Walmart re-elects board, denies all four independent shareholder proposals

Amid the COVID-19 pandemic, Walmart Inc. made history Wednesday (June 3) with its first-ever virtual shareholder’s meeting. It lasted just under one hour, including a question-and-answer segment with company executives. 

As expected, shareholders approved the full slate of directors that will each serve a one-year term. There were seven independent directors elected: 

• Cesar Conde, chairman of NBCUniversal Telemundo; 
• Tim Flynn, retired chairman of KPMG; 
• Sarah Friar, CEO of Nextdoor; 
• Carla Harris, an executive at Morgan Stanley; 
• Tom Horton, retired chairman of American Airlines; 
• Marissa Mayer, co-founder of Lumi Labs; and 
• Steve Reinemund, former chairman of PepsiCo. 

The four Walmart directors include president and CEO Doug McMillon, board chairman Greg Penner, Rob Walton and Steuart Walton. 

The independent directors earn an annual base retainer of $100,000 and $175,000 in annual stock grants. The non-executive chairman receives a $225,000 retainer fee, half of which is paid in stock, and the lead independent director gets a stipend of $35,000. Other board members earn between $20,000 and $25,000 for their specific committee roles. 

They also receive up to an additional $4,000 to cover travel expenses to meetings they attend in person. Walmart paid $1.33 million in cash compensation last year to its non-employee board members. They earned stock awards totaling $2.09 million. 

While shareholders did approve the slate of directors, an independent shareholder proposal asking the company to consider adding an hourly employee to the board failed to pass. Cynthia Murray, a Walmart employee for 17 years, read the proposal during the virtual meeting. Murray said hourly store employees are the “boots on the ground” and can best relay the challenges and customer feedback to the board if they had just one seat in the boardroom. She described a disassociation between management at times with the real needs and challenges of workers on the front lines. She described having four different store managers in one year and a lack of consistency in applying the COVID-19 protocol, which has likely contributed to the deaths of 22 Walmart employees across the company. 

Walmart has previously said it has top executives in stores each week and works to keep the lines of communication open between store employees and management. 

Three other independent shareholder proposals were also voted down as expected, given the Walton family controls a slight majority of the voting power and a loud voice on the board of directors. 

One proposal asked the company to work towards reducing single-use plastic bags. Conrad MacKerron, a senior executive at As You Sow, a nonprofit that promotes corporate social responsibility through shareholder advocacy, read the proposal during the virtual meeting. He said between 1% and 3% of single-use plastic bags are recycled. Many end up in landfills, he said, and will take 1,000 years to biodegrade. 

Kathleen McLaughlin, president of Walmart Foundation, addressed the company’s efforts to reduce its plastics footprint during the question-and-answer session. She said Walmart has several initiatives in place, and plastic shopping bags make up just 6% of the retailer’s plastics use. She said there is a constant effort to use recycled packaging in products sold at Walmart and to collect the single-use bags in stores for recycling. 

Additional shareholder proposals dealt with the use of antibiotics in farm animals in meat Walmart buys and sells to consumers, as well as developing a more comprehensive sexual harassment policy for U.S. employees that punishes the offenders instead of just relocating the perpetrators. 

Walmart said it takes sexual harassment very seriously and will continue to do so. As for the proposal related to antibiotic use in farm animals, Walmart said the issue is complex, and the company continues to offer more antibiotic-free products to customers at value prices.

Company proposals that passed involved executive compensation, appointing the accounting firm Ernst & Young and amending the stock plan for subsidiary ASDA.

Q&A SESSION
During the question-and-answer session of the meeting, McMillon was asked how often executives update the board about the ongoing COVID-19 impact on stores and employees. He said the board had kept up to speed throughout the past couple of months. When asked if the actions Walmart had taken to protect workers have been enough, McMillon said executives had been out in stores asking employees if more could be done. He said Walmart did take that input seriously and put a number of the suggestions into practice. More recently, he said employees had had very little to add. 

“We expanded our COVID-19 leave policy, and we had about 270,000 associates access leave. We have hired around 300,000 people since mid-March to help cover for those on leave,” McMillon said. 

McMillon was also asked about any impact on stores from recent protests in various cities throughout the U.S. He said Walmart had been impacted in a few areas where inventory was lost, and there was damage to stores. In those areas, McMillon said keeping employees and customers safe is the priority, and stores have been closing early. He said the company continues to monitor the situation. 

Also Wednesday, Walmart said it has temporarily removed firearms and ammunition from the sales floor in some stores out of an abundance of caution.

“Those items are available for purchase, but are being stored in a secure room,” the company said. 

McMillon said taking care of employees has been the company’s priority, and secondly, keeping stores stocked has been a constant challenge. 

“If we don’t have the products, then we cannot take care of customers,” he said. “In my nearly 30 years at Walmart, I have never seen anything like the pressure our supply chain has been under. We are working with suppliers who are collaborative and transparent, but trying to predict the swings in demand has been a real challenge.”

McMillon was also asked if robotics would be more likely in the post-pandemic future. He said robotics have specific roles in retail, but Walmart will always be a people business. 

For Walmart shareholders, the company said it will continue to pay its dividend, with now 47 years of consecutive increases. Walmart shares (NYSE: WMT) traded lower on Wednesday at $123.50, down 44 cents in the early afternoon session. Year-over-year Walmart shares have risen 21%.