Every springtime, as Wal-Mart prepares to hold its gala Annual Meeting at the Bud Walton Arena at the University of Arkansas at Fayetteville, the company’s shareholders are presented with half a dozen or more “shareholder proposals” that are routinely voted down by the Walton family, which controls the voting stock in the company. On June 2, 2006, the Company will reject the following Shareholder Proposals: 1) A proposal that calls for Wal-Mart to stop buying chicken from suppliers that use the “electrical stunning” method, in which the birds are shackled, shocked with electric current, have their throats slit, and, while still conscious, are dropped into tanks of scalding hot water. 2) A proposal calling for Wal-Mart to disclose the company’s political contributions, including the company’s “internal guidelines or policies, if any, governing the Company’s political contributions.” 3) A proposal to democratize how the Wal-Mart board of directors is selected, by requiring a majority of the votes cast at the annual meeting. 5) A proposal that Wal-Mart publish a “sustainability report” that addresses environmental issues, worker rights, human rights, supply chain compliance (including independent monitoring of its factory suppliers), and “economic issues, such as Wal-Mart’s economic impact on communities and regions.” 6) A proposal to review the compensation disparity between senior executives and rank and file workers. The proposal notes that, “Our CEO’s compensation was approximately 1,000 times the average pay of Wal-Mart’s U.S. employees in fiscal 2005… Shareholders are entitled to an explanation of why the ratio is so large at Wal-Mart and what steps, if any, are being taken to further reduce that ratio.” The proposal notes that “we believe that executive compensation at Wal-Mart is out of control.” 7) A proposal requiring the company to “prepare a special report documenting the distribution of last year’s equity compensation by race and gender of the recipient of stock options,” noting that the company’s top five officers, all white men, have received as much as 13% of total stock options granted. This report would determine if there is an “equity compensation glass ceiling” at Wal-Mart.
The Wal-Mart Board rejects all these proposals. Regarding political contributions, Wal-Mart explains that its federal contributions are done through its political action committee, or Wal-PAC, which files monthly reports with the Federal Elections Commission. But the company justifies keeping secret its political objectives in lobbying, noting that “disclosure of the business rationale behind each political contribution… would place Wal-Mart at a competitive disadvantage by revealing its long-term business strategies and priorities.” The company is “involved in a number of legislative initiatives that could dramatically affect our business and operations.” Wal-Mart argues that “any unilateral expanded disclosures” would be to the detriment of Wal-Mart. So shareholders won’t be learning anytime soon just what legislative initiatives the retailer is pursuing. Regarding sustainability, Wal-Mart says it will be releasing a report that looks at wages, benefits, product sourcing and “community engagement” by the spring of 2007. In response to the executive compensation disparity, Wal-Mart says it “is committed to paying its Associates fairly in accordance with their job responsibilities, their performance in those jobs, and their ability to contribute to Wal-Mart’s overall success.” The shareholders proposal notes that at DuPont, the CEO’s cash compensation is limited to twice that of the next highest officer. Wal-Mart apparently believes that a company should be transparent, as long as you can’t see through what they are really up to. It’s “secret” political agenda is emblematic of how the company operates. There has been no shareholders proposal adopted at a Wal-Mart annual meeting in at least the past ten years. These proposals may embarrass the corporation for one day, but do little else to change their corporate behavior. In fact, one could say that annual shareholder proposals are treated the same way that chickens for Wal-Mart are processed: dropped fully consious into tanks of scalding-hot water.
