OPERATIONS

Integrity is stressed at Wal-Mart annual meeting; board challenges rebuffed

BY Marianne Wilson

New York — Wal-Mart Stores CEO Mike Duke on Friday called integrity the company’s “bedrock” value during a presentation at the chain’s annual shareholders meeting in Fayetteville, Ark. The meeting was held against the backdrop of allegations of illegal payments made to facilitate growth in Mexico, which Duke addressed directly in the following remarks: “We’re working to continually strengthen our compliance efforts around the world,” he said. “And I want to personally assure you, we’re doing everything we can to get to the bottom of this matter. We will take appropriate action when the investigation is complete.”

Also at the meeting, all Wal-Mart board members were re-elected, and several shareholder proposals challenging company practices and calling for more disclosures on executive compensation and political contributions were voted down, the New York Times reported. Several proxy-advisory firms and large institutional investors had advocated votes against some board members. (Wal-Mart will release the tally of shareholder votes on Monday.)

In remarks at the meeting, company chairman Rob Walton, the eldest son of Walmart founder Sam Walton, also addressed the ongoing investigation into possible violations of the Foreign Corrupt Practices Act stemming from the Mexican scandal.

“Our governance is rooted in the foundation of values that dad put in place,” Walton said. “That’s why we are taking allegations regarding the Foreign Corrupt Practices Act very seriously.”

Walton said the chain was using every resource necessary to conduct an investigation by a third party that has been instructed to go where the facts lead them and cooperating with the Securities and Exchange Commission and Department of Justice.

Executives at the meeting also pointed out Wal-Mart strong recent performance. Duke praised the recent performance of the chain’s business segments, and applauded Walmart U.S. stores’ sales comps, Walmart International’s profit growth and continued sales momentum at Sam’s Club. He also highlighted progress made with the productivity loop, in global e-commerce and recruiting and retaining talent.

“I’ve said this before, and I’ll say it again, Walmart is the best-positioned global retailer in the world today,” Duke said.

The annual meeting, held inside Bud Walton Arena on the campus of the University of Arkansas in Fayetteville, was hosted by actor and singer Justin Timberlake and featured performances from Taylor Swift, Lionel Richie, Celine Dion and others. Walmart is celebrating its 50th anniversary this year, and the stage featured a replica of the original Walton 5-10 store located in nearby Bentonville. Company chairman Rob Walton and siblings Jim and Alice Walton entertained the audience with stories of working for their father in the early days of the business.

“Acting with integrity is not a negotiable part of this business and we won’t tolerate wrongdoing of any kind,” Walton said. “It is my personal commitment to you that we will do the right thing the right way. You have my word on that.”

CEO Duke offered a similar commitment later in the meeting after referencing how integrity is the bedrock upon which Walmart’s foundation is built.

“Walmart is committed to compliance and integrity everywhere that we operate. We are dong everything we can to get to the bottom of this matter,” Duke said regarding the situation in Mexico. Then, speaking directly to the hundreds of Walmart senior executives who attended the event and sit on the floor of the arena, said, “If you work for Walmart there is no gray area between right and wrong. It is either the right thing to do or we shouldn’t do it at all. This is my standard and it was Sam Walton’s standard.”

Adherence to that standard along with other tenets of the company’s corporate culture is what makes Walmart special and why the company has been able to accomplish the things it has in the United States and around the world, according to Duke. There is no way to envision what the world will look like in the next 50 years, but by staying true to the vision that Walton created Duke noted, “there will be no limit to the good we can do all over the world.”

Preliminary results showed all directors up for re-election were re-elected (final results will be announced Monday.) Three shareholder proposals were also defeated Duke joined a chorus of executives including chairman Robson Walton, the son of founder Sam Walton, at the company’s annual meeting on Friday in pledging that Wal-Mart will get to the bottom of the allegations and that integrity is the "bedrock" of thWal-Mart Stores’ shareholders on Friday voted to re-elect all 15 directors and add Google Inc’s Marissa Mayer to the board at the chain’s annual meeting.

The vote came amid concerns from some investors and proxy-advisory firms that certain members may have helped squelch a bribery probe relating to the company’s operations in Mexico in the mid-2000s. Voters also defeated three shareholder proposals. Voters also defeated three shareholder proposals.

The Walton family controls roughly half of the retailer’s 3.4 billion shares.

Duke closed his remarks by reflecting on the timeless contributions of the company’s founder, Sam Walton.

“I believe Sam Walton’s greatest legacy was the foundation he built — the culture, the beliefs and the enduring values,” Duke said. “We can’t possibly envision what the world, what retailing, what Walmart will look like in another 50 years. But if we stay true to the foundation that Sam Walton built, we’ll continue to be a better company, a stronger company and a prouder company. And over the next 50 years, there will be no limit to the good we can do around the world.”

Duke applauded Walmart U.S. stores’ sales comps, Walmart International’s profit growth and continued sales momentum at Sam’s Club. He also highlighted progress made with the productivity loop, in global e-commerce and recruiting and retaining talent. Duke added: “I’ve said this before, and I’ll say it again, Walmart is the best-positioned global retailer in the world today.”

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Keeping the faith at 50, Walmart looks forward

BY CSA STAFF

BENTONVILLE,Ark. — Walmart held its annual shareholders’ meeting Friday morning against the backdrop of the company’s 50th anniversary and allegations of corruption in Mexico.

The seemingly diametrically opposed situations presented senior executives with the opportunity to underscore how the company’s unique culture and such enduring values as integrity would power future growth.

The four-hour event took on a more celebratory and historical tone than normal due to the 50th anniversary of the opening of the company’s first discount store on July 2, 1962. Accordingly, the backdrop on the stage inside Bud Walton Arena on the campus of the University of Arkansas in Fayetteville featured a replica of the Walton 5-10 store located on the downtown square in nearby Bentonville. Company chairman Rob Walton, the eldest son of Walmart founder Sam Walton, entered the stage through the store’s front door. He then invited siblings Jim and Alice Walton to join him on stage where the three recounted stories of working in their father’s original store that served as the springboard for the company’s first discount store that opened in nearby Rogers, Ark. in 1962.

“Stepping through those doors brings back lots of memories of a special time and place,” Walton said, recounting how he carried merchandise into the store’s front door to an upstairs stock room and also refinished floors.

Walmart today bears no physical resemblance to the original single store operation, but Walton’s message and the point made by other senior executives, was that the core values the company’s legendary founder put in place 50 years ago that made possible the company’s success are the same things that will propel it to future growth.

“Let’s do things that no company has ever done before as we head into our next 50 years,” Walton said.
He then recalled a meeting he attended in 1991 where former Walmart president and CEO David Glass recounted a great financial performance. Sam Walton interrupted Glass with a comment about how the company had only just begun and then being the inspirational figure he was incited those at the meeting to chant, “We’ve only just begun.”

To the approximately 15,000 people gathered in the arena Friday morning, Rob Walton said, “We’ve only just begun to help people save money so they can live better. Do you believe it? Do you agree? The response he got was rather tepid, but Walton stopped short imploring crowd with an, “I can’t hear you,” appeal.

Following Walton, CFO Charles Holley and divisional CEOs took turns giving brief remarks and referencing Sam Walton, but steered cleared of specific discussions of growth objectives or specific strategies other than the overarching objective of saving people money so they can live better.

There was much discussion of that goal and how Walmart’s enduring corporate values and integrity-based culture would guide the company’s future success. Of course, with all the talk of integrity, Walmart and president and CEO Mike Duke were compelled to address the issue of an ongoing investigation in to possible violations of the Foreign Corrupt Practices Act stemming from allegations of illegal payments made to facilitate growth in Mexico.

“Our governance is rooted in the foundation of values that dad put in place,” Walton said. “That’s why we are taking allegations regarding the Foreign Corrupt Practices Act very seriously.”

He said the company was using every resource necessary to conduct an investigation by a third party that has been instructed to go where the facts lead them and cooperating with the Securities and Exchange Commission and Department of Justice.

“Acting with integrity is not a negotiable part of this business and we won’t tolerate wrongdoing of any kind,” Walton said. “It is my personal commitment to you that we will do the right thing the right way. You have my word on that.”

CEO Duke offered a similar commitment later in the meeting after referencing how integrity is the bedrock upon which Walmart’s foundation is built.

“Walmart is committed to compliance and integrity everywhere that we operate. We are dong everything we can to get to the bottom of this matter,” Duke said regarding the situation in Mexico. Then, speaking directly to the hundreds of Walmart senior executives who attended the event and sit on the floor of the arena, said, “If you work for Walmart there is no gray area between right and wrong. It is either the right thing to do or we shouldn’t do it at all. This is my standard and it was Sam Walton’s standard.”

Adherence to that standard along with other tenets of the company’s corporate culture is what makes Walmart special and why the company has been able to accomplish the things it has in theUnited States and around the world, according to Duke. There is no way to envision what the world will look like in the next 50 years, but by staying true to the vision that Walton created Duke noted, “there will be no limit to the good we can do all over the world.”

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JCPenney asks court to drop lawsuit over ‘Fair and Square’ branding

BY CSA STAFF

NEW YORK — JCPenney has asked a New York Federal court to dismiss a lawsuit filed by the visual merchandising firm Hudson + Broad over the Plexiglass LED square frame used in the chain’s new “Fair and Square” branding campaign, Women’s Wear Daily reported.

Hudson + Broad, based in New York City, is seeking $40 million in damages. It filed suit on April 25, suing the retailer for "breach of contract and misappropriation of trade secrets.” Hudson + Broad claims it had an agreement with JCPenney to create original proprietary in-store icons to represent the chain’s "fair and square" image, only to have the retailer renege on the agreement and have the light-changing fixtures knocked-off.

Hudson + Broad issued a statement on Tuesday that JCPenney had not responded to its lawsuit by the statutory deadline set by federal court rules and so the clerk of the U.S. District Court filed a certificate of default against the retailer. In addition to asking the court to dismiss the suit, Penney also asked the court to vacate the default certificate.

“It is shocking that JCPenney failed to honor its agreement with Hudson + Broad to be the exclusive company manufacturing the ‘fair and square’ icons that we created under a proprietary arrangement and that they love – and now it is mind-boggling that they failed to respond to our lawsuit in court within the deadline," said James Maharg, president of Hudson + Broad, in the statement on Tuesday.

Maharg said his firm was asked by J.C. Penney in December 2011 to develop a fixture that would serve as a symbolic icon to be rolled out to the chain’s stores nationwide. The Hudson + Broad square fixtures were well received by J.C. Penney executives, according to Marharg, and were installed in the chain’s Manhattan Mall in New York City store for CEO Ron Johnson’s Jan. 25, 2012 presentation on the new Fair and Square initiative.

After the presentation, Maharg said J.C. Penney asked Hudson + Broad to deliver an initial order of over 1,800 units to be installed in some 700 stores. According to the suit, on April 3rd, JCPenney’s procurement department told Hudson + Broad that the retailer had sourced the custom-designed proprietary LED fixture elsewhere.

Hudson + Broad said it will respond vigorously to both motions to the court by July 13. The company said it hasn’t had any communication with JCPenney since April 4. Meanwhile, Hudson + Broad is taking its message viral — on YouTube. The firm posted a 3-minute video message to Johnson in which Maharg asks the company to stand by its mission statement of treating people "fair and square."

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