Investigations taxing for Wal-Mart board members

by The City Wire staff ( 22 views 

The past year has been taxing for Wal-Mart directors serving on the retailer’s audit committee due to the ongoing global investigation into ethics and alleged bribery allegations made public in April 2012.

In the annual proxy filing released Monday (April 22), Wal-Mart Stores noted to shareholders that the company paid audit committee members more than the standard director fee because of the extra work they took on regarding those investigations.

Three directors will not stand for re-election, including Arnie Sorenson, chief executive for Marriott International, who served on the audit committee. James Breyer, the board's presiding director, and M. Michele Burns are each leaving the board after more than 10 years of service.

During this past year the audit committee met 15 times, while other committees met an average of six times in sync with the six meetings conducted by the full board, according to the proxy filing. Audit committee members were paid an additional $60,000 fee, while the committee's chairman, Christopher Williams, received $85,000 in compensation for their service last year.

Wal-Mart cited the audit committee's extra work in the proxy filing and decided to double the cash portion of the annual retainer for audit committee members, and doubled the chair fee for the chair of the audit committee. Wal-Mart paid Williams a total of $189,000 in fees for fiscal 2013, the most of any of the 15 board members who are not part of Wal-Mart's management team. He has been a board member since 2004.

The additional payments to audit committee totaled $325,000 and add to the $157 million the company said it spent last year on its investigation into the bribery allegations in Mexico, Brazil, China and India, and the internal improvements to the retailer's compliance protocols.

Wal-Mart executives for the most part enjoyed fruitful gains in their total compensation packages last year as their core performance bonuses paid off on the heels of a stronger overall sales and income.

Wal-Mart posted a 5% increase in sales to $466.1 billion last year.

CEO, Mike Duke, 63, earned $20.7 million last year, up from $18.1 million a year earlier. His higher pay is a combination of a 4% rise in annual salary and a fatter bonus based on improving sales.

Duke received a base salary of $1.3 million and stock awards of $13.6 million. His performance-based cash bonus jumped to $4.4 million up from $2.9 million, according to the filing. Other compensation totaled $644,450, the perks included $101,947 for the use of the company aircraft.

Charles Holley, chief financial officer, earned a total of $6.63 million, up 29.8% from the prior year, hoister higher by a 2.78% salary hike and bigger bonus as well.

Bill Simon, CEO of Walmart U.S., earned $11.22 million, up 32.9% from a year ago. Doug McMillon, CEO of Walmart International, earned $9.563 million, down from $10.96 million in the prior year, challenging global growth is the reason for the dip in overall performance income for McMillon.

Newcomer Rosalind Brewer, CEO of Sam’s Club, received compensation totaling $14.457 million last year, her first year in senior level management with the retailer. The total income reflects two years of cash performance stock awards given her start date near the tail-end of fiscal 2012.

Despite record stock prices this past year, huge dividend payments and overall strong financial performance, some stakeholders remain disgruntled by the ongoing ethics violations.

The United Food and Commercial Workers International Union and its OUR Walmart subsidiary are calling for Duke and Rob Walton, son the company founder, to be ousted.

The groups sent letters to Wal-Mart's global ethics office calling for Wal-Mart's board to remove Duke and Rob Walton "for their failure in leadership in preventing the alleged bribery, trying to cover it up" and not setting up controls or actions to fix the internal ethics violations.

Duke and Walton were implicated as “potentially knowing” about the alleged bribery dealings in the company’s Mexican business unit and not notifying their regulatory oversight agency in a timely fashion.

Shares of Wal-Mart (NYSE: WMT) dipped  to $77.97 on Monday after setting an all-time high of $79.28 just one week ago.