Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins with a new study from the group Good Jobs First, which reveals that cash-strapped states are forgoing a total of roughly $1 billion annually in tax revenue because of little-noticed laws that permit retailers to keep a slice of the sales taxes they collect for the government. In fact, the study finds thirteen states do not cap the amount that a retailer can receive as vendor compensation for collecting sales tax, resulting in millions of lost tax dollars.

A large focus this week is also on Wal-Mart’s announcement that Lee Scott will step down as CEO in February 2009, to be replaced by Michael Duke, Wal-Mart’s Vice Chairman of its International Division. In addition to the CEO change, you’ll find stories on the battle over the Employee Free Choice Act, how Wal-Mart will deal with the Obama Administration from a labor perspective, and related news on Wal-Mart’s labor battles in Canada.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe. Wal-Mart has founded a new consumer group in New England geared towards fighting Wal-Mart opponents, and has purchased its own wind-energy supply based out of Odessa, Texas

Wal-Mart Watch Weekly Update for Elected Officials [November 21, 2008]

According to Good Jobs First and The Wall Street Journal, a large chunk of sales tax revenue gets redirected to retailers like Wal-Mart, a company that pockets an estimated $70 million a year in sales tax revenues.

At least that is the finding of a report released today by Good Jobs First, a nonprofit research group here in Washington:

Most of us don’t realize that in a majority of states with a sales tax, a portion of the money actually goes into the pocket of the retailer under programs set up by state and local governments. In this first-ever comprehensive national analysis of the subject, Good Jobs First finds that the public sector is losing more than $1 billion a year through these sales-tax diversions. A large share of revenue gets redirected to giant retailers such as Wal-Mart, a company we estimate pockets more than $70 million a year in sales tax revenues.

The state laws discussed in the report allow retailers to keep a portion of sales-tax revenue to offset the cost of collecting the funds in the first place, a reasonable enough excuse (especially since state governments are so flush with cash at the present). But does anyone really, and I mean REALLY, believe that Wal-Mart spends $60 million a year collecting sales tax? In this age of computer everything and electronic money transfers, I have a hard time believing it costs more than a fraction of that.

As it stands, many states have calculated a vendor compensation rate, which can be applied to a percentage of sales tax revenue to determine how much a retailer gets to keep for its trouble. As the WSJ reports, Good Jobs First has identified 13 states that impose no ceiling on the total amount retailers can keep. In states such as Illinois, Texas, Pennsylvania and Colorado that vendor compensation rate can be applied to the full amount of sales tax a company collects, resulting in substantial returns for companies like Wal-Mart. Good Jobs First has estimated the givebacks in these states - Illinois ($126 million), Texas ($90 million), Pennsylvania ($72 million), and Colorado ($69 million). Jesse Drucker at the WSJ kindly puts some perspective on those numbers - for example, the $90 million Texas gives away by not capping vendor compensation would cover the $82 million price-tag needed to fund that state’s primary pre-kindergarten program.

For what its worth, the Illinois Revenue Department was quoted as saying the state has tried to cap the compensation program, but relentless lobbying by the retail industry has so far kept legislators from making changes.

Skimming the Sales Tax: How Wal-Mart and Other Big Retailers (Legally) Keep a Cut of the Taxes We Pay on Everyday Purchases [Good Jobs First, November 2008]

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In an opinion delivered yesterday, Pennsylvania Court of Common Pleas Judge Mark Bernstein wrote that the Pennsylvania Superior Court should reject a Wal-Mart appeal and affirm a 2006 jury verdict that found over 186,000 current and former Pennsylvania Wal-Mart employees were not properly compensated for off-the-clock work and missed rest breaks. He also sought to support his awarding last year of an additional $62 million in statutory liquidated damages. His opinion was delivered after Wal-Mart had contended in post-verdict motions that, among other things, the two class actions (Braun and Hummel were combined at trial) should never have been certified in the first place.

The total judgment against Wal-Mart in Braun/Hummel v. Wal-Mart currently stands at nearly $188 million.

According to Bernstein, “the trial evidence showed that Wal-Mart corporate leaders ceased all record-keeping of employees’ rest break periods after numerous lawsuits over the missed rest breaks were filed.” Bernstein allowed the jury to infer that Wal-Mart changed its policy to ensure that there were no records of missed rest breaks, an argument Wal-mart sought to preclude at trial, only to be denied.

The case is now with the Pennsylvania Superior Court on appeal.

Judge Upholds $185 Million Award in Wal-Mart Class Action [The Legal Intelligencer]

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Add another statuette to the Wal-Mart trophy case: the retailer has staked claim to no fewer than three spots on the list of top ten highest salaries for retail execs. Wal-Mart is the ONLY company to make more than one appearance on the list, with CEO Lee Scott, John Menzer and Mike Duke all qualifying for multimillion dollar salaries.

Lee Scott, as you’ll note, makes more than twice what the second-highest earning executive makes, and more than 1,645 times what an average Wal-Mart worker earns in a year.

Lee Scott’s compensation rose at a time when the Walton family members are all making millions of dollars off their Wal-Mart stock options. But in that same time, the wages of Wal-Mart’s lowest paid employees have remained stagnant, even decreasing if you take inflation and the rising cost of living in to account.

Here’s the full list from Women’s Wear Daily. We’ve included the detailed profiles for Wal-Mart’s executives who appear on the list.

1. H. Lee Scott Jr., 59, President and Chief Executive Officer, Wal-Mart Stores Inc.
Value of 2007 Compensation Package $31.6 million
Base salary: $1.4 million; Bonus: $0; Stock and option awards: $20.9 million; Other: $9.3 million
This Kansas-bred son of a gas station owner enjoyed a 6.4 percent jump in compensation from one year ago as Wal-mart got back on track by emphasizing value and low prices. Scott earned over $15 million more this year than his fellow top Wal-Mart executives, thanks to hefty stock and option awards - in fact, his value is $15 million more than any other executive on the list. Scott joined the company in September 1979 and under his leadership Wal-Mart has become the biggest retailer in the world. This past fiscal year, Wal-Mart spent $101,208 on Scott’s use of the company aircraft, not including pilot and crew salaries.

2. Paul Marciano, 56, Co-Chairman and Co-CEO, Guess Inc.
Value of 2007 Compensation Package $15.3 million

3. John B. Menzer, 56, Former Vice Chairman and Chief Administrative Officer, Wal-Mart Stores Inc.
Value of 2007 Compensation Package $14.9 million
Base salary: $1 million; Bonus: $0; Stock and option awards: $9.2 million; Other: $4.6 million
Menzer’s compensation is up 16.9 percent from 2006 due to increases in stock awards and other incentives, which helped catapult him into the top 10. Menzer, who retired in March, began his Wal-Mart career in 1995 as the company’s chief financial officer and was promoted to president and ceo of Wal-Mart International in 1999, where he had full responsibility for the company’s operations in 15 countries. Under his leadership, international sales grew to $60 billion from $20 billion. He also currently sits on the board of the Emerson Electric Co.

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