CalSTRS will vote its more than five million investor shares against the entire board’s reelection at Wal-Mart Stores, Inc. annual meeting. We encourage our fellow shareholders to do the same.

Walmart has not been very good to CalSTRS, and many other investors, as least as far as returns go. Its share price has been nearly flat over the past decade. But, like other holders of shares in the world’s largest retailer, it has ignored the rule that people, including executives, are innocent until proven guilty. The fund writes in a letter about its plans:

Based on these allegations, which indicate a breakdown of corporate governance and lack of oversight that should have averted this situation, CalSTRS does not have confidence that the current board has the independence and leadership needed to address these difficult issues.

A number of charges have arisen against Walmart over bribery activity at its Mexico operations. There are also allegations that past and current management knew about them and covered them up. Federal investigations, and a probe by Walmart’s board, have only just begun. It may be months before these conclude. In the meantime, no one in management or on the board has been pushed out, which is as it should be.

If the CalSTRS approach set a standard by which to measure boards and management, all of the leaders of Chesapeake Energy (NYSE: CHK) and JP Morgan (NYSE: JPM) would be gone by now. The same holds true for dozens of companies that have been through recent ethical scandals. Some board members and executives has been forced out at companies where there were breaches of reasonable standards. This includes Best Buy (NYSE: BBY) and Green Mountain Coffee Roasters (NASDAQ: GMCR). There have been no widespread suggestions that the entire boards and top managements of these corporations resign or be turned out by shareholders. Not everyone on the boards of these two public corporations was part of the wrongdoings. By forcing the resignations of those who had violated fair codes of conduct, these board members actually have proved their worthiness as fiduciaries.

The CalSTRS pressure to unseat the entire Walmart board is too radical. The directors who should reasonably judge the chairman and two CEOs ought to be left to do their jobs.

Douglas A. McIntyre

The question now, of course, is whether Kraft Foods Inc. (NYSE: KFT), maker of Maxwell House and Gevalia brands among others, Starbucks Corp. (NASDAQ: SBUX), Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR), Peet’s Coffee & Tea Inc. (NASDAQ: PEET), and Coffee Holding Co. Inc. (NASDAQ: JVA) will follow suit. Kraft would seem like a good bet to lower prices to compete in the retail space, but the premium coffee roasters are more likely to leave prices where they are as long as they can in order to make a little extra margin.

Last week’s price for arabica beans was about $1.90/pound. A year ago the price was just over $3.00/pound. Robusta (cheaper) beans currently cost about $1.14/pound, about 10% below the five-year high of $1.26/pound set last June.

A continued decline in arabica prices may force the premium roasters to lower prices because the story will hit the headlines and consumers will start making some noise about being gouged by the coffee companies. But that day is a ways off yet. But imagine, both gasoline and coffee prices falling at the same time. What an idea!

Paul Ausick

The list of governance failures in the past month or so is a long one. The board of Chesapeake Energy (NYSE: CHK) allowed its CEO, Aubrey McClendon, to share in the firm’s riches from drilling, which is certainly a conflict of interest. The board of Green Mountain Coffee Roasters (NASDAQ: GMCR) allowed the firm’s founder, Robert Stiller, to pledge shares for loans. Lead director William Davis did so as well. When Green Mountain’s stock collapsed after poor earnings, each director was hit by margin calls. The balance of the directors forced them out of most of their board positions. There is a case to be made that the services of the two were valuable to the company because of the length of their tenures. But where were the rules about margin commitments?

Yahoo! (NASDAQ: YHOO) continued to have one of the most dysfunctional boards of any large public company. The scandal over former CEO Scott Thompson is hardly worth mentioning again. Mistakes over vetting of his background cost him his job and also triggered the resignation of director Patti Hart. Most of the Yahoo! board has turned over at a time when some stability is almost essential to a corporation so near drowning.

The credit crisis of 2008 should have heightened board oversight at banks. Risk management at a high level is part of financial company governance. JP Morgan’s (NYSE: JPM) board obviously did not take that seriously. Or it was passive enough to allow management to be the sole judge of risk. That approach has helped cost JP Morgan a $2 billion write-off and a significant cost to its reputation.

At Best Buy, (NYSE: BBY), there is yet another example of the weakness of a system in which a founder and large shareholder controls the company for years. Chairman Richard Schulze followed disgraced CEO Brian Dunn out the door. Now the troubled consumer electronics store is leaderless, for all practical purposes. The Best Buy board allowed Schulze to run Best Buy as a private enterprise. Schulze believed he was powerful enough to keep Dunn’s indiscretions from the balance of the board. Much of the blame for that sits with his fellow directors.

Board reform is often debated in abstract. What if a board makes a major error in oversight? What if its allows management to run a company with the belief that the board is passive, perhaps because a CEO or chairman is unusually powerful? Or the perks of being a board member may be so good that the idea of changing those benefits in the name of better governance is too much of a temptation.

Governance took a beating recently. If the past is any indication, this will not change things much. Boards remain self-governing and assured of election. The system is still broken, and inertia at the level of government regulators and most investors will cause it to remain that way.

Douglas A. McIntyre

24/7 Wall St. screened out selective short interest data with the latest changes from the settlement date of April 30, 2012 versus the prior April 13, 2012 in shares of the following: Alcatel Lucent S.A. (NYSE: ALU); Banco Santander, S.A. (NYSE: STD); Bank of America Corporation (NYSE: BAC); Barnes & Noble, Inc. (NYSE: BKS); Dendreon Corporation (NASDAQ: DNDN); Diamond Foods, Inc. (NASDAQ: DMND); First Solar, Inc. (NASDAQ: FSLR); Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR); Groupon, Inc. (NASDAQ: GRPN); Human Genome Sciences, Inc. (NASDAQ: HGSI); LinkedIn Corporation (NYSE: LNKD); Netflix, Inc. (NASDAQ: NFLX); RadioShack Corporation (NYSE: RSH); Research in Motion Limited (NASDAQ: RIMM); and Sirius XM Radio Inc. (NASDAQ: SIRI).   Does this make for a “Short-Sell in May and go away!” theme?  The short interest changes are for the April 13 versus March 30 settlement dates, with selective color added if applicable:   Alcatel Lucent S.A. (NYSE: ALU) saw another rise in the short interest but this gain was massive by over 25% to 28.67 million shares in the short interest.  Based on its earnings botch, the short sellers made some real money here.

Banco Santander, S.A. (NYSE: STD) is not one of our usual short interest names but investors are back to betting against Spain and the PIIGS all over again now that austerity measures are being fought publicly.  The prior gain was a whopping 214% gain in the short interest to 55.7 million shares and the newest gain was only 2.5% to 57.1 million shares.

Bank of America (NYSE: BAC) is back to seeing a rise in the short interest after a prior drop.  Short sellers lifted the short interest by 9.9% to 142.3 million shares.

Barnes & Noble, Inc. (NYSE: BKS) saw a small increase ion its short interest, which you know helped to exacerbate that pop from the Microsoft deal while activist investors press on here.  The short interest rose another 3.7% to 19.768 million shares.

A new poll from Gallup shows:

About two in three adults worldwide believe corruption is widespread in the businesses in their countries. This belief is relatively commonplace everywhere in the world — ranging from 60% in the U.S. and Canada to a high of 76% in sub-Saharan Africa — but it tends to be higher in lower income regions.

By most accounts, bribery and corruption are not restricted much by law or its enforcement in the developing world. So there the extremely poor, which are a significant part of the population, likely have evidence that confirms their suspicions.

The figures for the U.S. and Canada, where people say corruption is prevalent, should be disheartening and of significant concern to businesses, from small companies to large corporations. That “corruption is widespread” measure of adults in the U.S. and Canada is 60%. Gallup does not give good reasons for why the figure is so high.

One reason for the U.S. and Canada figure is that people’s memories are strong. The Walmart (NYSE: WMT) corruption case will remain part of the conversation about big business for decades, whether or not the charges about its actions in Mexico are proven. Trouble with the government at Goldman Sachs (NYSE: GS) is fresh in people’s minds as well. Very few people over 30 do not remember Enron, one of the greatest lapses in business ethics in the U.S. ever. And there are the less well remembered Worldcom and a series of CEO and bribery missteps at Boeing (NYSE: BA). There are plenty of these incidents.

The perception of corruption is so widespread because it is true, no matter how unfortunate that is for businesses and the people who are their customers, and sometimes investors.

Douglas A. McIntyre

Chairman and founder Robert Stiller is out.  Green Mountain has appointed Michael J. Mardy, a director and chair of the Company’s Audit and Finance Committee, as interim Chairman of the Board.  Ms. Hinda S. Miller, who is chair of the Company’s Corporate Social Responsibility Committee, has been appointed as Chair of the Governance and Nominating Committee.

Robert Stiller sold 5 million shares to meet a margin call and the Form 4 filing noted, “The sales of Common Stock were effected by a financial institution pursuant to a margin call because the reporting person’s account did not satisfy the minimum margin requirements under various margin loans. The total number of shares reported as sold on this Form 4 is 5,000,000.”  The problem here is that Stiller is the founder and chairman of Green Mountain.

The full release has all of the details but this is something that may be far from over.  Both members who are being booted will remain on the board but will not receive their normal compensation until the company’s review of the situation is over.

Green Mountain shares are down only 1.6% at $25.95 in pre-market trading and the 52-week range is $24.03 to $115.98.

JON C. OGG

Proview vs. Apple

Chinese-based Proview Electronics continues to contend that it was bilked out of the iPad name by Apple (NASDAQ: AAPL). The firm says Apple should have paid it much more for the trademark than the U.S. company did. The legal fight over the issue, which started in China’s courts, moved to the United States. The decision from a judge here was much quicker than one that is still uncertain in the People’s Republic. Proview filed a suit in California superior court three months ago. The court threw the case out because Apple and Proview had agreed to settle legal contests in Hong Kong. That apparently means the disagreement will move to a third venue.

Board Shakeups

Corporate governance, which is a subject often debated but usually in abstract, has moved to the front pages. Patti Hart, the Yahoo! (NASDAQ: YHOO) director who was in charge of the search for new CEO Scott Thompson, will leave the board. Thompson has a misleading section in his CV that suggests he has a degree he does not. A special committee of Yahoo! directors, all of whom were added this year, will decide whether Thompson should be fired. On the same day that Hart left, the chairman and founder of Green Mountain Coffee Roasters (NASDAQ: GMCR) lost his job at the head of the board. His fellow board members forced Robert Stiller step down because he made stock sales during a period when the activity was prohibited. Stiller had to make the sales. When the firm’s stock dropped almost 50%, he received margin calls because of borrowing against the shares. William Davis, the lead director, was kicked out of his job because of stock sales. Both men will stay on the board, but they will not be members of any committees. The same day that both the Yahoo! and Green Mountain changes were disclosed, Reuters produced evidence that the board of embattled Chesapeake Energy (NYSE: CHK) allowed a large number of private plane flights by directors and officers. This comes on top of allegations of self-dealing by CEO Aubrey McClendon, who personally invested in a number of wells drilled by Chesapeake.

German Exports/Imports

Even though much of Europe is crumbling around it, Germany posted recent highs for both imports and exports in March. Demand from the U.S. and developing markets must be good. The topline numbers in the report indicated that was the case. Many of Germany’s neighbors are nearly bankrupt. Germany’s federal statistics bureau reported:

Germany exported commodities to the value of Euro 98.9 billion and imported commodities to the value of Euro 81.5 billion in March 2012. As further reported by the Federal Statistical Office (Destatis) on the basis of provisional data, these were the highest monthly figures ever recorded for exports and imports (both previous all-time highs recorded in March 2011). Compared with March 2011, German exports increased by 0.7% and imports by 2.6% in March 2012. Upon calendar and seasonal adjustment, exports increased by 0.9% and imports by 1.2% compared with February 2012.

Douglas A. McIntyre

GlaxoSmithKline (NYSE: GSK) will launch a takeover of Human Genome Sciences (NASDAQ: HGSI). (Reuters)

Toyota (NYSE: TM) says its profits will triple this year. (Reuters)

Yahoo! (NASDAQ: YHOO) director Patti Hart will leave the board as part of a scandal about CEO Scott Thompson’s resume. (Reuters)

A California judge rejects a suit by Proview that claims Apple (NASDAQ: AAPL) bought the iPad name from the company for too little money. (Reuters)

Nelson Peltz’s Trian Fund will buy 7% of Ingersoll-Rand (NYSE: IR). (WSJ)

Freddie Mac picks former E*Trade (NASDAQ: ETFC) executive Donald Layton to be its CEO. (WSJ)

Chesapeake Energy (NYSE: CHK) is under fire for the use of private jets by its board and management. (WSJ)

The founder of Green Mountain Coffee Roasters (NASDAQ: GMCR), Robert Stiller, and its lead director, William Davis, are demoted because of stock sales. (WSJ)

Liberty Media (NASDAQ: LMCA) increases its share of Sirius XM Radio (NASDAQ: SIRI) to 45.2% in an attempt to control the company. (WSJ)

The United States presses India to buy less oil from Iran. (WSJ)

Research In Motion (NASDAQ: RIMM) appoints Kristian Tear as chief operating officer and Frank Boulben as chief marketing officer. (WSJ)

T-Mobile may offer some video streaming without charging it against customer data plans. (WSJ)

JP Morgan (NYSE: JPM) will offer prepaid debit cards in its 5,541 branches this summer, a way to increase money from customer fees. (WSJ)

Germany is likely to force Greece to honor obligations for a bailout or leave the eurozone. (NYT)

Hackers attack U.S. natural gas pipelines. (FT)

A Moody’s downgrade of major banks may hurt the financial recovery of the European Union as it throttles back the ability of the financial firms to lend. (FT)

Germany’s Federal Statistics Office says the nation’s exports rose in March. (Bloomberg)

Political factions in Ireland may try to reject austerity as their counterparts in Greece have. (Bloomberg)

Douglas A. McIntyre

The US dollar index rose today, now up 0.11% at 79.221. The GSCI commodity index is down about -1.3% at 678.65, with commodities mixed on the small gains in the dollar. WTI crude oil closed down -2.6% at $102.54/barrel, and Brent crude trades down -1.84% at $116.02/barrel. Gold settled down -1.2% today, at $1,634.80/ounce.

The unofficial closing bells put the DJIA down nearly 62 points to 13,206.59 (-0.47%), the NASDAQ fell more than 35 points (-01.16%) to 3,024.30, and the S&P 500 fell -0.77% or nearly 11 points to 1,391.57.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) maintained as ‘buy’ but target price cut to $31 at BofA/ML and raised to ‘outperform’ at Bernstein; Level 3 Communications Inc. (NYSE: LVLT) reiterated ‘buy’ at SunTrust Robinson Humphrey and cut to ‘neutral’ at Piper Jaffary; Qualcomm Inc. (NASDAQ: QCOM) reiterated as ‘buy’ at BofA/ML; and Salesforce.com (NYSE: CRM) raised to ‘outperform’ with a $185 target price at Credit Suisse.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Diana Shipping Inc. (NYSE: DSX) is down -4.4% at $7.63; Corinthian Colleges Inc. (NASDAQ: COCO) is down -21.6% at $3.05; Apache Corp. (NYSE: APA) is down -3.7% at $91.99; Western Refining Inc. (NYSE: WNR) is down -2.6% at $18.42; YRC Worldwide Inc. (NASDAQ: YRCW) is down -8% at $6.79; Steve Madden Ltd. (NASDAQ: SHOO) is down -1.7% at $43.54; Sempra Energy (NYSE: SRE) is up 0.6% at $64.29 after posting a new 52-week high of $65.37 earlier today; Sara Lee Corp. (NYSE: SLE) is down -1% at $22.10; Royal Gold Inc. (NASDAQ: RGLD) is down -2.6% at $59.43 (more coverage here); Orbitz Worldwide Inc. (NYSE: OWW) is up 4.9% at $4.09; General Motors Co. (NYSE: GM) is down -2.3% at $22.42 (more coverage here); and MGM Resorts International (NYSE: MGM) is down -4.4% at $12.95.

Tomorrow we get earnings from AES Corp. (NYSE: AES), Cheniere Energy Inc. (AMEX: LNG), Duke Energy Corp. (NYSE: DUK), Estee Lauder Companies Inc. (NYSE: EL), Progressive Corp. (NYSE: PGR), and The Washington Post Co. (NYSE: WPO).

Other standouts from today include the following stocks:

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is down -47.3% at $26.11. The company reported earnings last night, and lowered guidance. More coverage here and here.

Kensey Nash Corp. (NASDAQ: KNSY) is up 32.2% at $38.35. The company is being acquired by a Dutch firm for $360 million. More coverage here.

Herbalife Ltd. (NYSE: HLF) is down -12.7% at $46.02. The nutrition products company flubbed some questions at last night’s conference call. More coverage here.

Stay tuned for Friday. San Francisco Fed President John Williams is giving a speech. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Non-farm payrolls
• 3:00 p.m. – Treasury STRIPS

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Paul Ausick

Green Mountain’s partner in some products and competitor in others, Starbucks Corp. (NASDAQ: SBUX), isn’t getting beaten up too badly because its deal with Green Mountain isn’t critical to the Seattle-based giant. One stock that is getting beaten up is Coffee Holding Co. Inc. (NASDAQ: JVA), down about -12%. Coffee Holding Co. is one of Green Mountain’s main suppliers, not a good thing to be today.

Among the many issues Green Mountain listed in its earnings report last night was higher coffee prices. That seems a little disingenuous. Coffee prices today are hovering around $1.75/pound for Arabica, down from more than $3/pound just a year ago. Green Mountain must have bought a mountain of the stuff and saved it until now in order to be blaming coffee prices, which have been falling almost non-stop since a September peak at around $2.90/pound.

Green Mountain’s trading volume today tops 73 million shares, more than 13x average daily volume. Shares are down -49.4% at $25.08 after posting a new 52-week low of $24.40. The prior range was $39.42-$115.98. Coffee Holding Co. shares are down about -12.6% at $7.67 in a 52-week range of $5.63-$30.98. Volume is only slightly higher than normal.

Paul Ausick