Wal-Mart says sorry, this time to shareholders

NEW YORK (CNNMoney.com) -- Wal-Mart apologized Thursday for considering some shareholder groups as potential "threats" after they submitted proxy proposals ahead of the retailer's annual meeting in June.

Wal-Mart spokesman John Simley, referring to an internal company memo that described "background research" being conducted on shareholder groups as a "threat assessment," told CNN that Wal-Mart made a "poor choice of words."

The Wall Street Journal, which first reported the story, cited the internal company memo in which Wal-Mart (Charts) official asked that its internal security groups "do some preliminary background work on the potential threat assessment for the annual shareholders meeting," listing the submitted proposals.

"We felt it was important to make ourselves available for any questions they might have" and were offering "an apology and an explanation," a Wal-Mart spokesman was quoted as saying by the paper. He said "to the best of our knowledge [the company's internal-security groups] hadn't done any research" on the shareholders.

The report also said the Wal-Mart official cautioned that the company's efforts to forestall some of the petitions "can create a potential for a negative reaction from the shareholder group that submitted the proposal."

Wal-Mart spokeswoman Sarah Clark confirmed to CNNMoney.com that the company had called the shareholders. "We wanted to let them know that we didn't consider any of them as threats," she said.

Clark said it was Wal-Mart's standard business practice to conduct surveillance activities ahead of its annual meeting "to prevent disruptions." Clark said that none of the surveillance work was illegal.

"We have 20,000 people in attendance at our annual meeting and it's our responsibility to provide physical security for our corporate events and for our executives. Unfortunately we have protestors and other people who come to the meeting and they don't have the best intentions," she said.

The Free Enterprise Action Fund - a conservative activist mutual fund that submitted a proposal that Wal-Mart report on its efforts to promote the "social benefits of business" was among shareholders the company evaluated as a "potential threat" in response to the petitions, the Journal story said.

Steven Milloy, general manager of Action Fund Management, which operates the approximately $11 million fund, told the paper that he wanted to "see what they collected and make our own assessment" of the information.

This latest embarrassment for Wal-Mart comes a day after the Journal reported that a former Wal-Mart worker said he was part of a large surveillance operation that included snooping on employees, stockholders and others.

Security worker Bruce Gabbard was fired last month after 19 years with the retailer for intercepting phone calls from a reporter with the New York Times, the paper said.

Wal-Mart apologized to the Times over the incident and said the recorded conversations were unauthorized.

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