Walmart has a new CEO in Doug McMillon, a one-time warehouse worker who took over the top job this year. Is it time for a new chairman, too?
A coalition of Walmart workers believe so, and they’re mobilizing fellow shareholders in an effort to boot billionaire Rob Walton off the board at the big box giant’s annual meeting on Friday, June 6.
Last week, union-backed employee group Organization United for Respect at Walmart (OUR Walmart) sent a letter and voting guide to shareholders asking that they vote against Rob Walton’s re-election as chair.
The letter, signed by three store-level Walmart workers, also suggests shareholders vote for an independent chair proposal that would bar Walton family members from leading the board at the world’s largest retail chain.
“Over the last decade or more, Wal-Mart Stores , Inc. has experienced a series of internal control and legal compliance breaches, and a number of investors have expressed concerns that these breaches have created risks for shareholders,” reads the letter, which can be seen in full here along with the voting guide.
“Recent breakdowns have included violations of environmental standards in California, the largest-ever complaint against the company by the National Labor Relations Board, and, most troubling, the global corruption scandal involving alleged bribery of foreign officials in violation of the U.S. Foreign Corrupt Practices Act that the company admits will cost more than $600 million by the end of the current fiscal year.”
The letter goes on to list reasons Rob Walton should be replaced with an independent board chair, noting that the billionaire has been “chairman of the board during the entire period before, during, and after the alleged
bribery, initial investigation, alleged cover-up, and subsequent investigations.”
Rob Walton’s popularity among shareholders has dwindled in recent years. In 2011, he was re-elected to the board with 99% of non-family votes. In 2012, his support dropped following the afore-mentioned bribery allegations, with about a third of non-family votes going against the patriarch of America’s richest family.
At last year’s annual meeting, Walton saw 22.6% of independent votes cast against him amid worker wage protests and concerns about the company’s supply chain, particularly in the wake of the Bangladesh factory disaster.
Despite their efforts, OUR Walmart members and their supporters will undoubtedly be disappointed next Friday. The Waltons, with a combined net worth of about $140 billion, now own more than 50% of the company’s stock between them, giving them what amounts to a veto.
Still, the group intends to put pressure on institutional and foreign investors, having had some success convincing Scandinavian pension funds to divest in recent years.
To a similar end, OUR Walmart has the support of consumer advocacy group Sum Of Us. The nonprofit is urging anyone with investments in Vanguard or Fidelity — the retailer’s largest institutional investors — to send letters asking the funds to vote against Walton’s re-election at the meeting. So far, over 16,000 mutual fund investors have signed on to the Sum Of Us campaign.
OUR Walmart also has allies on Wall Street. This past weekend, Institutional Shareholder Services, Inc., which advises mutual funds on these sorts of decisions, recommended shareholders vote against Walton’s re-election.
“Several years into the [foreign bribery] investigations and more than a decade after the actions at the heart of the allegations began to occur, shareholders still have little insight into the risks associated with the alleged compliance failures, and little reason for confidence that senior executives will be held accountable for any failures which are found to have occurred on their watch,” said ISS in its analysis, as reported by the Wall Street Journal on Monday.
Walmart spokesperson Randy Hargrove said that Walmart’s board will support Rob Walton’s re-election, noting his decades of experience with the company and in the industry. He added that the retailer separated the roles of chairman and CEO in 1988 precisely so the former is able to provide oversight while the latter focuses on day-to-day business. Of the 14 board members that will be elected on June 6, said Hargrove, 10 will be independent.