Prestige, protests come with Wal-Mart Board service

by The City Wire staff ([email protected]) 130 views 

Serving on the Wal-Mart Stores Board of Directors pays a handsome amount, but it’s not without some hazards as the retail giant is regularly a target for protestors from various union-sponsored groups.

High profile exec Marissa Mayer, CEO of Yahoo, has been a board member for Wal-Mart Stores since 2012, and during that time she has been dogged by protestors at numerous events when she was scheduled to speak about Yahoo.

A noisy protest on Nov. 19 at the Moscone Center in San Francisco, was the most brazen interruption Mayer has faced during her board tenure at Wal-Mart. She was onstage speaking with CEO Marc Benioff, when protestors inside the venue interrupted Mayer as she attempted to speak about her efforts to refocus Yahoo toward the mobile tech trend.

Mayer, the keynote speaker at the annual trade show, was forced to stop and explain that she serves on Wal-Mart’s Board, but she wasn’t there to discuss Wal-mart’s business. Multiple media outlets reported that the protestors and labor activists were escorted from the center, where they remained outside.

Corporate governance expert Alan Ellstrand said board members have to realize there can be some collateral damage when the company they serve is targeted by protestors or other media controversy. Ellstrand is a professor at the University of Arkansas. He said firms that recruit board members likely brief board candidates on the potential they could face for targeted protests and there could be hazard pay associated.

“At some point if distractions become too much, board members might resign that post, especially since most are already running a company full-time, for which they are earning a much larger salary than a board stipend,” Ellstrand said.

Earlier this year, Arne Sorenson, CEO of Marriott International, resigned his board seat at Wal-Mart Stores. Sorenson was a board member serving on Wal-Mart’s audit committee. He too faced protests inside at least two Marriott Hotels after the Foreign Corrupt Practices Act investigation into Wal-Mart’s international operations was made public in the April 2012.

In April 2012, protestors entered a Maryland Marriott chanting that Sorenson needed to resign in the wake of the FCPA bribery scandal. They also left a banner with the same message. Later that same month, AFL-CIO activists and Respect DC protestors entered the Pennsylvania Avenue Marriott in Washington D.C. and reportedly chanted “Hey Hey! Ho ho! Wal-Mart greed has got to go!”

Sorenson could not escape the Wal-Mart questions when he was interviewed on CNBC for a segment on the hotel and hospitality industry in the summer of 2012. Analysts were not surprised to see Sorenson step away from the controversial board seat. Sorenson said he would focus on running Marriott International and did not stand for board re-election in April 2013. He served on Wal-Mart’s board of directors for five years.

Wal-Mart Stores announced Nov. 22 that Pamela Craig, retired chief financial officer of Accenture, had joined the Board effective immediately. Craig became the 15th member of the board and will also serve as a member of the company’s Audit Committee.

Ellstrand said board members can’t win if they answer questions from protestors or if they don’t.

“It’s likely that Wal-Mart or other firms would not want their board members to speak randomly about company business. After all, they may not have all the information given their limited meeting times throughout a year,” he said.

However, he said not answering questions can send the message that board members aren’t in-tune with what’s going on or they don’t care.

Wal-Mart reported that it paid members of it audit committee, like Sorenson, an additional $65,000 during fiscal 2013, in part because this committee met 15 times – nearly three times the number of other committee meetings and the full board.

Wal-Mart said because of the audit committee's extra work, it doubled the cash portion of the annual retainer for audit committee members, and doubled the chair fee for the chair of the audit committee.

Non-management board members for Wal-Mart Stores earned between $387,976 and $219,994, which included stock awards equaling $175,000.