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Judge refuses to halt Wal-Mart proxy distribution

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POSTED April 11, 2014 8:11 p.m.

WILMINGTON, Del. (AP) — A federal judge in Delaware refused on Friday to issue an injunction prohibiting Wal-Mart from sending its annual proxy statement to shareholders because it doesn’t include a Manhattan church parish’s proposal for a shareholder vote involving gun sales.

The Episcopal parish that includes Trinity Church on Wall Street wanted shareholders to vote at their June 6 annual meeting on whether the board of Wal-Mart Stores Inc. should oversee the formulation and implementation of policies and standards that determine whether the company should sell products considered especially dangerous, harmful to Wal-Mart’s reputation, or offensive to community and family values.

The proposal was aimed particularly at sales of guns with magazines holding more than 10 rounds.

Wal-Mart argued that it was not required to include the proposal in its proxy statement because it deals with ordinary business operations that are functions of management. A Securities and Exchange Commission staff attorney accepted that argument last month and said no enforcement action would be recommended if Wal-Mart excluded the proposal from its proxy, which will be sent to shareholders later this month.

The parish argued that its proposal met the requirements for inclusion in the proxy because it involved matters of corporate governance and social policy.

But U.S. District Court Judge Leonard Stark denied the parish’s request for an injunction and temporary restraining order, saying some deference to the SEC’s expertise in such matters was warranted, and that the parish was not likely to succeed in arguing in court that the SEC’s determination was erroneous.

“The proposal here deals with guns on the shelves and not guns in society,” Stark said, echoing arguments made by Wal-Mart attorney Adam Offenhartz.

Offenhartz noted that the parish, which he described as a “savvy, sophisticated investor” with $2 billion in assets, made a conscious decision to try to force Wal-Mart to include the proposal in its proxy, rather than going directly to shareholders with its own proxy solicitation and avoiding SEC review.

“This is about what Wal-Mart will buy from suppliers ... and what it will sell,” he said.

Joel Friedlander, an attorney for the parish, said it was not asking Wal-Mart to adopt any particular policy or demanding that the giant retailer not sell guns.

“There is no micromanagement,” Friedlander said, adding that the SEC previously has said shareholder proposals that relate to ordinary business functions can be included in a proxy if they are primarily focused on significant social policy issues.

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