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Did you catch “Undercover Boss” after the Super Bowl? It’s a new reality show on CBS where executives go undercover at their own companies and work entry level jobs to see what it’s like. In the first episode, Waste Management’s President and Chief Operating Officer Larry O’Donnell works several different jobs over a week and discovers how tough life can be for his employees. He also discovers how his policies have affected workers.

It’s nice to see a show that uncovers these kinds of problems in the American workplace. Of course, most of us already know how tough work can be, but most of us don’t have a reality show. That’s why American Rights At Work started Fix Our Jobs which is pushing for real, systematic reform in our workplace, not just feel good TV moments. They’re asking folks to sign a petition to congress: “America’s workers need a voice on the job so they can fight for fair pay, real benefits, reasonable hours, and better working conditions. We need to fix our labor laws now!”

They’re also asking for stories about your job, good or bad. We’re sure you all have some stories to share, so go check out the site. You can also watch a video they put together just to the right.

We also want to hear from Walmart workers. Tell us your stories from work. What would Mike Duke find if he came to work as a greeter at your store for a day or two? Would he make the cut as an overnight stocker?

Would Mike Duke ever take on this kind of undercover assignment? We don’t think so, but if he did, we’re sure he’d find some pretty disturbing stories, just like Larry O’Donnell did.

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Today is the big day. This morning, the Walton Family welcomed shareholders and associates from around the world to the company’s annual shareholders meeting on the campus of the University of Arkansas. 

Once again, the Shareholders circus is all show, and no substance.

What we did see was marching bands, cheerleaders, lasers, Smokey Robinson, Michael Jordan (say it ain’t so!), the comedic stylings of Ben Stiller, and even Miley Cyrus - who managed to make it this year after last year’s snub. What we didn’t see was any sort of a real discussion between the company and its shareholders of the real issues facing the company today.

We didn’t hear anything about the dozens of wage&hour lawsuits whose settlement is costing the comany hundreds of millions of dollars. We didn’t hear anything about the rallies that are being held all around the country by workers who are fed up with Wal-Mart jobs and are finally ready to start forming unions. And we didn’t hear anything about the Employee Free Choice Act - which if passed could change Wal-Mart more than anything in the history of the company.

Aren’t these issues of utmost importance to the shareholders who own the company?

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It looks like Bank of America didn’t learn from Wal-Mart’s mistakes.

Just like Wal-Mart has done in years past, BOA is now taking out life insurance policies on it employees and listing itself as the primary beneficiary in order to fund executive compensation. According to an article in today’s Wall Street Journal:

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

Known as “dead peasant” insurance, Wal-Mart took out Corporate-Owned Life insurance (COLI) policies on unsuspecting employees until 1995. Even thought Wal-Mart stopped taking out new policies at this time, it continued to cash in on them years later. In Texas and Oklahoma, Wal-Mart paid $15 million to settle claims it did not have an insurable interest while taking out these policies. Michael D. Myers, an attorney who has represented workers on these types of cases, had this say about employers using these policies in a July 2007 Tampa Tribune article:

Creepy’s a good word for it...If you ask the executives that decided to buy these policies and the insurance companies that sold them, they would say this was designed to create tax benefits for the company, which would use the benefits for benevolent purposes such as buying employee medical benefits.

Despite widespread condemnation and lawsuits surrounding the practice, some companies never learn. Bank of America—in perpetual hot water for its roll in the financial crisis—decided it was a good idea to cash in on some of the $400 billion in death benefits consultants believe banks will get over the next few decades.

Many people feel that companies should not profit off the death of its employees. Nevertheless, government intervention and regulation has been slow to occur:

Efforts to rein in the practice largely have been unsuccessful, including the most recent rules Congress enacted in 2006. The rules limit companies to buying life insurance to just the top third of earners, who must provide consent. But the rules don’t apply to life-insurance that employers bought before the August 2006 rules, which cover millions of current and former employees. (WSJ)

With executive compensation out of control, Bank of America should rethink taking out these policies. Not only for the positive press, but to restore a good faith relationship with its employees - who are not doing as well as the executives.

Banks Use Life Insurance to Fund Bonuses [Wall Street Journal]:

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To anyone who has read this blog, Wal-Mart’s conservative Republican agenda is no secret. For years, the Walton family and company execs have used their power and money to advance a political agenda that is almost always at odds with their associates and customers.

Over the weekend, the website knowthyneighbor.org revealed that Mike Duke signed a petition to put an anti-gay adoption ban on the ballot in Arkansas. (Mike Duke’s signature below was pulled off the actual PDF provided by the Secretary of State.)

We still don’t know a huge amount about Mike Duke. We know that he has donated to conservative, uber-religious Republicans like Mike Huckabee and John Boozman - as well as John McCain for President in 2008. We know that he has never shown that his political agenda is out of line with the Waltons - who selected him to succeed Lee Scott as the 4th CEO of Wal-Mart Stores, Inc.

Why does this matter? Because the extreme right-wing agenda of the Walton Family and company executives permeates the entire company.

This is a company who’s executives dressed up in drag and mocked women at a national meeting. This is a company that has repeatedly cowed to religious groups who urged them to pull support from any LGBT organizations. This is a company who has a slew of sexual discrimination cases against it, and was labeled “do not buy” by the Human Rights Campaign for its treatment of its LGBT associates.

It’s an unfortunate trend - for those of us who hoped Mike Duke might start to lead Wal-Mart in a different direction, and for Wal-Mart execs who won’t find this publicity helpful in their quest to expand their universe of customers. 

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It’s everyone’s favorite time of the year again: Consumerist’s “Worst Company in America” competition.

Wal-Mart just breezed by Best Buy 55% to 45% to land a spot in the elite eight. But in the next round, Wal-Mart faces an entirely different level of competition: AIG.

We’re realists—we know Wal-Mart is looking at an uphill battle to win this one. And while we also know the incredible extent to which companies like AIG deserve their rotten reputation, here’s a few reasons why we’re confident some of our faithful will still pull the lever for Wal-Mart.

1. Aubretia Edick works for Wal-Mart, not AIG. AIG’s executives screwed over America - but did they treat their own workers worse than Wal-Mart?

2. AIG is the new kid in town and is getting all the attention. But Wal-Mart’s track record over time is unmatched.

What do you think? Is the fact that Wal-Mart has to square off against AIG for a “worst company” award victory enough?

Go vote now!

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In China, Wal-Mart’s “job optimization” program was just a fancy way of saying you’re fired. That is, until the country’s government-run trade union stepped in.

Earlier this month, Wal-Mart announced it could need to slash some mid-level executive positions in an effort to adapt to “the changeable market situation.” At the time, however, company officials refused to say how many people would lose their jobs. The plan that was ultimately unveiled was dubbed the retailer’s “job optimization and regrouping” program, aimed at relocating some mid-management staff to similar posts in new stores.

Angry staff affected by the plan were not buying it, however, and labeled the program as a “de facto layoff plan.” In fact, managers included in the optimization program were actually given three options: demotion with reduced salary, relocation, or leaving the company with compensation - with those choices, Wal-Mart was obviously aiming to trim staff.

“I came to work for Wal-Mart in my 20s. I have been always working hard and never made any major mistakes. I am now pushing 40. If I have to leave Wal-Mart, I really don’t know where to find another job.” said a department manager at Wal-Mart’s Shekou store in Shenzhen.

The optimization program has been thwarted for now, however, as the country’s government-run trade union stepped in and blocked the restructuring. That decision came after over 50 staff protested the plan at Wal-Mart’s headquarters in Shenzhen, China.

“Three mid-level executives came to my office this morning and told me the plan was shelved and they have resumed their work,” Xinhua news agency quoted Yang Fengzhi, a union official in northeast China, as saying. The managers in Jilin province, who earlier had been told they would be laid off, were asked to return to work after the union stepped in, the report said.

See, but that’s the thing. China is what it is, yet for all we complain about that country’s methods of doing things, workers there can still band together to fight for their jobs. Yet here in the land of the free, Wal-Mart workers attempting to flex their muscles will find themselves quickly unemployed.

What do you think? Does it make sense that workers in China have more rights that those right here at home?

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The Wal-Mart Watch Research Department, lovers of corporate information in all its forms, has taken it upon itself to make sure you do not miss the release of Wal-Mart’s latest 10-K filing. In case you didn’t know, publicly traded companies must file a 10-K each year and this filing “provides a comprehensive overview of the company’s business and financial condition and includes audited financial statements.”

In other words, Wal-Mart compiles information on international and domestic store segments, risk factors to the company, legal proceedings, environmental matters and stock value. We know it is not the most exciting document in the world; however, it does provide useful information if you look hard enough to get past all the legal and accounting lingo. Notable entries in this document include: Wal-Mart’s pending settlement of 63 wage-and-hour class action cases (recognizing that they still have nine others on the books) and 12 risk factors ranging from site fight opposition to global sourcing.

To read this document, please click HERE

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Mike Duke is wasting no time putting his stamp on Wal-Mart.

In a time when workers everywhere are struggling through the recession while Wal-Mart eats market share and makes billions, and pro-Wal-Mart flakkery is printed every day in the media, the company has decided on a prescription: more PR.

The Wall Street Journal is reporting that Wal-Mart apparently no longer thinks Edelman can handle the full load, and is looking to bring on up to five additional public relations firms. The WSJ looked at internal Wal-Mart documents and found that the company feels it needs more spin in order to lock down the gains it has made during the recession.

It’s unclear as of yet how much of slap the move is to Edelman. Perhaps the company truly thinks it needssix PR firms hock its products and defend against bad press. But we do know that we need to be on guard - more than ever - against Wal-Mart spin. 

Wal-Mart Seeks to Hold Gains With Expanded Focus on PR [Wall Street Journal]:

In a sign that Wal-Mart Stores Inc. plans to capitalize on its sales strength in the recession, the retailer is in the process of hiring five public relations firms to better promote its products, according to documents reviewed by The Wall Street Journal.

The Bentonville, Ark.-based retailer plans to put the firms on retainer and then have them bid on individual projects, an effort by the notoriously frugal retailer to contain costs. This strategy is becoming more common in the advertising industry as businesses attempt to rein in marketing budgets amid falling revenues.

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There shouldn’t be any doubt that the Wal-Mart of Mike Duke is different from the Wal-Mart of Sam Walton. Mike Duke just hired an outsider to be the new Sam’s Club CEO. Brain C. Cornell was the CEO of the craft-store chain Michaels - and is replacing Doug McMillan, who left to take over Mike Duke’s old job as head of Wal-Mart International. Follow that?

It gets more ridiculous. Michael’s also just announced it’s new replacement for CEO - and it’s none other than John Menzer - who just retired from Wal-Mart as Vice Chairman. And he also served as International Chief, Mike Duke’s job, not that long ago.

I think I’m dizzy…

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Wal-Mart, you’ve come a long way.

Says Fortune today:

“Duke does have his indulgences, including a cherry-red Porsche 911 - although he is not audacious enough to drive it to the office.”

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The total value of Lee Scott’s stock options just keeps rising and is currently up $30.6 million to $202 million since 2007. This figure includes both direct and indirect shares held by Scott; see Wal-Mart SEC Proxy Statement from April 22, 2008 for more details. The value of Scott’s holdings, calculated by combining the number of shares he owns times the current share price, Scott now exercises control over an amount that would take the average Wal-Mart worker 10,522 years to earn at an “average” wage of $10.86/hr. And this is not counting Scott’s total non-share compensation, which amounted to $31.6 million in 2007. Scott’s pay is one of the few Fortune 500 CEOs’ equity-based compensation that rose in the past year; 175 of the top 200 suffered a median fall of 50% percent in shares held in their own company. Wal-Mart’s stock as a company may have risen 10% in the past year, but does Scott really deserve the additional $30 million in value he’s just gotten when Wal-Mart wages fail to keep pace with inflation and “full-time” employees earn poverty-level wages?

You lost your shirt? CEOs did worse! [CNN Money]

You think you lost a bundle in the market? The CEOs who lead the companies in the upper decks of the Fortune 500 have fared even worse: Their stock holdings in their own companies declined in value by $54 billion last year.

A just-released study by executive compensation consultancy Steven Hall & Partners sums up the damage. For CEOs who head 175 of the top 200 corporations in the Fortune 500, the median value of the equity held in their own businesses dropped 50% last year. This decline is far worse than the 37% median drop for the stocks of those companies.

What accounts for the relatively dreadful performance of the CEOs’ own holdings? Options. They tend to be tremendous wealth accumulators in good times. But when a stock price falls below an option’s exercise price, the intrinsic value of the option goes to zero. And in this sinking stock market, that has happened a lot. Those underwater options create a more dramatic drop-off in CEO equity values than you’d expect from just looking at a company’s stock price.

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Wal-Mart just announced Doug McMillan as its new CEO of Wal-Mart International. For the past three years, McMillan has served as CEO of Sam’s Club, and has long been considered a rising star at Wal-Mart. His big day comes on February 1st, when he takes over Mike Duke’s job - who’s moving up to replace Lee Scott as top dog at Wal-Mart, Inc.

According to his Wal-Mart bio:

In his 18 years with Wal-Mart Stores, Inc., McMillon has learned the business from the bottom up, holding leadership roles in all three operating segments —Walmart US, Wal-Mart International and Sam’s Club. He began his career as an hourly associate at a Wal-Mart Distribution Center in Northwest Arkansas, while he worked his way through college. In 1990, while attending graduate school at the University of Tulsa, he became a Buyer Trainee for Wal-Mart working in Store #894 in Tulsa, OK. He has served as a Buyer for Food and Candy, Ladieswear and Crafts; a Divisional Merchandise Manager for Home Furnishings and Infants and Toddlers; Vice President and General Merchandise Manager for Sam’s Club International; and Senior Vice President and General Merchandise Manager for Wal-Mart Stores, Inc. overseeing purchases for Toys, Electronics, Video Games, Photo, Sporting Goods, Stationary and Office Supplies.

Here’s a quick look at McMillan, from a 2007 interview with AOL Business:

Watch more ClipSyndicate videos on AOL Video

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As the rest of the country slides into recession, Wal-Mart continues to ride high. Retail Metrics, a retail research firm, projects that Wal-Mart will post a record profit of $13.7 Billion this year - higher than the country’s next three retailers - CVS, Home Depot and Lowe’s - combined.

According to my calculations, it would take an average Wal-Mart worker making $10.86 an hour 144,008 years (working 24 hours a day, 365 days a year) to earn 13.7 billion dollars.

US Retailers Looking At Losses For 2008, With 4Q Not Helping [Dow Jones Newswire via Wall Street Journal]:

At least two dozen publicly traded retailers are on pace to show a loss for 2008, with the fourth quarter, usually the industry’s best period of the year, in many cases contributing to the red ink.

Saks Inc. (SKS), Dillard’s Inc. (DDS), Pacific Sunwear of California Inc. (PSUN), Talbot’s Inc. (TLB), Borders Group Inc. (BGP), and Zale Corp. (ZLC) are all seen posting earnings deficits for their current fiscal year, according to Retail Metrics, whose data are based on analysts’ estimates.

Rite Aid Corp. (RAD), which is contending with heavy debt as well as management turnover, is projected to show the biggest loss in the Retail Metrics group, at almost $1.5 billion for 2008.

Circuit City Stores Inc. (CCTYQ), now operating under Chapter 11 bankruptcy protection, is second, with analysts seeing a $314 million loss for the year. Building Materials Inc. (BLG) is pegged for a $154 million loss.

The diverse group also includes Saks, Talbot’s, Dillard’s, Pacific Sunwear of California, Zale and Borders Group and all are expected to see a loss for 2008.

The projections for significant red ink illustrate how deep the morass is for the retail industry, with fourth-quarter results projected to be soft and raising questions about just how bad next year might be.

“There isn’t much good news out there, and conditions are not improving,” said Ken Perkins, head of Retail Metrics.

Of the 40 retailers that Retail Metrics tracks, just 16 are expected to post a profit for 2008, which for most of the group is a fiscal year that concludes at the end of January.

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Since becoming Vice-Chairman in 2005, Michael Duke has presided over Wal-Mart’s international division. Unfortunately, the company’s international track record during these three years has been less than stellar. While aggresively expanding into Canada, Mexico, Brazil, China and recently India, Wal-Mart has been accused of sourcing from sweatshops, selling dangerous foreign products on its shelves, union-busting, and attempting to monopolize employees’ business by paying them in vouchers.

Here’s a little background on the man who will shortly run the biggest company in the world.

Early Life and Education

Michael Duke, 57, was born in 1950. He has a wife, Susan, and two daughters and a son. He graduated from Georgia Tech with a Bachelor’s degree in Industrial Engineering in 1971. He serves on the Board of Directors of the US-China Business Council as well as CIES-The Food Business Forum. He also serves on the Board of Trustees of Morehouse College and on the University of Arkansas Board of Advisors. He is also a Company Director on the Board of Directors of Arvest-Bank of Bentonville and the Retail Industry Leaders Association.

Professional Life

Before joining Wal-Mart, Duke spent 23 years working for Federated Department Stores and May Department Stores.

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Mike Duke, currently the Vice Chairman, International Division, will take the reins from Lee Scott on February 1st. Check out Wal-Mart Watch’s official statement here.

And check back later for more on Mike Duke…

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Lee Scott and Eduardo Castro-Wright have spent the past two days in New York City, detailing Wal-Mart’s business plan to financial analysts. There’s a lot to run down here, but the big (and good) news: less new Wal-Marts. The company is continuing to cut down on capital expenditures and build less stores, focusing instead on remodeling and driving up sales at its current stores.

AP:

As a result, capital expenditures will come in at $5.8 billion to $6.4 billion for fiscal 2009 and $6.3 billion to $6.8 billion in fiscal 2010. That’s down from the $9.1 billion the company had in capital expenditures in its last fiscal year.

The Wall Street Journal tells us what that means in terms of store numbers.

Mr. Castro-Wright also said the discount retailer plans to open 142 to 157 new U.S. stores in the fiscal year ending January 2010, down from an earlier projection of 165.

150 stores is still a heck of a lot, but any decrease is a good thing. Remember that growth in 2008 had dropped from 2007, and that only several years ago Wal-Mart was opening 300+ new stores a year.

Some other tidbits from the analyst meeting below the jump-

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Dan Rather is back on Wal-Mart. 

Back in April, Dan Rather’s new show Dan Rather Reports did a full episode on the dubious workings of Wal-Mart’s PAC. This time, he takes a long look at the phenomenon of exploding gas cans, and interviews several boys that were very badly burned and disfigured.

If you haven’t heard the story before, Wal-Mart and its supplier Blitz USA have been repeatedly accused of selling gas cans that can explode if held near an open flame, shooting flaming gasoline in every direction. Experts say that a simple flame arrestor would make every can safe, and could be installed by the manufacturers for under $1 - and possibly as little as a few pennies. Wal-Mart and Blitz have of course denied any responsibility for the accidents, refused to take any action to make the cans safer, and actually deny that the cans can explode at all.

But the footage actually includes a clip of an exec on stage at a Manager’s meeting shamelessly joking about gas cans exploding.  And another unbelievable SNL-style fake-ad skit where a supposed Wal-Mart worker jokes about starting fires with gasoline from gas cans.

The clip above is the bulk of the segment on Wal-Mart, although part 6 goes on to tell us that Wal-Mart and Blitz gas cans are actually countersuing one of the families whose son was badly burned in a gas can explosion.

Every day, something new and horrifying from Wal-Mart.

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If you’ve read our FEC complaint by now, you’ll be familiar with our contention that at its training sessions, Wal-Mart was explicitly advocating against the election of Democratic candidates this coming November because of its fear of possible unionization in the future. You’ll also be familiar with our contention that Wal-Mart is limited, under both the United States Code and the U.S. Code of Federal Regulations, from directing its political meetings or “trainings” at anything beyond its stockholders and executive or administrative personnel. Certainly, the issue is serious enough to warrant a looksee from the Federal Election Commission - now that multiple labor groups have sent a complaint of their own, similar to the one submitted by Wal-Mart Watch last week, we’ll see if the FEC decides to initiate an investigation.

If that does happen, attorney Bob Bauer has been helpful enought to give a brief guide on the federal regulations involved - you might want to read it in shifts, as staring too long at federal regulatory language has been known to cause eyes to bleed, etc. Bauer is the Chair of the Political Law Group of Perkins Coie LLP, and the author of numerous books including: United States Federal Election Law (1982, 1984), Soft Money Hard Law: A Guide to the New Campaign Finance Law (2002) and More Soft Money Hard Law: The Second Edition of the Guide to the New Campaign Finance Law (2004).

The Wal-Mart Matter [posted August 14, 2008]

The Wal-Mart controversy, now headed toward the Federal Election Commission, presents interesting questions about how the campaign finance laws treat coercive political conduct by a corporate employer.  As the allegations have been framed in press reports, Wal-Mart is claimed to have breached two requirements for lawful corporate political action:  (1) it spent corporate funds outside the limited allowances for election-related speech, and (2) it did so through coercive means, subjecting employees to job-related pressures to support one candidate or party rather than another.

FEC rules specify in fair detail when and how corporations may spend resources in relation to federal elections without breaking the core campaign spending prohibition.  11 C.F.R. Part 114.  The most liberal of the allowances is for “partisan” communications to the “restricted class,” of executives and shareholders, and a corporation may also repeatedly solicit them for contributions to the company’s political action committee.  It can arrange for the candidates favored by the company to address this defined group.

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More to come from the Wall Street Journal later this week.

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In the wake of Wal-Mart’s massive anti-union political scandal that broke late last week, we decided to release a new Wal-Mart All Star Collectible card: Leslie Dach, Executive Vice President of Corporate Affairs and Government Relations.

As Jeffrey Goldberg points out, Dach was hired by Wal-Mart to convince Democrats to like the company. Wal-Mart, the born-and-raised red state company, has traditionally had a hard time with liberals, and Dach was brought in to win them over.

Leslie came to Wal-Mart from Edelman Public Relations, the company still responsible for most of Wal-Mart’s PR work. While there, “he led the Washington D.C. office, the company’s research, advertising, and corporate social responsibility consulting divisions and its global public affairs, crisis, technology, and healthcare practices.” He can spin with the best of them, but more important than his ability to doublespeak, Leslie Dach has serious Democrat cred. From Wal-Mart’s website:

Leslie has been active as a strategist in Democratic politics and worked in senior positions in a number of presidential campaigns, including as a senior advisor for communications for the Democratic National Committee in 2004 and managing the program at the 2000 Democratic Convention. He served the Clinton administration in a variety of project capacities, including special advisor to the National Security Advisor during the Kosovo conflict. Leslie was also a lobbyist for the National Audubon Society and Environmental Defense, and the special assistant to the chairman of the U.S. Senate Agriculture Committee.

If Wal-Mart really wants to win over Democratic consumers, maybe the company should stop badmouthing Democratic candidates to its entire workforce. What does Wal-Mart’s recent Obama-bashing mean for Mr. Dach? Will his work appealing to sentimental liberals get flushed down the drain by the retailer’s political bullying? How can a self-proclaimed Democrat work for a company so blatantly un-Democratic? And what will it take for Democrats to look past the hype?

Wal-Mart All Star Collectible Trading Cards: Collect them all!

Mike Duke, Vice Chairman, International Division
Tom Schoewe, CFO
Susan Chambers, Executive Vice President, People Division