Wal-Mart Stores continues to push for a younger leadership mix. The retail behemoth announced late Wednesday that Jim Walton, son of founders Helen and Sam Walton will not seek re-election to the board, nor will former CEO Mike Duke, Aida Alvarez, and Roger Corbett.
The company also announced in the amended Proxy filing with the U.S. Securities and Exchange Commission that as part of the board’s succession planning, it has nominated Helen and Sam Walton’s grandson, Steuart Walton, for election to the Walmart board. The changes will reduce the number of directors serving on the board from 15 to 12 directors.
“The contributions of each of our four retiring board members cannot be overstated, and we wish them all continued success in the future,” said Greg Penner, board chairman since June 2015. “With these retirements, we view this as a time to make our board more nimble, while maintaining its independence and further aligning on Walmart’s strategic priorities. Our board has the right skills and expertise to support the company’s strategy. We continue to believe that the value, quality and diversity of our directors are some of Walmart’s greatest strategic assets.”
With the proposed changes, the Wal-Mart board will maintain its independent majority at 67%. The board’s 12 nominees, if elected, represent a mix of company knowledge and fresh perspectives, including five independent board members added over the past four years, the company said.
‘MORE NIMBLE’ NEXT-GENERATION BOARD
The changes didn’t come as a surprise to corporate governance expert Alan Ellstrand, the Charles Fitchner Chair at the University of Arkansas.
“The transition to younger leadership in recent years is a positive for the company’s focus on the future given that retail is moving from brick and mortar traditions into more online options. These are huge issues for CEO Doug McMillon and having a more nimble, next generation board could be helpful,” Ellstrand said.
He applauded the move to trim the board from 15 directors to 12 saying that the logistics alone of trying to convene 15 busy professionals several times a year can be challenging. He said the 12 directors give enough diversity and varied perspective and are less cumbersome in terms of communication flow.
“I think it’s a good move,” Ellstrand said. “With the third generation Waltons taking active board roles now it looks as the family will remain firmly connected to the company’s oversight for some time to come. It also signals that it’s still a family business to some extent, while there are millions of shareholders, the family retains the largest ownership stake,” he added.
Wal-Mart said it has placed a focus on technology in recent years with the additions of Marissa Mayer, president and CEO of Yahoo! Inc., and Kevin Systrom, CEO and co-founder of Instagram. Chairman Penner also provides expertise in technology, finance and international business.
“The changes we are making are designed to maximize our effectiveness as we adapt to ever-evolving customer requirements. We believe that board refreshment and succession planning are critical and demonstrate good corporate governance practices, but also and most importantly, support our mission to broaden and improve how we are serving customers through both stores and e-commerce,” said James Cash, lead independent director for the retailer.
Steuart Walton is CEO of Game Composites, a company he founded in 2013 that designs and builds small composite aircraft. He previously worked for the London office of Allen & Overy, handling matters related to debt and equity offerings by non-U.S. entities. He also worked for Walmart International, focusing on mergers and acquisitions.
The company said historically three members of the Walton family have served on the company board and that is appropriate given the Walton family’s significant and long-term equity ownership. With Jim Walton’s retirement, his son Steuart Walton is deemed by the board to be a qualified replacement based on his skills and background.
“We are pleased that Steuart has been nominated to join our company’s board,” said Penner. “Given his strong history and familiarity with Walmart, he clearly understands the company’s mission and vision as he is prepared to carry on the next generation of family leadership. His career in law and his experience as an entrepreneur will allow him to bring valuable insight to our board.”
Penner said Duke’s board retirement is similar in time frame to that of former CEOs. Jim Walton served on the board for more a decade in addition to running Arvest Bank group.
“We would like to thank Jim for his many contributions to our board for over a decade and his personal commitment as a board member to doing what is best for Walmart, our associates and shareholders as we build on the company’s success now and in the years to come. He has proudly carried on the legacy of Sam Walton and that stands to continue with the nomination of Steuart Walton to take his place,” Penner said.
Roger Corbett, retired CEO of Woolworths Limited based in Australia, has been on the board since 2006. Penner said his experience in retail and merchandising has been an huge asset over the years.
Aida Alvarez is also rotating off the board after a decade of service. She was the administrator for the U.S. Small Business Administration and a member of President Bill Clinton’s cabinet from 1997 to 2001. Penner said her service to Walmart has been invaluable as she has championed diversity and inclusion and been a strong advocate of corporate governance.