(Bloomberg News) The California State Teachers' Retirement System will vote its 5.3 million Wal-Mart Stores Inc. shares against the entire board's re-election amid a probe into alleged bribery in Mexican operations.
The board failed to respond to indications of unethical conduct, and Wal-Mart's leadership may have "actively suppressed" an internal investigation, Calstrs Chief Executive Officer Jack Ehnes said today in a statement disclosing how the shares will be voted.
"Calstrs does not have confidence that the current board has the independence and leadership needed to address these difficult issues," Ehnes said in the statement.
The move shows mounting pressure against Wal-Mart, the world's largest retailer, over its corporate-governance practices in advance of the company's annual meeting on June 1 in Fayetteville, Arkansas. The New York City Pension Fund and a major adviser to investors have also urged investors to vote against some directors in the wake of bribery allegations.
Wal-Mart, based in Bentonville, Arkansas, has said it is probing allegations reported by the New York Times last month that executives paid more than $24 million in bribes to clear the way for expansion in Mexico. A company spokesman, David Tovar, didn't return a phone call seeking comment today.
Calstrs on May 4 said it sued current and former Wal-Mart directors, alleging bribery and a cover-up. Wal-Mart directors and executives responsible for overseeing the company's Mexican unit should reimburse the Bentonville, Arkansas-based retailer for damages the chain suffered as a result of the bribery scheme, lawyers for Calstrs said in the lawsuit, filed in Delaware Chancery Court in Wilmington.
Calstrs holds less than 1 percent of Wal-Mart shares, a stake valued at about $313.5 million. The total holdings of Calstrs were worth about $153.7 billion on April 30. The retirement system, based in West Sacramento, California, serves 856,000 public-school educators.
The pension plan is the third shareholder-related group this month to come out against Wal-Mart directors. On May 19, Institutional Shareholder Services Inc., an adviser based in Rockville, Maryland, recommended that Wal-Mart stockholders vote against Chairman Rob Walton, CEO Mike Duke, retired CEO Lee Scott and Chris Williams, who heads the audit committee.