The fallout of Wal-Mart Stores Inc.’s Mexican bribery scandal continues to roll on — and the company’s executives and board members are in the legal cross hairs.
This story first appeared in the May 4, 2012 issue of WWD. Subscribe Today.
The California State Teachers’ Retirement System said it sued current and former Wal-Mart executives and board members on behalf of the retailer in what’s known as a derivative lawsuit. The suit was filed in Delaware Court of Chancery Thursday.
The retirement fund held 5.3 million shares of Wal-Mart valued at $313.5 million as of Tuesday.
“By utilizing the derivative action, CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart’s executive officers and directors,” said the retirement system’s chief executive officer Jack Ehnes. “The focus of this action, unprecedented in CalSTRS history, is corporate governance reform to ensure that similar misconduct is not repeated in the future. We need truly independent directors who will set the right tone from the top.”
Wal-Mart is looking into allegations that its Mexican expansion was fueled by a series of bribes that were later brushed off by top executives.
“As fiduciaries for California’s teachers, we believe there is a real need for reform,” said Dana Dillon, chair of the group’s board. “Better corporate governance leads to greater long-term value. How we do business is just as important as how well we do business.”
The retirement system is trying to change Wal-Mart’s governance and corporate culture and said the company’s board is “dominated by directors beholden to the Walton family rather than shareholders.”
The suit also charges that senior Wal-Mart officials made large opportunistic stock trades before the allegations were made public last month.