FAYETTEVILLE, Ark. — Wal-Mart Chairman Robson Walton expressed confidence Friday that newly anointed CEO Doug McMillon can lead the world's largest retailer into the future as it faces a tough global economy and scrutiny over how it does business at home and overseas.
"He's an associate CEO," said Walton, referring to McMillon who is a 23-year veteran and started out as an intern. Wal-Mart calls its employees associates. "He reminds us all that Wal-Mart is a place of unlimited possibilities."
The annual Wal-Mart shareholder's meeting on Friday drew about 14,000 people, including its workers from around the globe.
Typical of past Wal-Mart's shareholders' meetings, the event was packed with celebrity entertainment. Actor Harry Connick Jr. served as the master of ceremonies and musical acts included "Happy" by Pharrell Williams, as well as performances by Robin Thicke and Sarah McLachlan.
Despite the festivities, the company is under scrutiny on all fronts.
Revenue at established Wal-Mart stores in the U.S. has declined for five consecutive quarters. The number of customers has also fallen six quarters in a row at the division, which accounts for 60 percent of the company's total sales.
Like many other retail chains that cater to working-class Americans, Wal-Mart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are increasingly looking for lower prices at online rivals like Amazon.com and at small stores like dollar chains and pharmacies.
Wal-Mart is expected to show investors how it's fighting back by accelerating its expansion of smaller store formats and pushing online grocery services. It's also adding services catering to the needs of its low income shoppers, such as its new money transfer service.
At the same time, Wal-Mart is still battling labor-backed critics who argue that its workers' wages are too skimpy. The issue came up amid the festivities Friday when worker Charmaine Givens-Thomas introduced a shareholder proposal for an independent chairman.
"Something is wrong when the richest of family in America pays hundreds of thousands of workers so little that they cannot survive without public assistance," she said.
Wal-Mart is also facing tough ethical questions overseas as it continues to confront concerns over how it handled bribery allegations that surfaced in April 2012 at its Mexican unit. The company is being pressured to increase its oversight of factories abroad following a building collapse in April 2013 in Bangladesh that killed more than 1,100 garment workers. Wal-Mart wasn't using any of the factories in the building at the time of the collapse, but it is the second-largest retail buyer of clothing in Bangladesh.
During the annual meeting, which was held at the University of Arkansas's Bud Walton Arena in Fayetteville, Arkansas, Wal-Mart named Greg Penner to the newly created position of vice chairman of its board, which it said was part of its long-term succession planning.
Among the proposals by shareholders was a call for an independent chairman that doesn't serve as an executive at Wal-Mart, a move that was backed by Institutional Shareholder Services. The firm also recommended that shareholders vote against the re-election of board members Walton, the company's chairman, and Mike Duke, who was recently Wal-Mart's CEO. ISS cited the failure of the board to provide more information to shareholders about specific findings of the investigation into bribery outside of the United States.
Wal-Mart has said ISS's request for disclosure of "specific findings" in regard to possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials, is "contrary to the best interests of the company" because such a disclosure could interfere with the ongoing investigations.
Allegations first surfaced two years ago that Wal-Mart failed to notify law enforcement that company officials authorized millions of dollars in bribes in Mexico to speed up building permits and gain other favors. Wal-Mart has been working with government officials in the U.S. and Mexico on that investigation. Wal-Mart has said that it has spent about $500 million on investigations and bolstering its compliance programs around the world.
With descendants of Wal-Mart's founder owning more than 50 percent of Wal-Mart's shares, activist shareholders have little chance of passing shareholder proposals. But this year's meeting could show the third year in a row of a loss of faith in board members, particularly when the votes of Walton family and members and others are excluded.
Wal-Mart shares edged up 2 cents to $77.34 in morning trading.
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