Wal-Mart’s 2008 Shareholder Resolutions: Political Contributions Report

Each year, thousands of Wal-Mart employees and shareholders convene near Wal-Mart’s home office in Bentonville, Arkansas for a meeting that’s part corporate business, part spectacle.

At this year’s shareholder meeting – scheduled to take place on June 6 – shareholders will have the opportunity to vote on a number of resolutions, all of which can be found in the company’s proxy, here.

As shareholder resolutions tend to be glossed over during annual meetings, we’d like to take the time here on the Wal-Mart Watch blog to analyze some of the proposals on this year’s proxy and evaluate what effects they could have on Wal-Mart’s corporate governance practices and business strategy.

First up, a proposal to increase the transparency of Wal-Mart’s corporate spending on political activities. The resolution proposes to increase transparency about “direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.”

What kinds of political donations does Wal-Mart make?
Federal law prohibits Wal-Mart from making political contributions at the federal level.* However, Wal-Mart can legally donate directly to state and local candidates. Based on calculations from Congressional Quarterly and the National Institute on Money in State Politics, the proposal proponents estimate that Wal-Mart has contributed at least $5.6 million in corporate funds since the 2002 election cycle.

Compounding the difficulty in understanding Wal-Mart’s donations is the fact that - on top of contributions to candidates and political parties at the state and local level - Wal-Mart is able to exert political influence through “soft money” donations to 527s, trade associations and other tax-exempt organizations that often engage in political activities.

Why should Wal-Mart increase transparency of its donations?
Because of the minimal disclosure requirements for 527s and trade associations, the proposal’s proponents argue that these types of political contributions are “undisclosed and unknown” and therefore “relying on publicly available data does not provide a complete picture of the Company’s political expenditures.” The proposal asks Wal-Mart to disclose all of its political contributions, “including payments to trade associations and other tax exempt organizations.”

Beyond the disclosure of donations, this shareholder proposal would also require Wal-Mart publish the guidelines governing its political contributions and expenditures as well as the identities of the decision makers. The proponents suggest that absent a system of accountability, executives could use company assets for their own objectives, which could be “inimical to the long-term interests of…the company and its shareholders.”

How would this affect shareholders?
A 2006 poll commissioned by the Center for Political Accountability (CPA) suggests that Wal-Mart shareholders would benefit from increased political contributions transparency. The poll found that 85 percent of American shareholders are concerned that “company political spending puts corporations at legal risk and endangers shareholder value” and that 84 percent of the shareholders polled wanted companies to adopt “political disclosure and accountability” measures.

What does Wal-Mart think of this proposal?
Wal-Mart’s representatives argue against increasing donations transparency, explaining that in states where corporate contributions are still legal, state laws already require full public disclosure. Shareholder activists contend, however, that while this information may be available in the public record on a state-by-state basis, there is no single source for the information, making it difficult for shareholders to ascertain the entire scope and range of a company’s political spending.

The company goes on to state that disclosing the “business rational behind each political contribution” would place the company at a “competitive disadvantage,” because “parties with adverse interests also participate in the political process.” The company asserts “unilaterally expanded disclosure by Wal-Mart could benefit these parties to the detriment of Wal-Mart and its shareholders.”

The bottom line
Regardless of whether this shareholder proposal receives majority support at the upcoming annual meeting, given the growing demand for increased corporate regulation and oversight, it may be wise for Wal-Mart to voluntarily take steps to increase corporate transparency and accountability.

* While Wal-Mart cannot make political contributions on the federal level, the company solicits voluntary contributions to its political action committee Wal-PAC, which gives money to federal candidates, parties and PACs. Recently released video from a series of Wal-Mart management gatherings, however, brings the “voluntary” nature of these contributions into question. In the videos, Wal-Mart personnel are seen soliciting PAC donations from Wal-Mart managers with the promise that the company will make a corresponding donation in the manager’s name into a company-controlled charity.

Posted by Research Team on Wednesday, April 30, 2008

COMMENTS

The THREE RING CIRCUS CLOWNS- RDS, bbrd & Mary in.

Call the bug snuffer to get rid of these INSECTS!

The FLEA= RDS, The TICK= Mary, The DUNG BEETLE= bbrd

The beetle is a type of dung beetle called Phanaeus- It eats DUNG (shi-) and lives in burrows below ground. Its INITIALS are- bbrd!

Stock Watcher in
Wednesday, April 30 at 05:11 PM

Hey Stock Watcher!

You don’t seem to like our 3 “guests” too much do you?

We’ve all been speculating for a long time what bbrd stood for! Now thanks to you, we do-- Burrows Beneath Rich Dirt!

Thanks!

ScrewedbyWal-Mart in Anytown, America
Wednesday, April 30 at 07:42 PM

I guess this blog is called “The Big D and Tom Show”, now?

Funny you had to mention us three, but our “movement to the movement” is far bigger than just three people…

I guess I must be hitting that nerve, after all!

bbrd in
Wednesday, April 30 at 08:15 PM

ScrewedbyWal-Mart,
Correct. & your welcome.

Dung Beetle (bbrd)
your “movement to the movement” is nothing but a bowel movement! Instead of attempting to hit a nerve, hit the flush handle, hard, the bowel has to go all the way to Walmart so they can put it on the shelf. Naturally, For a “low price”

Stock Watcher in
Wednesday, April 30 at 08:56 PM

bbrd,

Remember, anytime someone doesn’t have anything ‘intellegent’ to say, they resort to name calling!! Is this what the anti movement has come down to, constant name calling, instead of logical facts? They are fighting a losing battle and they know it, but don’t want to admit defeat and look foolish!! Too late for that, don’t you think, they already look ‘foolish’?

RDS in
Wednesday, April 30 at 10:51 PM

“...anytime someone doesn’t have anything ‘intellegent’ to say...”

This would be you most of the time RDS! Practice what you try to preach.

ScrewedbyWal-Mart in Anytown, America
Thursday, May 01 at 05:56 AM

big deal who cares all the other retailers do the same thing.

m att hew vantress in gresham,oregon
Thursday, May 01 at 06:18 AM

Remember, anytime someone doesn’t have anything ‘intellegent’ to say, they resort to name calling!!

Oh, I’ve seen that pattern played-out in past postings—if you don’t “just fade away”, Mr. Screwed and his Screwed-ka-teers resort to personal attacks, name calling, etc.

And Mr. Screwed often asks why I wouldn’t share more about myself with him…

P.S. I’m not going anywhere - I like it, here.

bbrd in
Thursday, May 01 at 09:09 AM

Too late for that, don’t you think, they already look ‘foolish’?

RDS, they’ve looked “foolish” from day one—we just had to wait for certain things to play-out.

And now, the rest of the world knows, too…

bbrd in
Thursday, May 01 at 09:11 AM

bbrd and RDS: Happier Than 2 Pigs in Sh--!

“I’m not going anywhere - I like it, here.” ~bbrd

The beetle is a type of dung beetle called Phanaeus- It eats DUNG...and lives in burrows below ground. Its INITIALS are- bbrd. (burrows beneath rich dirt )

ScrewedbyWal-Mart in Anytown, America
Thursday, May 01 at 10:54 AM

Mr. Screwed,

Wow, you sure do know how to hurt someone—I’m certain those of us who don’t agree with you are really going to lose some sleep, tonight—NOT!

In fact, why don’t you pull your head out of your hiney and take a look across town at Mr. Ed Frawley—now, there’s a real activist who’s doing the right thing!

bbrd in
Thursday, May 01 at 01:04 PM

How much fuel does it take to get 15000-20000 to this meeting every year?

JOE in
Thursday, May 01 at 04:39 PM

Screwedby,

“The beetle is a type of dung beetle called Phanaeus- It eats DUNG”

You sure can’t be talking about us, because we haven’t eaten any of YOUR DUNG ever!! I know people like ddrb and Ken V, eat up every bit you crap out of your keyboard!!

JOE,

“How much fuel does it take to get 15000-20000 to this meeting every year?”

What do you care, they aren’t asking YOU to pay for it, are they?

RDS in
Friday, May 02 at 01:07 AM

RDS I DIDN"T ASK YOU EITHER .

THEY ARE SUCH A GREEN COMPANY. RIGHT. YOU DO KNOW THEY HAVE THEIR OWN TV CHANNEL / system, I’m not talking about the ones you see in the store with the subliminal messages .

Its like conference call type .

JOE in
Friday, May 02 at 08:01 AM

JOE,

Have you heard about Warren Buffett, the guy who is giving most of his money to charity and lives the ‘simple life’? Well, he is the head of Berkshire Hathaway and they are having their stockholders meeting in Omaha, Neb. and 30,000 people are coming to that one!! Watching it on TV, is not the same as being there!! Would watching Disney World on TV, be the same as going there?

RDS in
Friday, May 02 at 10:03 AM

What do you bet Lee Scott doesn’t dress up in drag this year?

These shareholders meetings are more pep rally than substantive. Just ask the outraged shareholders that tried to tie Scott’s compensation to his performance a couple of years back.

“If we don’t take steps to reconnect productivity growth and living standards, eventually the vast majority will feel little reason to support an economic system that’s failing to return a fair share of the growth they themselves are creating.” ~ Jared Bernstein

Ken V in Texas
Friday, May 02 at 10:21 AM

WHO’S Buffett, Jimmy"s brother?

Are YOU going to be there RDS?

JOE in
Friday, May 02 at 02:55 PM

JOE,

“WHO’S Buffett, Jimmy"s brother?”

Shows how knowledgeable you are about financial things!!

“Are YOU going to be there RDS?”

No, because I don’t own any stock, as the recent price is $133,600.00 a share, too rich for my blood!!

One thing you don’t take into account, is how much money these stockholders meetings bring into the local economy, to motels/hotels, restaurants, and many other businesses, it can amount to billions!!

RDS in
Saturday, May 03 at 02:18 AM

RDS IF you really think I don’t know who Warren Buffett is, then you really are a moron.

ARE you going to wm meeting in June?

JOE in
Saturday, May 03 at 05:37 AM

...it can amount to billions!!

hy·per·bo·le: 1. obvious and intentional exaggeration.

Ken V in Texas
Saturday, May 03 at 08:40 AM

“In the videos, Wal-Mart personnel are seen soliciting PAC donations from Wal-Mart managers with the promise that the company will make a corresponding donation in the manager’s name into a company-controlled charity. “ A “company controlled “charity??? WTF??

ddrb in
Saturday, May 03 at 02:20 PM

Ken V,

“...it can amount to billions!!

hy·per·bo·le: 1. obvious and intentional exaggeration.”

Only if you are talking about 1 YEAR, but, if you total up the amounts of all the meetings, over the years, “it can amount to billions”!!

RDS in
Saturday, May 03 at 07:59 PM

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