The pension plan, the California State Teachers’ Retirement System, owns about 5.3 million shares in Wal-Mart, worth about $313 million. Although that is a small stake — far less than 1 percent — the suit was filed on behalf of Wal-Mart itself against people the pension plan identified as having failed in their duties to the company.
The suit names the company’s board and several current or former executives or board members as defendants.
The type of lawsuit, called a derivative suit, is not uncommon after accusations of corporate misdeeds. But the pension plan, known as CalSTRS, has never brought such a lawsuit before.
The suit, filed in Delaware, asks that damages from the result of any violations be awarded to Wal-Mart, and that the company reform and improve its corporate governance and internal procedures.
“The severity of this occurrence demands that shareholders step in the role of the board, and act essentially in their stead, to protect the interests of shareholders,” said Jack Ehnes, the pension fund’s chief executive. James D. Cox, a professor of law at Duke Law School, said the suit would probably prompt other lawsuits from small investors. “There’s a lot of piling on in derivative suits,” he said.
Since derivative suits ask that damages be returned to the company, there is not usually a great monetary reward for plaintiffs. But Mr. Cox said a company settling such a suit would often agree to cover plaintiffs’ lawyers’ fees, which can be significant.
Mr. Ehnes of CalSTRS said the fund had not collaborated with other shareholders regarding the lawsuit, but given pension funds’ active involvement with Wal-Mart, he expected a “boisterous” period to follow.
“Our connection to this stems from ensuring that there is a responsible board of directors representing our interests day in and day out, overseeing compliance, overseeing a code of ethics,” he said. “We all need to understand what was going on in the boardroom, and what was going on in the corporate culture.”
A Wal-Mart spokesman, Greg Rossiter, said the company took its responsibility to shareholders seriously, adding, “We are reviewing the lawsuit closely and are thoroughly investigating the issues that have been raised.”
The charges in the suit are largely based on an article published in The New York Times last month that disclosed that Wal-Mart investigators had found credible evidence that the Mexican subsidiary bribed officials in Mexico and that executives at corporate headquarters in Arkansas subsequently shut down the investigation.
The suit is apparently the first by a big, established institutional investor after the bribery accusations. Earlier, leaders of New York City’s pension funds said they would vote their shares against the five directors standing for re-election at the company’s shareholder meeting in June.
Activist pension funds occasionally use derivative suits to compel corporate governance changes — for example, a Massachusetts pension fund filed a derivative suit against Hewlett-Packard in 2010.
But CalSTRS prefers to meet with management rather than bringing suits, Mr. Ehnes said.
Indeed, “it’s unusual that CalSTRS would bring something like this — it signals that they’re very upset,” said Charles M. Elson, a professor specializing in corporate governance at the University of Delaware. “For Wal-Mart, it’s a problem.”
Mr. Cox, the law professor, said that Wal-Mart and the pension fund would grapple next with whether any board members were sufficiently independent to evaluate whether to dismiss or pursue a suit against directors and management. CalSTRS argues in the suit that most of the directors have conflicts of interest that would prevent them from making an unbiased decision.
In a case like this, Mr. Cox said, he expected that “Wal-Mart will find two or three of these directors who are looked at as more holy than the others,” and “set up a special committee that will speak for the company.”
Special committees generally find that the derivative suit ought to be dismissed, he said.
The New York Times reported last month that some Wal-Mart executives, in 2005 and 2006, knew about the bribery accusations and chose to ignore them. It is not clear whether Wal-Mart’s directors were made aware of the accusations.
Since late 2011, Justice Department prosecutors have been monitoring Wal-Mart’s internal investigation of the bribery accusations. Wal-Mart informed the Justice Department after learning of The Times’s reporting. Officials of the Securities and Exchange Commission have also met with Wal-Mart officials about the matter.
Under the Foreign Corrupt Practices Act, American companies are prohibited from bribing foreign officials.
There are also multiple investigations under way in Mexico.
The lawsuit names all of Wal-Mart’s current directors, along with several executives and some former board members and executives. They include Michael T. Duke, Wal-Mart’s chief executive and a board member; H. Lee Scott Jr., also a board member and Mr. Duke’s predecessor as chief executive; Eduardo Castro-Wright, vice chairman of Wal-Mart, and Thomas A. Mars, chief administrative officer.
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