One year ago today, The New York Times published its story on the payment of millions of dollars in bribes paid by Wal-Mart Stores Inc. (NYSE: WMT) to aid the company’s expansion in the Mexican market. Walmart’s share price fell to below $58 after the report, but the shares have climbed to almost $80 since then.
Clearly investors are not worried about the charges and the impact they might have on the company’s profits, but there are still some individuals and organizations that believe the company needs an ethics transplant. A Walmart employee who submitted a petition at last year’s annual meeting of Walmart shareholders that called for the resignation of CEO Mike Duke and Chairman Rob Walton is once again collecting signatures on a similar petition to present at this year’s meeting.
Is there any chance that another petition will have more impact this year than it had a year ago? Very likely not. Even an investigation of the company for violations of the Foreign Corrupt Practices Act has had little impact beyond an occasional headline.
Mexico’s federal government has taken the position that the permits and licenses Walmart allegedly obtained by bribery are local and municipal matters and should be dealt with locally. Walmart is now Mexico’s largest private employer, which gives the company a solid position from which to defend itself.
While a few Walmart investors might care about the bribery allegations, far more pay attention to the rising share price. If the company has been guilty of bribing Mexican officials, then Walmart eventually will pay a fine and promise never to do it again, and business will go on. Shareholders are unlikely to revolt en masse against the CEO and the chairman unless the share price turns south.