View Comptroller’s letter to Wal-Mart

New York, NY -- New York City Comptroller William C. Thompson, Jr., on behalf of the New York City Pension Funds, has demanded that Wal-Mart Stores, Inc. turn over specified books and records so he can determine whether the company conducted threat assessments or illegal surveillance of shareholders who submitted shareholder proposals to the company.

Invoking Delaware law (8 Del. C. Sec. 220) governing a corporation, such as Wal-Mart, incorporated in Delaware, the Comptroller wrote to Executive Vice President and Corporate Secretary Thomas D. Hyde:

“The Funds wish to determine the status of Wal-Mart’s, the Board’s or management’s efforts to investigate, collect information concerning, perform a threat assessment of, or perform surveillance of, the proponent of any shareholder proposal submitted for inclusion in the Company’s proxy materials.”

The Comptroller’s letter continued: “It is of vital importance to the Funds and to other Wal-Mart shareholders that there be full disclosure of all books and records relating to these matters. Any such attempts by Wal-Mart or its management to discourage shareholders’ free and uncoerced exercise of their voting franchise would constitute mismanagement, waste and/or illegality.”

Thompson submitted his letter to Wal-Mart on behalf of the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund, the New York City Fire Department Pension Fund, and the New York City Board of Education Retirement System.

You can view the letter at www.comptroller.nyc.gov.

The Comptroller serves as Investment Advisor and Custodian of assets to the Funds, and as a Trustee of four of the five Funds. The Funds hold 7,584,786 shares worth over $360 million in the Bentonville, AR-based company.

As was reported in The Wall Street Journal on April 4, Thompson’s office, among others, was apparently subject by Wal-Mart to surveillance and “threat assessments” related to shareholder proposals. Thompson on April 9 wrote to Deputy U.S. Attorney General Paul J. McNulty, and Christopher Cox, the Chairman of the Securities and Exchange Commission, labeled Wal-Mart’s reported activities “chilling and truly outrageous,” and called upon the AG’s office to “thoroughly investigate whether Wal-Mart’s conduct was, and continues to be, illegal.”

Wal-Mart denied that any surveillance or threat assessments took place.

Meanwhile, the SEC referred the matter to its regional office to determine whether an investigation is in order. But in a letter to Thompson, Cox wrote: “The right of shareholders to propose appropriate matters for consideration at an annual meeting is an indispensable element of the federal securities laws we administer at the SEC. Attempts by company fiduciaries to intimidate shareholders exercising these rights are antithetical to the core principles of corporate governance and the full and appropriate expression of shareholder rights and should be roundly condemned.” (Emphasis added).

Thompson demanded to see all books and records relating to Wal-Mart’s efforts over the past five years to “investigate, collect information concerning, perform a threat assessment of, or perform surveillance of, the Comptroller or the Funds or any other person or entity, in response to their submission of shareholder proposals to Wal-Mart.”

Thompson’s demand calls for all paper or electronic records – including memoranda, letters, reports, e-mails, transcripts, statements, instant messages, Word files, database records, electronic search results, spreadsheets, pdf’s, audio or video recordings, or photographs.

“The Funds have a credible basis to believe that certain employees, directors or agents of Wal-Mart have improperly expended corporate assets in connection with conducting surveillance, investigations or ‘threat assessments’ of proponents of shareholder proposals, including the Funds and the Comptroller,” Thompson wrote.

Additionally, Thompson and the Funds want to inform other Wal-Mart stockholders of any information concerning illegal activities, communicate with Wal-Mart directors, and consider whether to submit shareholder proposals to the Company relating to these issues.

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