Wal-Mart CEO Stepping Down After 9 Years

H. Lee Scott steps down this weekend as CEO of Wal-Mart. He's been the head of the world's largest retailer for nine years. When Scott took over Wal-Mart back in 2000, the company was under attack for low wages, the lack of health insurance for many workers and its seeming indifference to its impact on the environment.

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It's Morning Edition from NPR News. Good morning. I'm Renee Montagne. And tomorrow, one of the most powerful men in corporate America steps down.

(Soundbite of speech)

Mr. H. LEE SCOTT (President and Chief Executive Officer, Wal-Mart): When people say, what do you want your legacy to be, I, you know, I started out as assistant manager of the truck fleet. I don't give a lot of thought to legacy.

MONTAGNE: For the last nine years, H. Lee Scott has run the world's biggest retail.

(Soundbite of Wal-Mart advertisement)

(Soundbite of music)

Unidentified Announcer: Life can be pricey. Wal-Mart isn't.

MONTAGNE: When Lee Scott took over Wal-Mart back in 2000, the company was under attack for its low wages, its lack of health insurance for many workers, and its seeming indifference to its impact on the environment. Wal-Mart was vilified and demonized. Still, CEO Lee Scott grew and grew the company.

Mr. CHARLES FISHMAN (Author, "The Wal-Mart Effect"): During Lee Scott's tenure, the sales at Wal-Mart have more than doubled, from $166 billion to what will be $400 billion this year. The number of stores outside the U.S. has gone from fewer than 1,000 to 3,500.

MONTAGNE: Charles Fishman wrote the book "The Wal-Mart Effect."

Mr. FISHMAN: Sixty-five percent of Americans live within five miles of a Wal-Mart. Ninety-four percent of Americans live within 15 miles of a Wal-Mart. Even if you don't shop at Wal-Mart, wherever you shop, that store is competing with Wal-Mart. So, there's no question that Wal-Mart itself touches the life of every single American, every day.

MONTAGNE: Even if Americans have barely heard the name Lee Scott. It's not a name that trips off the tongue. Most people don't really know much about him.

Mr. FISHMAN: Right. Wal-Mart is fairly faceless, and I think for a long time, that was purposeful. I guess people knew who Sam Walton was. But Lee Scott himself, I think, has been a very effective leader inside the company. He has changed the way the company thinks about itself and relates to the world. Wal-Mart was so insular when Lee Scott took over. They essentially did not talk to reporters; they did not have a Washington lobbying office. And he actually listened to the criticism and instead of bunkering in, which has been Wal-Mart's practice for 40 years, and ignoring the criticism - covering their ears and just building new stores - he actually had the wherewithal to stop and say, well, maybe if we can turn down the screaming, there might actually be something there for us to learn from.

Mr. FRED KRUPP (Former President, Environmental Defense Fund): You know, it's probably a little bit of an overblown analogy, but I almost think of Lee Scott as a Gorbachev leading glasnost, because Lee was this figure that opened Wal-Mart's walls up to the outside and changed how they did business.

MONTAGNE: That's Fred Krupp; he was once among the fiercest critics of Wal-Mart, as head of the group the Environmental Defense Fund. That's past tense, because he now works closely with the giant retailer, and therein lies an interesting tale about Lee Scott. A couple of years ago, the CEO joined the environmentalist on a trip to the white mountains of New Hampshire. Lee Scott wanted to learn about climate change. What he learned moved Scott to throw his company's weight behind energy-efficient compact fluorescent light bulbs. That was the beginning of Wal-Mart's shift towards becoming a greener corporation.

(Soundbite of Wal-Mart advertisement)

(Soundbite of music)

Unidentified Woman: This is a GE compact fluorescent light bulb. Didn't cost a lot because I got it at Wal-Mart. It can save me $47 in electricity costs...

MONTAGNE: Lee Scott also realized he could make money selling affordable energy-saving products, and by cutting energy costs inside his own company. After 30 years at Wal-Mart, he wasn't about to change Sam Walton's focus on keeping prices and costs low. In a recent speech, Lee Scott recalled one manager's meeting with his old boss and company founder, Sam Walton.

(Soundbite of speech)

Mr. SCOTT: And he'd get around that room and he looked at me, and he said, Scott - so, you knew it was coming - what in the world happened to your driver uniform costs this month? Normally, it was $1,000, it was $1,500. Five hundred - this a billion-dollar company, and he managed the details of that business.

MONTAGNE: Lee Scott is still beholden to Walton family members who control the board, and that's why Andy Stern, head of the Service Employees International Union, continues to wage war with the company over pay and health insurance. So, while environmentalist Fred Krupp describes Scott as a transformative leader, Stern believes he missed his chance for greatness.

Mr. ANDY STERN (President, Service Employees International Union): Where Lee Scott never really came out of his Arkansas background to appreciate is, the leader of the largest private-sector company in the world has an opportunity and an ability to set a different standard in the marketplace. And he chose to keep making his $15,000 an hour, and kept those workers at $10.68 an hour. And if he had said, I am going to share more, I'm going to have a different business model - and I think that is the missing link for Lee Scott's greatness.

MONTAGNE: As for the CEO himself, a couple of weeks ago, Lee Scott had this to say about his departure.

Mr. SCOTT: I want to be able to walk out of my office on the 31st of January, I want to turn out the light, and be able to believe that Sam Walton would be proud of what myself and my team accomplished.

Mr. FISHMAN: Sam Walton would have to rub his eyes many times to try and understand the company that he left behind just 16 years ago. It's 10 times the size it was then. There was one overseas store when he died. Overseas sales are now twice what the whole company was when he died. So, I'm sure Sam Walton would be proud. I think he'd be puzzled. I think he'd need a tour.

MONTAGNE: Author Charles Fishman.

Mr. FISHMAN: I think the question is, if the legacy that Lee Scott set in motion in the last three or four years really takes root inside Wal-Mart, I think we'll look back 15 years from now and say, Wal-Mart has become one of the most important sustainability forces in the country. So, his legacy remains unclear, but he has laid a really interesting foundation for a new agenda for Wal-Mart.

MONTAGNE: Lee Scott steps down tomorrow and on Monday, Wal-Mart's new CEO will be another little-known company insider, Mike Duke. He's been running Wal-Mart's international operations. That's a division of the company that barely existed when Lee Scott took over, but is now seen as critical to the future of Wal-Mart.

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