Some Wal-Mart shareholders are seeking more transparency from the Bentonville based company, as evidenced by three shareholder-written proposals on the ballot for the company’s 2014 shareholders’ meeting, set for June 6 in Fayetteville.
The proposals ask that the company employ an independent board chairman and provide annual reports on recoupment of executive pay and on lobbying activities. The company opposes all three measures, according to Wal-Mart’s proxy statement filed with the federal Securities and Exchange Commission last week.
One of the proposals, filed by Boston-based Zevin Asset Management along with the congregation of Sisters of St. Agnes in Fond du Lac, Wis., which owns shares of Wal-Mart, asks for an annual report on Wal-Mart’s corporate lobbying “to evaluate whether it is consistent with our company’s expressed goals and in the best interests of shareholders and long-term value.” They want an annual lobbying report posted on the company’s website.
Wal-Mart asks that shareholders turn it down because the retailer already discloses information about its lobbying activities and procedures as required by “law, regulation and Wal-Mart policies.”
“The additional disclosures of proprietary and confidential information required by this proposal are unnecessary and would risk putting Wal-Mart at a competitive disadvantage,”Wal-Mart stated in the proxy.
Similar resolutions on political disclosure and lobbying reports have been put to a shareholder vote in recent years but failed, said Sonia Kowal, director of socially responsible investing for Zevin. The measure aims to get Wal-Mart to disclose any and all lobbying at the state and federal levels, “including any payments to any trade associations that they are lobbying,” Kowal said, because such trade organizations may be in cahoots with organizations whose missions counter that of Wal-Mart. The retailer does not disclose its memberships in, or payments to, trade organizations or even how much they spend on lobbying, the proposal said.
Kowal used the U.S. Chamber of Commerce as an ex-ample.
Wal-Mart is reportedly a member of the chamber, which is described in the resolution as “by far the most muscular business lobby group in Washington.” The chamber has actively lobbied to weaken the power of the Foreign Corrupt Practices Act.
“That makes it look super awkward for Wal-Mart,” said Kowal, based on the fact that Wal-Mart is being investigated over accusations of bribing Mexican officials to speed development of stores there, and accusations of misconduct in other countries, such as Brazil, India and China.
“Wal-Mart’s just really far behind the curve,” she said. “There’s a lot of companies that are disclosing on this. You just need that transparency and accountability.
It’sin the best interest of Wal-Mart shareholders to do this.”
Another proposal asks the board to adopt a policy that provides, when possible, that the board chairman be someone who has not served as an executive officer of the company and who is not affiliated with management.
S Robson Walton, a son of Wal-Mart Stores Inc. founder Sam Walton, has been chairman of the company’s board of directors since 1992. Before his election as chairman, he was senior vice president, corporate secretary, general counsel and vice chairman of the company.
The company separated the roles of chief executive officer and board chairman in 1988.
The person or persons behind the proposal cited, among other things, the aforementioned investigation in Mexico and the other countries. The alleged activities “highlight the need for advanced oversight of Wal-Mart’s corporate culture and behavior,” the measure said.
“A board led by an independent chairman is best positioned to drive such change,” the proposal said.
Wal-Mart asks its shareholders to vote against the resolution, saying that those duties are carried out by the board’s “presiding director,” an independent board member since 2004. The presiding director was recently given more control, Wal-Mart said. James I. Cash Jr. is the presiding director.
The Wal-Mart proxy filing also disclosed the Walton siblings’ stock ownership in the company, which is about half of Wal-Mart’s 3.2 billion outstanding shares. Walton Enterprises LLC - with its managing members being Alice L. Walton, Jim C. Walton, Rob Walton and the John T. Walton Estate Trust - own more than 1.6 billion shares worth $126 billion using Thursday’s closing stock price of $78.31 per share.
All are the children of Sam and Helen Walton. The three children each own millions of shares of Wal-Mart stock in addition to what they own together. Jim Walton pledged nearly 4.3 million shares as a line of credit extended to a company not affiliated with Wal-Mart, the filing said.
The third shareholder proposal asks for an annual report disclosing whether the retailer recouped any incentive or stock compensation from a current or former senior executive if the executive was found to have not acted in the best interest of the company. Wal-Mart opposes the measure “because existing SEC disclosure rules already require sufficient disclosures regarding Wal-Mart’s comprehensive recoupment policies and practices,” the company said in the proxy.
“We care about shareholder feedback and the board looks at results of shareholder votes and takes them under consideration,” said Wal-Mart spokesman Randy Hargrove.
Shareholders can vote online at proxyvote.com or by telephone at (800) 690-6903 until midnight the day before the meeting. They also can vote by proxy card, which will be mailed to them and returned by mail; by scanning a QR code that’s on the mailed proxy card; or in person at the June 6 meeting.
Business, Pages 73 on 04/27/2014