Rob Walton, son of Wal-Mart Stores Inc. founder Sam Walton, stepped down Friday as chairman of the company's board of directors, but the position will remain in the family.
Greg Penner, Walton's son-in-law, was elected as just the third board chairman in Wal-Mart history. He was presented to company shareholders during their annual meeting at Bud Walton Arena in Fayetteville. Rob Walton, 70, has presided over the board since his father's death in 1992.
Penner, 45, was announced as vice chairman in June 2014 during the company's annual meeting. He is married to Rob Walton's daughter, Carrie.
Rob Walton will continue to serve on the board, a position he has held since 1978. He said Penner has the "full support" of the board and the Walton family, which owns more than 50 percent of the company's stock.
"Although I intend to stay on the board and serve on the board, this will be my last shareholder [meeting] as chairman," Walton told about 14,000 employees and shareholders at the meeting. "He knows Wal-Mart. He loves Wal-Mart. He's sharp as a tack. And he was smart enough to marry my daughter. ... He'll do a great job leading the board and serving our shareholders."
Wal-Mart President and CEO Doug McMillon, 48, told media later in the day that Penner's appointment last year was widely viewed as a sign that change was imminent. Penner has served on the board since 2008 and last year was head of its e-commerce and technology committee while also serving on committees for strategic finance and global compensation.
Outside observers said it appears the company is making a transition to younger leadership.
"It appears a youth movement is purposely continuing,"said Randy Koontz, first vice president of investments for Pinnacle Wealth Management of Raymond James & Associates Inc. in Rogers. "It started with Doug and continues."
Penner, general partner at Madrone Capital Partners, began his career as an analyst for Goldman Sachs & Co. before joining Wal-Mart as a management trainee. He later held senior vice president positions with Walmart.com and as part of the retailer's operations in Japan. Last year as the board's vice chairman he was compensated $289,000 and tasked with presiding at board meetings when Walton was not present. Walton did not miss a meeting, the company said.
"I am really excited; I also feel a deep sense of responsibility," Penner said onstage during the meeting. "It's not lost on me there's only been two people to serve as chairman."
More than 50 percent of the company's outstanding shares are owned by the Walton family. Outside observers said overall it seemed likely there would be no major changes with Penner as board chairman. Brian Yarbrough, retail analyst for Edward Jones, noted Penner is part of the family and that many day-to-day company decisions are made below the board level.
"I honestly don't see much changing as the family still has a large stake," Yarbrough said.
Critics of the company were not happy with the Penner appointment. OUR Walmart issued a statement that said the company was conducting "business as usual."
"Instead of listening to and respecting Wal-Mart worker shareholders who have been calling on Wal-Mart and the Waltons -- heirs to the Wal-Mart empire -- to implement a new policy establishing an independent chairperson, Wal-Mart and the Waltons have once again decided to elevate family members to powerful positions," the statement read.
A shareholder proposal calling for an independent board chairman was one of five proposals defeated during the company's annual meeting Friday. It is the third consecutive year shareholders have been asked to vote on a proposal that would establish an independent board chairman. It received more than 16 percent of the vote, up from about 15 percent in 2014.
Ten of the board's 15 members are independent of the company. James Cash is the lead independent director. Walton said Cash's responsibilities would be increasing.
Other proposals defeated included an annual report on recoupment of executive pay, shareholder ability to nominate board members, a report on greenhouse gas emissions and an annual report regarding incentive compensation plans.
Shareholders re-elected all 15 of the company's board members. Independent board members Linda S. Wolf, retired CEO of Leo Burnett Worldwide; Instagram CEO and co-founder Kevin Systrom and Yahoo CEO Marissa Mayer all earned at least 98 percent of the votes cast. McMillon and Penner each received at least 98 percent of the vote as well, as the company transitions to having its day-to-day leader and head of its board both in their 40s.
Not only are key company leaders getting younger, Wal-Mart is increasing its focus on becoming "more relevant," said McMillon. During his prepared remarks, McMillon noted that 85 percent of millennial customers, those born roughly between 1980 and 2000, use smartphones. Those figures are nearly as high during in-store trips in which 8 of 10 use their phones, according to a study cited by McMillon.
Becoming innovative and not simply playing catch-up will be key to the retailer's future, McMillon told analysts during an afternoon presentation. Creating user experiences that shoppers don't even know they want or need is Wal-Mart's focus. He stressed the need to give customers what they want and "things they haven't even dreamed of yet."
"We have the cash flow to support it," McMillon added later. "While we can't do everything, we can do almost anything as long as we prioritize."
Although e-commerce sales of $12 billion annually make up just a small percentage of the company's nearly half-trillion in annual revenue, growth there is critical for Wal-Mart. It is investing up to $1.5 billion in e-commerce for its current fiscal year.
Wal-Mart has made major investments in wage increases for its U.S. employees and continues to see growth opportunities internationally. The company announced wage increases in February for more than 500,000 employees and recently announced that 100,000 employees will receive pay raises this summer.
During an appearance before international employees on Wednesday, Penner told those gathered that the company was in a position of strength.
"I want you to know the board is very optimistic about Wal-Mart's future," Penner said. "We have an exceptional management team. We see significant opportunities for growth."
Business on 06/06/2015