Did Wal-Mart Have a Brain Seizure and Go All HP on Its Stockholders?

Could it really be that one of the world’s most scrutinized – and criticized – companies copied the tragi-comic escapades that earned Hewlett-Packard 2006 “PR Disaster of the Year” dishonors?

The Wall Street Journal reported earlier this month that New York City comptroller William Thompson has sent letters to the U.S. Attorney General’s office and the SEC asking for an investigation into Wal-Mart’s allegedly “ill-considered and possibly illegal surveillance operations.” Reports of “chilling and truly outrageous surveillance activities,” Thompson says, include spying on stockholders who have submitted contentious proposals for consideration at Wal-Mart’s annual shareholder meeting in June.

Did some senior-level exec at Wal-Mart lose all grip with reputational reality and begin channeling Patricia Dunn, or was this ill-conceived idea never seriously considered?

Wal-Mart says the idea of spying was raised in a memo but never acted upon.

In a letter to shareholders, Wal-Mart’s top legal adviser, Tom Hyde, denied that the company had initiated an intrusive "threat assessment" of shareholders who submitted proxy statement proposals, writing:

“In spite of a January 2007 memo referenced in the [WSJ] article, there were no inquiries made with respect to the proponents of shareholder proposals. Given the nature of the matters proposed and our familiarity with the individual proponents, the request contained in the memo was not acted upon.”

Note: Wal-Mart’s position on this issue is nowhere to be found on its website – only this lame non-statement.Walmart_facts_logo The excerpt of Hyde’s memo can be found on Wal-Mart Watch. I certainly would prefer to source from Wal-Mart directly but am hampered by the lack of transparency on its public website.

There will be no shortage of watchdog groups keeping the investigation under the hot spotlight of mass media and the blogosphere. No matter what explanation emerges, this story underscores the need for a Chief Reputation Officer at major corporations to steer executive decisions clear of reputational land mines.

- Jon Harmon

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