Lisa's Fresh Thoughts
Walmart Faces Concerned and Vocal Shareholders
By Lisa Hays, Fresh Perspective and Susan Spaulding, Recalibrate Strategies
Posted August 18, 2014
About 14,000 attended Walmart’s June annual shareholder meeting held at the Bud Walton Arena at the University of Arkansas, Fayetteville. The meeting began at 7:00 a.m. on stage in front of a video of company employees dancing to the Pharrell Williams song, “Happy.” Several celebrities were on hand to entertain, including Harry Connick Jr., who both performed and was the event’s emcee.
However, “happy” would not be an accurate descriptor for many in attendance.
Institutional investors, independent shareholders, analysts and advisors came to present what they consider important issues – along with their proposed changes – to Walmart leadership. The annual shareholder meeting presented an opportunity to voice concerns, primarily in the form of shareholder proposals. Institutional Shareholder Services (ISS), an active proxy advisory firm, was very vocal on multiple shareholder proposals.
As well, while they may not be “out front” vocally calling attention to their concerns, substantial long-term investors lent their support to several shareholder proposals. These investor groups include CalPERS, CalSTRS, CtW Investment Group, New York City Pension Funds, the Florida State Board of Administration, the Christian Brothers Investment Services (CBIS), among others.
In a very unusual display of shareholder activism, 50,000 individuals – including 16,000 mutual fund investors – asked Vanguard and Fidelity, Walmart’s largest institutional investors, to vote against the election of Rob Walton to the company board. Similarly, CalSTRS voted against 13 of 14 director nominees, and CalPERS withheld support from three director nominees.
Additionally, “OUR Walmart”, a three-year-old organization made up of Walmart associates continues their protests against low pay, erratic scheduling and Walmart’s retaliation against associates who speak up. This group notes the extreme wealth of the Walton family, associates’ personal family hardship caused by low pay, erratic schedules, a lack of supply chain oversight and the alleged foreign market bribery and ensuing cover-up.
Associates who are members of “OUR Walmart” and large shareholders spoke from the floor on the issues they consider of greatest importance.
- Too few trained associates on duty to keep shelves stocked. Associates are unable to deliver customer service that makes them proud, and keeps consumers happy – and buying. Staffing levels need to be raised, as does pay. OUR Walmart specifically calls for full-time employees to be paid a minimum of $25,000 annually.
- Shareholder proposals on the ballot that Walmart opposed included:
- Reporting on Walmart’s lobbying practices and expenditures. A sizeable investor group wanted to know whether Walmart lobbied for cuts in food stamps, used by many Walmart associates and customers and against raising the minimum wage – moves they believe harm Walmart’s image, financial results and shareholder value.
- A call for an independent chairman of the board – which Walmart is unlikely to grant. Walmart’s board considers the chairman position to be part of succession planning – not likely to change.
- Executive compensation – specifically for increasing executive incentive pay, retention bonuses and retroactively granting shares that could potentially increase executive payouts.
- ISS urged investors against the re-election of two board members, members they hold responsible for the lack of disclosure on the ongoing foreign bribery investigation.
In reality, it would highly unlikely for a majority of disapproving shareholders to win since the family controls more than 50% of the company’s shares.
However, it would behoove Walmart’s board and leadership to take note of these issues and proposals. They come from a groundswell of associates, individual investors and large-scale institutional investors. Explicitly addressing at least some of these concerns could be important in the long term. Already, the city of Portland, Sweden’s AP Funds and PPGM and APG in the Netherlands have divested from Walmart stock – each representing billions in assets under management.
While criticism of Walmart is nothing new, the number and intensity of the various groups has grown considerably. As well, support for substantial change at the top now includes very prominent, highly-sought-after investors, such as CalPRS and CalSTRS.
Even Walmart is not immune to the impact of investors of that size and stature.
Fresh Perspective helps business leaders make key strategic decisions. We adeptly research, analyze and synthesize results to deliver only ‘need to know’ insight to leaders so they make the right decision the first time. Lisa Hays, founder and CEO, gained considerable experience from widely varied roles in large corporations. She combines her 30+ years’ experience, expertise and objective viewpoint to directly help business leaders.
Lisa Hays, Fresh Perspective, Inc.
Recalibrate Strategies help companies grow their business. We apply proven marketing systems to recalibrate their business and their brands by collaboratively creating a success blueprint. We facilitate a process that harnesses insights, generates new ideas and provides a strategic roadmap. Our founder and lead consultant has 30+ years of experience as a CEO, entrepreneur and marketing expert with exceptional leadership and facilitation skills.
Susan Spaulding, Recalibrate Strategies
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