Wal-Mart announces
new employee plan

updated 1:19 p.m. ET June 4, 2004

FAYETTEVILLE, Ark. - Wal-Mart Stores Inc., facing lawsuits for alleged gender bias and unfair treatment of workers, will cut top executives’ bonuses if the company does not meet its diversity goals, as part of an initiative to improve work conditions, its top executive announced Friday.

Chief executive Lee Scott said the company also is using its computer systems to help ensure that cashiers, other hourly workers and managers take their required breaks.

Scott told employees and shareholders at the company’s annual meeting here that bonuses, including his own, would be cut up to 7.5 percent this year and 15 percent next year if the company does not promote women and minorities in proportion to the number that apply for management positions.

“If 50 percent of the people applying for the job of store manager are women, we will work to make sure that 50 percent of the people receiving those jobs are women,” Scott said.

In 2003 that the company exceeded that goal, he said.

Scott said the financial penalty for executives shows Wal-Mart is serious.

“This is not something where we stand on the stage and we say we’re going to try,” he said.

Wal-Mart, the world’s largest retailer, is being sued for allegedly not paying employees for overtime and for alleged gender bias.

Scott complained about the criticism that has been heaped on the company in the last couple of years but said the glare of the spotlight has helped the company function better.

Wal-Mart created a compliance office this year that now has 140 people working to ensure the company follows the rules and its own procedures. Scott said the office is working to make daily improvements in how workers are treated. None of the individual programs undertaken by the office will be major, but Scott said that, taken together, the changes will mark “major progress” in the relationship between Wal-Mart and its workers.

Scott said the pay structure for employees was being changed, but no one will take a pay cut. He said some workers will be paid more, but did not elaborate.

Also, a new procedure will have workers approve any changes to their time sheets.

Tom Coughlin, Wal-Mart executive vice president in charge of the Wal-Mart and Sam’s Club divisions, also complained about critical news coverage and thanked employees who “hung in there.”

“The fact of the matter is we do need to tell our story better,” Coughlin said. He pointed out that the company spends nearly $40 billion on food produced in the United States and that Wal-Mart’s aggressive expansion has created 40,000 construction jobs.

Chief financial officer Tom Schoewe told the crowd packed into the 19,000-seat Walton Arena that last fiscal year’s 11.6 percent sales increase came about while the company rolled back prices to the tune of $12 billion. Wal-Mart is the world’s largest company as measured by sales, with $256 billion last year.

He said the company’s running goal is for profit to grow faster than sales, and profits increased 13.3 percent last year.

The company has 1.5 million workers in the United States and abroad. Domestically, Wal-Mart has 3,578 discount stores, Supercenters, Sam’s Club warehouse stores and Neighborhood Market stand-alone grocery stores.

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