CEO’s Who Need to Leave: Wal-Mart’s Lee Scott

December 14, 2006 by Douglas A. McIntyre

Wal-Mart’s (WMT) Lee Scott……

Shareholder groups are becoming more and more activist-minded and this trend will continue in 2007.  Private Equity and LBO Groups can only acquire so many companies, and there are only so many candidates that can run behemoths.  The best way to see change is right at the top in many cases and there is a slew of US public companies that would do far better if they could replace current management.  These aren’t in any ranked order, so the first isn’t the worst and the last isn’t the best of the worst.  The problem in stating this is that it is very easy to come in and criticize, yet finding replacements for companies this size is not exactly an easy feat.  Private Equity as a sector has taken all the talented guys, and they haven’t stopped with the age limits that many public companies live by.  There just aren’t too many Lou Gerstner and Jack Welch carbon copies out there.

Wal-Mart’s (WMT) Lee Scott needs to be shown the back door and he needs to go spend a year in meditation under the Dalai Lama.  He was even in more of the same position last year, but this is still the truth about him today.  He has actually tried to convey a funnier and more personable Lee Scott in 2006, but he is tainted and he just has the air of a guy that would not think for even a second about having a conscience over any corporate or personal decisions he made.  If anyone asked who in Corporate America most resembles Darth Vader, it would probably be Lee Scott.  He doesn’t come across as poorly in the media as he used to like an angry and defensive guy without any cares, but if Wal-Mart decided to bring in a "feel good" CEO it would go a long way toward putting some fun back in the company.  The company just needs a face-person that looks happy and conveys a better message. 

Wal-Mart is no longer where people like to go.  They go because prices are cheap, even if the goods are cheap.  The lowering of same-store-sales sure makes one wonder if there is a chance that it will go the same way as Great Atlantic & Pacific Tea where they just have too many stores to effectively run.  The stores are in disarray and the customers themselves are already being called "the Wal-Mart bunch" by people who shop elsewhere.  The stock has lost its mojo and has been dead money as a stock.  All of this can be fixed with a new fresh face that is a feel good front-person.  Even if it is for show only, the company would be liked by the public better with a fresher and nicer face.  This call has NOTHING to do with being the face of outsourcing or anything like that.  In a free market economy Industry will chase cheap labor, always has and always will.  They just need someone that Sam Walton would have liked, now there’s a thought.  Maybe one of those billionaire Walton kids or grandkids could do the job.  This certainly will be a hard position to fill if it becomes vacant, but they should at least be considering this for a new year’s resolution.

Jon C. Ogg
December 14, 2006

This is part of "THE 10 CEO’s THAT NEED TO GO" series coming out today and tomorrow.  Jon Ogg can be reached at jonogg@247wallst.com; he does not hold securities in the companies he covers.