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A view of the industry through the eyes of a chain buyer.

Wal-Mart in the News

Charity work, legal hassles, an irate ad, and money.

by Mike Hartnett (May 2, 2005)

(Comment: There is so much in the media these days about Wal-Mart, it could easily fill 10 newsletters, so here's a digest-version of the highlights, plus comments in response to the CLN articles, "So, Is Wal-Mart the Bad Guy?".

Wal-Mart helping the poor.

Wal-Mart has been a good friend in several ways to Friendship House, the United Way social agency that I manage in a poor section of Peoria, IL.

Friendship House was adopted by an area Wal-Mart Superstore and was one of several United Way agencies that received a $1,000 check as part of its grand opening ceremonies.

As part of the company's Good Works program, Wal-Mart employees faithfully work one Sunday each month in the Friendship House soup kitchen, and those accumulated volunteer hours are translated into a cash donation each quarter by Wal-Mart headquarters � another $3,000/year.

Finally, starting this month, we will benefit from a program that partners a marketing company for our local newspaper with a non-profit agency. Friendship House will have seven dates at each of the nine area Wal-Marts to sell trial discount subscriptions to the newspaper � and Friendship House receives a percentage of the sales. The work is done by the marketing firm, but we will have volunteers and our literature available. If past performance is any guide, we could earn as much as $5,000 from this program.

And Friendship House is just one small agency. � Barbara Hartnett, Friendship House, Peoria, IL

(Comment: Wal-Mart recently announced that its donations and fund-raising efforts on behalf of the Children's Miracle Network over the past 18 years has now surpassed $300 million. The money directly benefits 170 children's hospitals.)

Turning the U.S. into a company town.

As for Wal Mart, it's a 6000-lb. gorilla that is growing every day. Good for the zoo if it attracts lots of visitors. But what happens to all the other animals in the cage?

Wal-Mart likes to crow about how many jobs they create, but what about all the U.S. manufacturing jobs they have caused to be eliminated by forcing companies to go overseas to have product manufactured? You notice you do not see their "Made in the U.S." campaign anymore.

Also, $10 is not a livable wage in most parts of the country, especially when they keep saying "AVERAGE" wage. Whose wages are included in the average � store managers, district managers, company president? The other thing they do not like to talk about is what percentage of workers they provide with health care. If they had to provide health care for all their employees, then what would be their prices?

By putting manufacturers out of business, and only paying $10 or less to about 90% of their employees, they are creating a society that can only shop at Wal-Mart. It's like the old company store days of the early 20th century and that ain't good. � Larry Olliges, Dee's Crafts.

Joining forces against Wal-Mart.

The Center for Community and Corporate Ethics took out a full-page ad in the New York Times accusing Wal-Mart of costing taxpayers $1.6 billion a year because its low wages and benefits force employees to seek government aid in the form of Medicaid, food stamps, and housing assistance, Reuters reported.

The Center's board consists of members of the Sierra Club, the National Partnership for Women & Families, and Common Cause and runs a website, www.walmartwatch.com. The Center was launched with initial funding from the Service Employees International Union.

"This is just one more example of labor unions playing fast and loose with the facts in an attempt to discredit Wal-Mart," Wal-Mart spokeswoman Mona Williams told Dow Jones News. "We don't know where they got these numbers. And most sources they cite are from dubious studies they commissioned."

The Times ad said the Center would mail sample legislation to elected officials showing them "how they can pass laws to put the brakes on Wal-Mart."

Coughlin investigation continues.

A federal grand jury is now reviewing allegations that former vice chair Tom Coughlin misspent as much as $500,000, some of it allegedly for anti-union activity, the Associated Press reported.

Wal-Mart spokesman Marty Heires told the AP the company can't comment because of the grand jury involvement, but "we have committed fully to cooperate with the federal authorities, and we're doing that."

Wal-Mart also has suspended $4.1 million in compensation to Coughlin, who at one time oversaw the operations of Wal-Mart stores and Sam�s Club wholesale clubs. Coughlin's attorney has denied any wrongdoing and implied a potential lawsuit against the company.

The compensation was part of an unusual retirement package that included a non-compete clause which barred Coughlin from speaking about Wal-Mart�s business practices with just about every major U.S. retailer.

Whistle-blower wants to be rehired.

Jared Bowen, a former vice president and assistant to Thomas Coughlin, claims he was fired for alerting officials about Coughlin's alleged improprieties, and he wants his job back. He's bringing his case to the Wal-Mart board of directors and wants the company's senior officials to stay out of the decision making process, reports the Arkansas Democratic Gazette.

Wal-Mart spokeswoman Mona Williams told the Associated Press that Bowen had not been "forthcoming" with company officials when they looked into the spending. "He admitted during interviews he had approved transactions that violated company policy and then remained silent for months rather than step forward," Williams said. "Our investigation was initiated after another associate provided information related to Mr. Coughlin's use of gift cards." Williams added.

If Bowen is not rehired, his lawyer told the Gazette he will sue the retailer under the federal Sarbanes-Oxley Act, which protects whistle-blowers from termination and was passed in 2002 as a result of the scandals involving Enron and other large corporations. The Sarbanes-Oxley Act also includes criminal penalties � up to 10 years in prison or a $1 million fine, the Gazette reported.

Everything is relative.

CEO Lee Scott is not among the highest paid CEOs in the U.S., when you compare compensation to a company's revenue or profit. In fact, the poor guy's total compensation dropped almost 24% last year, according to reports Wal-Mart filed with the SEC.

Nevertheless, it still totaled $17.5 million. And that is 871 times more than the average of full-time Wal-Mart employees, and as much as 50,000 times as much as Chinese workers, according to Political Affairs.Net. Visit www.politicalaffairs.net/article/articleview/976/1/32/

(Note: To read previous Business-Wise columns, click on the titles in the right-hand column. To add your thoughts � on or off the record � about Wal-Mart or any other industry issue, email them to mike@clnonline.com.)

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