Proxy Blog

Walmart Inc. 

May 14, 2019

The annual proxy for this retailer had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on sexual harassment and cumulative voting 

Magni voted as follows: 

  1. For and against proforma proposals.
    -For all except one director  Magni voted the same way last year. The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation
    Only one Walton needs to be on the board, so Magni voted against Steuart Walton.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -For say-on-pay”  The company significantly strengthened disclosures related to executive compensation. The shareholder engagement disclosures make clear the level of activities, as well as the inclusion of executive compensation in the discussions. In addition to disclosure of the peer group, the company provides a flowchart explaining the process (including decisions about companies to exclude from the peer group). The company is benchmarked against the peer group and the data clearly shows that Walmart is larger than most of the peer, thus reducing the risk of compensation benchmarks being set too high. With the improvements, this company now has one of the best disclosures among large companies. 
  2. Against shareholder proposals.
    -Gender pay – Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.
    -Cumulative voting – New approaches to voting (e.g., cumulative voting, ranked choice) have some theoretical advantages. At the same time, these approaches make the voting process more complicated and explaining results becomes more difficult. The current approach has served companies well and is considered good governance. There are more important governance issues than to test a theoretical system on a major company.