Duke
Three board members are tied to the Walton family. Sam
Walton's sons, Chairman Robson "Rob" Walton and his younger
brother Jim, sit on the board, as does Gregory Penner, who is
Rob Walton's son-in-law.
During last year's election, more than 2.85 billion shares
were voted in favor for each of the 15 members. Sorenson had the
largest number of shares voted against him, nearly 57.5 million.
CalSTRS, a $153.7 billion pension fund, has said as an index
investor it is required to hold shares of the retailer, which is
a component of the Dow Jones industrial average and many