In another sign of the growing pressure from Walmart workers and their allies, Walmart announced in its annual proxy statement (a report filed with the SEC in advance of the annual shareholders meeting) yesterday that two long-time board members would be stepping down. The two board members are former Walmart CEO Lee Scott, Jr. and independent board member and Audit Committee chairman Christopher Williams.
Members of the Organization United for Respect at Walmart (OUR Walmart) and their allies have repeatedly reached out to Mr. Williams, asking him listen to their concerns. In response to his continued lack of leadership, calls began to grow for Mr. Williams’ resignation.
OUR Walmart member Barbara Gertz, released a statement upon the news that Mr. Williams would be stepping down. The statement read, in part:
We hope that the departure of Mr. Williams and Mr. Scott provide an opening for new, independent voices at Walmart. We have been calling on Mr. Williams and other independent members of the board to stand up for change at Walmart. Mr. Williams has refused to listen to our concerns. We called on him to resign because we need board members who recognize and value our experiences.
Mr. Scott and Mr. Williams are two of those most heavily implicated in the ongoing investigation into alleged violations of the Foreign Corrupt Practices Act at Walmart. Mr. Scott was CEO during the time that the alleged bribery and apparent cover-up at Walmart’s Mexican subsidiary, Wal-Mex, took place.
The New York Times reported that Mr. Scott was instrumental in limiting Walmart’s internal investigation and, ultimately, in handing it back to some of the very people who were implicated in the alleged bribery:
In one meeting [in 2006] where the bribery case was discussed, H. Lee Scott Jr., then Wal-Mart’s chief executive, rebuked internal investigators for being overly aggressive. Days later, records show, Wal-Mart’s top lawyer arranged to ship the internal investigators’ files on the case to Mexico City. Primary responsibility for the investigation was then given to the general counsel of Wal-Mart de Mexico — a remarkable choice since the same general counsel was alleged to have authorized bribes.
In 2013, New York City Comptroller John Liu specifically raised concerns about Mr. Scott’s role in squashing the internal investigation and exposing shareholders, including the NYC Pension Funds, to additional risk as a result:
Wal-Mart’s failure to pursue a timely, independent investigation in fall 2005 has potentially exposed the corporation and its shareowners to even more serious financial and reputational harm. Two current inside directors, CEO Michael Duke and former CEO H. Lee Scott, were aware of the allegations and, in Mr. Scott’s case, took affirmative steps to shut down a thorough independent investigation.
Mr. Williams has been on Walmart’s board since 2004 and has been a member of the Audit Committee, the key committee charged with overseeing issues of internal controls and legal compliance, since 2005. Mr. Williams has chaired the Audit Committee since 2009. Since the New York Times surfaced the bribery allegations, Mr. Williams has consistently received some of the highest “no” votes from institutional investors at Walmart.
We hope that the addition of Walmart’s new CEO, Doug McMillon, and the departure of two longtime board members signals an ongoing change at the company. OUR Walmart member Barbara Gertz concluded her statement in response to the departure of Christopher Williams and Lee Scott with this:
The evidence suggests there may have been a sustained cover-up of the alleged FCPA violations, and despite excessive spending in legal fees, no one at Walmart has been held publicly accountable. Under misguided leadership, Walmart is moving in a direction of breaking and bending the rules, and declining same-store sales are the result. Instead, Walmart should invest in the heart of its business: workers who will help boost store sales, improve customer service and get business back on track. The entire country needs Walmart to provide better paying jobs now that will get the economy moving again.
We couldn’t agree more.