If you care about ethics, sell your Wal-Mart shares

by James & Miel on April 14, 2007 · 0 comments

Like most people interested in personal finance, you’re probably focused on keeping tabs on your investments. If you own any shares in the Wal-Mart (WMT) corporation, either directly or indirectly, you should be keep yourself informed about your company’s conduct.

This posting is about the implications of the Wal-Mart spying scandal. If you have been following the story, Wal-Mart has been implicated in engaging in ongoing surveillance of its employees, its company officers, its suppliers, its critics, and its shareholders. While this is not the first time Wal-Mart has gotten in trouble because of surveillance, in recent years Wal-Mart’s security efforts have become more aggressive under the leadership of CEO H. Lee Scott and security chief Kenneth H. Senser.

The timing of these revelations is bad for Wal-Mart. Since Lee Scott took over the company’s mangement, there have been increasing concerns about declining profits and worries that Wal-Mart has been underperforming relative to its rival, Target Corp (TGT). The company has additionally been receiving negative publicity due to the ongoing tainted pet food scandal. In short, Wal-Mart has been implicated in big time spying, has been showing signs of slowing growth and is getting a bad rap in the media.

Make no mistake. The slowing growth is not Wal-Mart’s problem. Wal-Mart’s problem is disrespect of its shareholders. While it may be justifiable to survey one’s workers it is never acceptable to spy on shareholders. This shows a profound disregard for the fundamental basis of capitalism: provision of profits to owners. Not only has Wal-Mart’s management failed to provide adequate returns, their response to ownership complaints is investigation and character assassination.

Wal-Mart is not and never will be a part of my portfolio. If you care about ethics in the companies you own, you’ll vote with your feet also.

Best,

James Carl Hendrickson



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