retail news in context, analysis with attitude

Bloomberg has a piece in which it notes that the Walton family, through a series of stock buybacks, now owns more than 50 percent of Walmart's shares - 50.9 percent vs. 39 percent 10 years ago - "which could give it greater control over the board of directors."

Under New York Stock Exchange rules, this means that Walmart could "opt out of a requirement to have a majority of independent directors" on its board. Which it says it has no plans to do ... though three independent directors were not renominated, the board is being reduced from 17 members to 14 (meaning that 64 percent of the board will be independent, as opposed to 71 percent), and, in fact, some of the "independent" board members aren't that independent - "seven of the nine remaining independent directors have outside financial ties to the company."

This is, apparently, a concern shared by some institutional investors, with some expressing a concern that a lack of keen oversight by the board may be one of the reasons that Walmart current is embroiled in probes about alleged bribery of foreign officials.

Some, however, say that it doesn't matter how many independent directors are on the board - Walmart always has been a closely held company, and the Walton family has always run it pretty much the way it wants to.


• Meanwhile, Bloomberg also reports that in the wake of the internal and external bribery probes, "a number of global investment and pension funds led by the United Auto Workers Retiree Medical Benefits Trust have filed a proposal asking Wal-Mart to disclose whether the company has reclaimed the pay of executives found responsible for serious and costly misconduct. The proposal, which has received the backing of the proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co., will go to a vote at the company’s shareholder meeting on June 7.

"For large companies with far-flung operations, some misconduct is inevitable," the story goes on to say. "There is simply no way to police the actions of hundreds of thousands (in Wal-Mart’s case, millions) of employees. Wal-Mart isn’t immune to this problem. The important thing is that those responsible are held to account -- and that such efforts are made transparent, so that the misdeeds don’t become larger or systemic."

Bloomberg says that "Wal-Mart’s response to the proposal has been predictable. The company says it has strong policies to claw back pay from executives who engaged in wrongdoing. But it hasn’t said whether these policies have ever been invoked, despite having some of them in place for more than a decade."
KC's View: