Wal-Mart named Doug McMillion CEO on Nov. 25, 2013
BENTONVILLE, Ark. - Wal-Mart Stores replaced CEO and President Mike Duke and named Doug McMillon as its new leader after a rough period for the world's largest retailer in which it became embroiled in a bribery scandal.
The 63-year-old Duke will stay on as chairman and advise McMillon for a year.
The appointment of McMillon, 47, is effective Feb. 1, 2014. He was previously CEO of Walmart International and will join the company's board of directors immediately.
The announcement came just days before the kickoff of the holiday shopping season.
Wal-Mart shares rose 58 cents to $80.39 in morning trading Monday.
Wal-Mart paid bribes in Mexico to speed building permits and gain other favors, The New York Times reported last year. After starting an internal investigation into the allegations, senior Wal-Mart officials halted the probe in 2006 despite having found lots of evidence, the newspaper said.
After initially denying that company directors knew of the bribes paid to Mexican officials, e-mails released earlier this year by U.S. lawmakers appeared to show that Wal-Mart CEO Mike Duke learned about the payments as early as 2005. In May, a U.S. judge ordered Wal-Mart attorneys to turn over more documents to shareholders trying to find out what, and when, directors knew about the Mexico payments.
The U.S. Department of Justice and the Securities and Exchange Commission are investigating potential evidence of bribery, Wal-Mart disclosed in a Nov. 2012 regulatory filing. The company widened its internal examination of the issue to include "a number of foreign markets where we operate, including but not limited to Brazil, China and India," the filing also stated.
The bribery allegations erupted three years after McMillon's January 2009 appointment as chief of Wal-Mart International, the company's second largest operating segment. He succeeded Duke in that post as well. However, McMillon was running Wal-Mart's U.S.-based Sam's Club segment during the years The New York Times identified as the period with evidence of potential bribery payments in Mexico.
The U.S. Foreign Corrupt Practices Act makes it unlawful for certain companies and other entities to pay foreign government officials for help in obtaining or retaining business.
"Doug McMillon is the head of international, so if the Mexico bribery thing were such a big deal he wouldn't be the CEO now," said Sucharita Mulpuru-Kodali, a retail analyst at Forrester Research.
Wal-Mart's international growth has been "pretty astounding," in recent years, irrespective of the impact of alleged bribes in Mexico, she added.
During a Wal-Mart meeting with investors last month, McMillon said the company now has a chief compliance officer and anti-corruption leader in each market around the world.
"One of the things we're doing right now as we speak is making sure that we've got all the right resources to make this a world class compliance effort within Wal-Mart," he said. "We've hired new people and we've realigned people into this global structure. And we now have through those efforts over 1,000 people that work full time on compliance."
McMillon is a Wal-Mart insider, having started his career with the company as a summer associate in a Walmart distribution center in 1984. That status may have given him a better shot at the top job, versus Bill Simon, who runs Walmart U.S.
"Bill Simon was more of an outsider," Mulpuru said. "It was going to be one of them."
Indeed, the change in CEOs may not result in big strategy shifts, according to a statement from Rob Walton, chairman of Walmart's board and a member of the company's founding family which still owns a lot of stock in the retail behemoth.
"The company has the right strategy to serve the changing customer around the world, and Doug has been actively involved in this process," Walton said.