The entire Walmart board was re-elected last Friday at the company’s shareholders meeting, but a substantial number of negative votes indicate some investors are not happy with long-time board members and key senior leaders.
Walmart said the 14 directors who stood for election at the meeting received affirmative votes from 87.77% of the 91.9% of the outstanding shares represented at the meeting, a figure which excludes abstentions and non-votes by brokers who did not receive voting instructions from shareowners. Dragging down the overall percentage were board members Chris Williams, company chairman Rob Walton, president and CEO Mike Duke and former president and CEO Lee Scott. A little more than 12% of shares voted were negative votes for Williams and Duke with roughly 10% voting against Walton and 8.3% against Scott.
However, these figures tend to understate the level of opposition when accounting for the fact that members of the Walton family control nearly 51%, or 1,675,463,892 of the company’s 3,292,377,090 shares outstanding as of April 1. The Walton family shares presumably were voted in support of the entire slate of directors.
Removing those shares from election calculations reveals a different picture of director support among shareholders whose last name isn’t Walton. The percentage of negative votes among non-Walton shareholders increased to 30.5% for Williams, 30.1% for Duke, 25.2% for Walton and 20.7% for Scott, based on calculations by Retailing Today.
The opposition is noteworthy because Walmart shareholders had a lot to feel good about in 2012. Walmart was one of the best performing Dow components, it boosted its dividend by a large percentage earlier this year and at the shareholders’ meeting the company re-authorized a $15 billion share repurchase program.
Despite the positives, discontent with key board members and Williams in particular, is fueled by the company’s protracted investigation in alleged violations of the Foreign Corrupt Practices Act and mounting expenses. Williams heads the Audit Committee overseeing the investigation that was launched in November 2011. He is chairman and CEO of Williams Capital Management and one of the company’s longest serving board members having joined the board in 2004. Only Walton and Scott have served on the board longer.
Last year, Williams was the most highly compensated director, receiving total compensation of $387,976 consisting of a $175,000 stock award and $60,000 retainer given to all board members. In addition, he received $25,000 for his service as chairman of the Audit Committee and an $85,000 bonus because the committee met 15 times last year and performed additional work in connection with the FCPA investigation.