Excellent piece from Ben Heineman Jr., a Senior Fellow of the Program on Corporate Governance at Harvard Law School, on Walmart’s Global Compliance Report and the state of the company’s FCPA investigations. An excerpt:
Christopher Williams, who was on the audit committee when allegations of bribery in Mexico first surfaced and has chaired the committee since 2008, will be stepping down from the Walmart board in a few weeks. Who will be the new chair of the audit committee? It’s an important question, considering that the audit committee is charged with overseeing the FCPA/bribery investigation (even though it ignored investor concerns and failed to establish the right internal controls in the first place).
Wednesday’s proxy statement contained the interesting (though not entirely unexpected) news that Christopher Williams will not be seeking re-election to Walmart’s Board of Directors. According to Walmart, Williams is stepping down after 10 years on the board in accordance with the company’s guidelines on the tenure of outside directors. Whether that’s the whole story behind Williams’s departure or not, we don’t know, but regardless of the reason for Williams’s departure, we can think of two groups that are probably happy to see him go:
Big news today for Walmart director Tim Flynn, who also sits on the board of JPMorgan: JPMorgan and four regulators announced a settlement on the London Whale matter in which the company will pay $920 million in fines and acknowledge misconduct by company management.
It’s common knowledge that the FCPA investigations are costing Walmart a fortune. WMTS has previously documented the figure. What’s not known is when it will all end.
Before the shareholder meeting, WMTS reviewed how some large public pension funds and proxy advisors were voting their shares for the different Board of Director candidates. Well, the results are in, and Directors Christopher Williams, Mike Duke and Rob Walton, yet again tallied high “no” votes. In an effort to shed some light on why large institutional investors voted against various director candidates, WMTS has looked into the reasoning of the two large public pension funds—Wisconsin (SWIB) and California (CalPERS). Both are among the largest public pension funds in the world with CalPERS ranking 6th and SWIB in 30th place, both with assets in the billions.
No one is expecting the election for Walmart directors to be a nail biter. What with the Walton family controlling more than 50 percent of the votes, you’d be foolish to bet against their reelection. However, how the non-Walton shares are voted will be revealing. Will the no-votes this year will be as large as last year when Lee Scott, Chris Williams, Mike Duke, and Rob Walton garnered the most no votes? The early numbers are starting to come in and it doesn’t look good for those four again this year. The NYC Pension Funds announced yesterday that it will vote its 5.1 million shares of Walmart stock against nine of Walmart’s 14 directors. NYC is casting its vote against Messieurs Scott, Williams, Duke, and Walton, as well as voting no on Directors Aida Alvarez, James Cash, Douglas Daft, Steven Reinemund, and Linda Wolf. CalSTRS is voting against all directors standing for election. Add to that the recommendations of two proxy advisers, ISS and Glass Lewis, who are each advising clients to vote against select directors – ISS recommends voting against Duke, Walton and Williams, while Glass Lewis is suggesting no votes against Duke, Williams, Scott, Alvarez, and Cash – and it could be another year of record no votes.
After the Walmart annual meeting in June, three of the company’s directors will be stepping down from their positions. The exit of Jim Breyer, Michele Burns, and Arne Sorenson will leave Walmart’s Board of Directors will be even weaker and more compromised than it already was.
In a Securities and Exchange Commission filing late last month, Walmart said it expects to incur a loss as a result of investigations and lawsuits related to the alleged systematic bribery scheme in its Mexican subsidiary. “Given the on-going nature and complexity of the review, inquiries, and investigations,” the company wrote, “we cannot reasonably estimate any loss or range of loss that may arise from these matters.”