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Tavis: I'm pleased to have Lee Scott in the studio with us tonight here in Los Angeles. Mr. Scott is president and C.E.O. of Wal-Mart, a company that began as Sam Walton's dream with one small five-and-dime in the little town of Bentonville, Arkansas. I've been there. It is a small town. That was 1950. Today Wal-Mart is the world's largest company, and they still call Bentonville, Arkansas, home. As I mentioned just a moment ago and as a means of full disclosure, Wal-Mart, as you know, is a sponsor of this program. But as you no doubt know, Wal-Mart has made news, sometimes negative news of late, on a number of fronts over the past few months, and Mr. Scott has agreed to address these issues here tonight with us. Having said that, Lee Scott and Wal-Mart are clearly doing something right, because on the current list of America's most admired companies as ranked by 'Fortune' magazine' Wal-Mart is still number one. So, having said that, Lee Scott, nice to see you.

H. Lee Scott: Nice to see you.

Tavis: Can I shake your left hand?

Scott: Shake my left hand.

Tavis: Maybe that's the most important question of the evening. What happened?

Scott: Well--

Tavis: And how many times have you changed the story about what happened?

Scott: Actually, nothing happened. I've just done this to get some sympathy, so... My wife and I were fishing on Sunday, and I slipped and fell and broke my hand and so--but I didn't want to miss this interview.

Tavis: Well, I'm glad you are here, and as they say, the game must go on--the show must go on. So I'm glad you're here. Let me start--I mentioned a moment ago--and this is no surprise to you, obviously--Wal-Mart has been taking some hits of late in the media, and I wanted to start with some e-mails, because one of the reasons why I asked you to come on--I'm delighted to have you here--I wanted you to come on because I, from time to time, get inundated with e-mail asking me why I'm in bed, so to speak, with Wal-Mart, why in the interest of the public trust on PBS and even my radio show on NPR, why am I in bed with this company, this evil empire Wal-Mart. Let me read a few e-mail and get your response to some of these. Here's an e-mail from a guy named Wayne in Los Angeles. "I think you have a very promising show, Tavis. What little I've seen of it has been interesting and entertaining. Unfortunately, I can no longer watch it for the simple reason that this show is associated with Wal-Mart, a corporation which is anticommunity." Another e-mail from a guy named Paul: "Tavis, when Wal-Mart touts its commitment to diversity in their promo spots on your show, don't you realize you're being played? They're using you as their little black pawn"--Didn't know I was a little black pawn, but anyway. Um, uh, "Little black pawn so they can get into our little black, brown, yellow, red pocketbooks." Another--"The fact that you have Wal-Mart as a sponsor, isn't that a conflict of interest, a company that has the lowest wage with no protection for its workers and has become a stable of greed no matter what their new commercials say?" So who's right, these 3 people who wrote these e-mails or 'Fortune' magazine--you guys really are an admired company?

Scott: I don't know if it's a matter of who's right or who's wrong. I would tell you that the people who wrote those e-mails, I would guess, do not know Wal-Mart. Certainly, we are a company that is made up of human beings, and as a company made up of human beings, we make mistakes, all of us, including Lee Scott, but in general, what I find, in the company I work for, is a company that you can be very proud of, a company that pays very competitive wages, a company that has benefits. I think one of them mentioned health benefits. We'll pay in the United States this year almost $2 billion in healthcare benefits to our associates, so I know as a fact that we have healthcare benefits. So, I think right now there's a lot out there that people look at and listen to without necessarily knowing Wal-Mart, and, you know, our company is really about stores and clubs. It's about people in those stores and clubs. And I think when people get to know the people in the stores, they tend to like 'em, and they like them being in their community, so I don't know.

Tavis: I want to talk more in a second here specifically about some of the allegations, some of the charges against Wal-Mart, and get that out of the way, 'cause I'm really interested in the business philosophy of Wal-Mart, but again, I'd be remiss if I didn't ask you and give you a chance to set the record straight to address some of these troubling stories of late. Before I get into more of those issues specifically, let me ask you why you think Wal-Mart, for better or worse, is such a lightning rod? Why is this company such an enigma to so many Americans? Why am I getting these e-mails in the first place?

Scott: You know, I don't know, because when I look at it, just the facts, you've got a million associates in the United States who work for us.

Tavis: And we should clarify for those who are watching this who don't know who you're referring to when you say "associates." At Wal-Mart--I happen to know this. You guys don't call employees "employees." They're called associates. So you're talking about the Wal-Mart staff.

Scott: So we have a million associates in this company. We have about 100 million customers a week who come through our doors. So, on one hand, you can talk about the criticisms, but you have this whole group of people who do, in fact, appreciate Wal-Mart and feel good about Wal-Mart. I think, in some ways, we're extraordinarily difficult to compete with because of our associates. The quality of merchandise, the pricing, the way we do logistics and systems and those things combine to create great value for working people who work so hard for a paycheck that they appreciate the company. I think that's hard if you're competing against that. I think it causes you to worry, 'How do I stop Wal-Mart if Wal-Mart is on the other corner and I can't compete with their prices or their merchandise. I can't compete with their associates and the morale of the team that's in that Wal-Mart store. How do I compete?' And maybe one way to compete is to say things that you believe would cause a reaction.

Tavis: Mm-hmm. How do you respond to some of these issues specifically now, if I might? How do you respond to folk who say that the reason why Wal-Mart is so difficult to compete against is because they pay their employees less money. They don't cover the sort of health benefits that other companies do. You know as well as I do that this recent grocery workers' strike that happened here in southern California where we sit was blamed on Wal-Mart. You know the logic. You know how the story went. The reason why the grocery workers go out on strike--because they want better benefits. The people who own the grocery store say, 'We can't give you more. We'd love to give you more. We can't give you more, because Wal-Mart is about to make a big push into southern California, and if we're gonna compete with Wal-Mart when they get here with these super centers, we can't give you what you're asking for,' so that Wal-Mart gets blamed for this grocery workers strike here, Wal-Mart gets blamed for putting mom-and-pops out of business when they come into a community. How do you respond to folk who say it is because you don't treat your employees with wage respect, with benefit respect, that you can keep those prices low and at that rate, nobody could ever compete with Wal-Mart?

Scott: Well, what I say is, you're wrong, absolutely wrong. If you look, how could you hire that many people if you weren't paying competitive wages? We opened a store, I guess it was last month, and I was just reading an article about it this week, where we had 5,000 applications for 500 jobs. You don't get 5,000 applications for 500 jobs if you're not paying a competitive wage. And like I said, we'll spend $2 billion, almost $2 billion this year on health benefits, so we have health benefits. So, you know, they're just not right. We have to pay competitive wages, or else we wouldn't be able to get associates to work in those stores.

Tavis: How much--To that point, how much of the hate, shall we say, how much of the hate that Wal-Mart gets do you think is based upon the fact that--I shouldn't say based upon the fact, but is undeserved because if, to your point, if you have 500 positions and there are 5,000 folk who show up, clearly these folk want to work.

Scott: They want to work.

Tavis: Clearly they want an opportunity, and clearly Wal-Mart is providing at least some opportunity for these people to work. Is it fair to blame Wal-Mart? And how bothered are you by being blamed for exploiting these people if, in fact, we have an economy that is in such bad shape that these folk show up in droves for 500 jobs?

Scott: Well, I don't know that the economy is in that bad a shape, Travis. I think--Tavis. Excuse me.

Tavis: Just don't call me late for dinner. You can call me anything else.

Scott: But I think one of the reasons those people line up is because of the opportunity. Something people don't talk about is that Wal-Mart, almost 70% of the management team started as hourly associates in the stores and the clubs and were promoted. This Baldwin Hills store right here in this neighborhood, we've been open a year there. We already have promoted 6 people from hourly associate into the management ranks. So people aren't just coming for the wage. They're coming for the opportunity that exists at Wal-Mart to work not only here in the U.S., but overseas or in the home office in Bentonville. It is small, but a lot of people do like living there. And so I think you underestimate it if you think people only come for whatever that starting wage is. I think they come for the opportunity in addition to making that living.

Tavis: Since you mentioned the Baldwin Hills store, there's a commercial here that you all are running that I want to play, because there are some questions I want to ask you specifically about it, but for those who are watching, the Baldwin Hills store happens to be a store in the inner city part of Los Angeles, specifically a black neighborhood. It's where I live and where my office is. I know the neighborhood quite well, and it's not just in inner city L.A., but you all are expanding into inner city Baltimore and into Milwaukee and into Philadelphia and Dallas and other places where you actually, you know, although Sam started it in the country, you guys are now taking your goods, taking your services, to the inner city. To that end, there's a commercial you're running specifically that features the Baldwin Hills store that you referenced. Let me run this commercial and there are a couple things I want to ask about if I might.

Scott: OK.

Woman: Here in this part of L.A., our community's been overlooked by a lot of organizations, but when Wal-Mart came in, they let us know that they care. Wal-Mart has revitalized this corner. They've moved into a building that had been empty for over 5 years. They've brought jobs to the community. They've given to a lot of the programs that help our youth.

Man: They've brought a sense of respect back to the area.

Woman: Wal-Mart has done so much for my community because they're here. We've got a new sense of hope.

Tavis: There's the commercial. I wanted to play that, because there are 2 schools of thought in the community, and I have some knowledge of this, because, as I mentioned a moment ago, I live and work right down the street. My office is a block from that particular store. And there's a huge debate in that community and just a couple miles up the street in a place called Inglewood because, in another African-American community, you all are building another major store.

Scott: Hoping to build.

Tavis: Hoping to build. Hoping to build. And I'm glad you said that, because there is a big controversy about that hope. And the controversy, as you well know, centers around this notion. There's one school of thought that says these inner city communities need people to come in to provide employment for people who are socially, politically, and certainly economically disenfranchised. Somebody needs to come in and give people in this community an opportunity to work and make a decent living. Enter Wal-Mart, as you see it, obviously. There's another school of thought that says that Wal-Mart is doing exactly what they ought not to be doing, which is going into these communities that are depressed and further exploiting the people who are there, and the labor unions are giving you guys hell for exploiting these workers, these would-be workers in these communities. Who's right? The labor unions, that you guys are exploiting these workers in the inner city or some of these folk in the community who are delighted to have Wal-Mart come and provide an opportunity?

Scott: Right or wrong, let me just give you an opinion. If you think about it, we have the same prices in that store as we do in Bentonville, Arkansas.

Tavis: OK. The same prices in Bentonville--

Scott: The same prices and merchandise.

Tavis: As are charged in Baldwin Hills.

Scott: In Baldwin Hills. So, first--And that's true in every store that we have, except where there's local competition and there's a price war on something. All the base prices are the same everywhere. So, first of all, let me assure you, we're not exploiting the customers in Baldwin Hills in any way. They're getting a great value. And what customer needs to save money more than the residents in Baldwin Hills who are working so hard for their money and they're trying to get a leg up, and we can provide quality merchandise at a great price? When we hired the people in that store, if you walked to that store, it seems to me those people ought to be the judge of whether or not they're being exploited, and if you walk in that store and you're greeted by that people greeter and the other people you see in the aisles, like when I went to the store, and I don't think it's because I'm the C.E.O. They're generally proud to be involved in this and to be working in that Wal-Mart store. I was walking through that store, and this elderly lady who was standing there beside this really tall young man, she stopped me--and I had a tie on that day--and she said, "Are you one of the bigshots?" I think is what she said, and I said, 'No, ma'am,' and she said, "Well, you're from their home office?" And I said yes. And she said, "My grandson just went to work here," and she said, "I am so proud. This is his first job. Teach him how to work." That's not exploiting people. I'm sorry that some people don't like us, but they better pick a different example than Baldwin Hills.

Tavis: But what--OK, so she's happy about her grandson, but what do you say to the person down the street, that mom-and-pop shop that's been around for 25, 30, 45, 50 years, a family-owned business that does, in fact, get pushed out because a Wal-Mart is on the scene now?

Scott: I don't know if they get pushed out or not. If you look at where Wal-Mart develops, we tend to have a lot of people who want to be around us whether it be the hair care place or the automotive store or whatever else, because there's lots of room for the personal service that smaller stores can give, where they can take care of their customers in a way that are different than what we can, different levels of customer service and knowledge, expertise, and those things. Ultimately it seems to me, Tavis, that the consumer determines what it is that should exist to serve them, and for us to say that, from a society standpoint, that what we want is for people to pay a premium, we want to not allow them to participate in merchandise they could otherwise afford because we have this view of what a neighborhood should look like. That's easy for you and I to say at the income levels we are, but when you make that decision for someone who's living paycheck to paycheck and you make a decision that says you should pay more for product because I want this area to look like what I remember it looking like in the fifties or the sixties, that's a big decision.

Tavis: Let me shift gears again. There's so many things I want to cover, and I'm glad you're here for the whole show. This story that made front page in 'The New York Times' and everybody was talking about some weeks ago about the locking in overnight of the workers. For those who don't know the story, Wal-Mart--and I don't want to put words in your mouth, but the way the story was framed--I want to hear from you, was that Wal-Mart routinely locks its employees in overnight. Now, in fairness to Wal-Mart, Wal-Mart is not the only company that locks employees in, if that's the phrase we're gonna use, overnight. The story is that you lock employees in overnight when they're doing their work because you don't want the employees, in laymen's terms, you don't want the employees--or the associates in your case--stealing stuff and running out to their car in the middle of the night. By the same token, you don't want folk breaking into the building overnight, stealing stuff. From inside or outside, you don't want stuff missing overnight. And I think that's fair. But it raised some serious questions about what happens to certain employees when they're locked in. It talked about employees who had gotten hurt who could not get out to get to the hospital. You saw the story as well as I did. Talk to me about what that whole issue is about with regard to the lock-in.

Scott: Well, first of all, we do have people in the store at night and we do lock the doors. Principally, it's a safety issue. The theft issue takes care of itself. That people are stealing from you generally becomes pretty well-known, and you can stop that if it's internal. But from a safety standpoint, if you have a closed store, you do not want the associates in there working and the general public being able to come in and have whatever problems that that would bring. So the idea is that you have a manager there with a key, and they're able to unlock those doors if there's an emergency. Now, what they were talking about is, 5 or 6 years ago, I think, in the research I did, first of all, the person they talked about who supposedly was hurt and waited 6 hours, our records show, and the hospital records show that that person actually left within 40 minutes of being hurt. The fire exits are always unblocked, so they can go out the fire exits, and they know that. So what we deal with today, on that issue, would really be the exception where you have a store manager, a club manager who's a knucklehead and makes a wrong decision--an exception. I don't think we have any of that going on right now, but that's our exposure. But our associates can leave that store. And there were a number of letters that came in after that of associates who wrote in and said, "I know I can leave that store any time I need to leave it." You can't--Wal-Mart, you know, is not going to put people in that building and not allow them to leave. So you just, I mean, you couldn't keep your associates if you did.

Tavis: As I sit here, engaged in this conversation with you, I'm looking at you, and you're just a human being. I suspect you're flawed and challenged like all the rest of us. I'm trying to understand how it is, as the C.E.O. of this humungous company, how do you manage this every day? How does one run the biggest company in the world every day and not just run it, but run it successfully? Whatever people may say or may think about Wal-Mart, you guys keep getting bigger and bigger and making more money and more money every year. That seems to me to not necessarily be an easy task.

Scott: Well, you don't run it. First of all, if you took my chair--

Tavis: But it doesn't run itself.

Scott: If you took my job and you said, 'I'm gonna run Wal-Mart,' you'd be a real frustrated individual.

Tavis: Yeah.

Scott: This is about stores, clubs, distribution centers. It's about people, and, you know, I'm not Bill Gates, Jack Welch, anyone like that. The strength that I have is having been at Wal-Mart for 25 years and understanding that our difference is our culture, and this whole thing is about empowerment. It is about allowing the store to do what the store needs to do to take care of their customers. It's not about oversupervising. When we went and walked stores this morning, we didn't go in and say, you need to fix this, you need to fix that. The idea is, 'What do we need to be doing differently? What are we not doing well for you at the store level?' And it makes it a lot easier. You just simply don't run it. You can lead it, and you can make sure we stay true to the culture and the things we believe in and that we have integrity in the company, because you know, when you read about Enron and WorldCom and all those people, you didn't read about Wal-Mart, because Sam Walton established a sense of integrity in the company that is the foundation.

Tavis: In terms of process, though, as this company has become so global and so big, how do you go about, process-wise, keeping that small -town Bentonville, Arkansas, feel if you will--never mind the size of this company--around the world?

Scott: I think it goes back to the same thing. It goes back to the culture where the C.E.O. at Wal-Mart is not the most important person in the company. It is about people at the local level. And so that makes it easier. You know, when you allow buyers to buy the right kind of thing and you don't oversupervise them, you hold people accountable, but you give them the ability to do what they need to do. And I think that's what makes it work. But it's true in Argentina. It's true in Brazil, in Germany, in the U.K., Mexico, Canada, wherever we are, the people in those countries, they run that company, not out of Bentonville, Arkansas.

Tavis: How much outsourcing do you guys do?

Scott: You know, I didn't think we did any, but I found out the other day through a very meanspirited e-mail--not quite as meanspirited as I thought those were--

Tavis: Yeah. Ha ha ha!

Scott: I found out that through our dot-com, that we have some kind of a relationship with a service provider, and through that, we have some people who represent Wal-Mart who are in India. That is the only one I know of as far as outsourcing, so, no, we do not. We have almost 2,000 programmers in Bentonville, Arkansas. We do all of our own systems. In fact, we run our worldwide systems out of Bentonville with those programmers, so we don't do outsourcing.

Tavis: What's your take on the economy, as we sit here today, this jobless recovery as it were?

Scott: You know, our business is good.

Tavis: Yeah.

Scott: And what we're seeing--When I say it's good, not just in toilet paper and laundry detergent and those things, but where we have good weather, we're seeing people buy across the planting area flowers and seed and potting soil, garden tools, barbecue grills, which usually is an indication that people are feeling pretty good about things and it's not just honed down to kind of the necessities of life. We're seeing apparel sales this spring are very good. But I think apparel looks better this year, so that may be a part of it. But our business is good, and that's what we've been reporting is that we're at the upper end of our expectations on sales, but I think our competitors are doing very well.

Tavis: I said, "Jobless recovery." Do you see this as a jobless recovery?

Scott: Oh, you're way beyond my expertise when you get into that.

Tavis: Oh, Lee, I know better. Tell me what, for you personally, what's the best thing and the most--I don't want to say the worst thing. The best thing and the most challenging thing about being the C.E.O. of Wal-Mart?

Scott: Oh, I--The best thing is clearly the people I work with. I work with a group of people that I don't have to worry about their integrity. When we do the books at the close of the month, I don't have to worry that somebody fudged the numbers. Now, I'll tell you, I still check. Ha ha ha!

Tavis: Ha ha ha! Just in case!

Scott: Just in case.

Tavis: Yeah! Ha ha ha!

Scott: But I don't have to worry about it. I like the people I work with, and I'm gonna tell you, there's nothing better, and I know this is gonna sound hokey, but there's nothing better than walking a Sam's Club or a Wal-Mart store and meeting the associates and talking to them about what they're doing and how they feel and where they came from. I just love it. Uh, the worst thing probably is, in this job as C.E.O. in today--I kind of missed the imperial C.E.O. time--is probably just the demands it has in taking away from your family. We have a granddaughter that's about 2 years old, and probably spending more time with my wife and my kids and--well, not right now my kids, but my granddaughter--would be--that's probably the biggest challenge.

Tavis: Well, I'm delighted you came by to see us. I appreciate that. I want to shake your right hand, but I'll shake your left hand.

Scott: I appreciate you having me here.

Tavis: I'm glad you came through.

Scott: Thank you.

Tavis: I appreciate it. That's our show for tonight. I'll have more with Lee Scott tomorrow on my radio show on NPR, and I'll see you back here next time on PBS. Until then, good night from Los Angeles. Thanks for watching, and keep the faith.