(Reuters) - The second largest U.S. public pension fund said on Tuesday it plans to vote all of its Wal-Mart Stores Inc shares against the board in the wake of bribery allegations in Mexico that Wal-Mart officials failed to fully investigate.
California State Teachers' Retirement System, or CalSTRS, has already sued current and former Wal-Mart executives, saying allegations the company paid millions of dollars of bribes in Mexico and a cover-up by Wal-Mart officials raised the question of whether top executives should remain in place.
The allegations "indicate a breakdown of corporate governance and lack of oversight that should have averted this situation," CalSTRS said in a statement.
CalSTRs added it "does not have confidence the current board has the independence and leadership needed to address these difficult issues."
CalSTRS plans to vote its 5.3 million Wal-Mart shares against the re-election of all board members and encouraged other shareholders to do the same.
The $153.7 billion pension fund has said as an index investor, it is required to hold shares of the retailer, which is a component of the Dow Jones industrial average and many indexes.
Shares of Wal-Mart were up 0.8 percent at $63.53 in late-morning trading after rising to $63.55, their highest level in more than 10 years, earlier in the session.
LATEST GROUP TO GO AGAINST THE BOARD
CalSTRS is the latest shareholder to make its voting plans public ahead of Wal-Mart's June 1 shareholders' meeting.
The New York City Pension Funds, which hold 5.6 million Wal-Mart shares, are also opposed to the re-election of certain board members.
Proxy advisory firms have suggested shareholders vote against Chief Executive Michael Duke, former CEO Lee Scott and some other board nominees.
Institutional Shareholder Services, Glass Lewis & Co and Egan Jones made their recommendations after the New York Times reported that Wal-Mart failed to fully investigate allegations in the last decade of widespread bribery by company officials in Mexico, a key foreign market.
Scott was CEO during the period of the alleged bribery and Duke was head of Wal-Mart International when the allegations at Wal-Mart de Mexico, or Walmex
Institutional Shareholder Services, the largest proxy adviser, recommended votes against Duke, Scott, Chairman Robson Walton and Christopher Williams, who is chairman of the board's audit committee.
Glass Lewis recommended shareholders vote against Scott, Duke and Williams, as well as Aida Alvarez, Michele Burns, James Cash and Arne Sorenson. It said Williams, Alvarez, Burns, Cash and Sorenson served on the audit committee when there was a failure to fully investigate the bribery allegations.
Egan Jones recommended shareholders withhold votes for Duke and Scott.
(Reporting by Jessica Wohl in Chicago; editing by Gerald E. McCormick and Jeffrey Benkoe)
