June 6 (Bloomberg) -- Greg Penner, the grandson-in-law of Wal-Mart Stores Inc. founder Sam Walton, became heir apparent to the chairman role today after spending almost a decade investing the family’s money as head of a venture firm in Silicon Valley.
Penner, a 44-year-old who participates in triathlons, brings California sensibilities to the Arkansas-based retail chain, which named him vice chairman at its annual meeting today. Penner received his MBA from Stanford University in 1997 before taking a series of Wal-Mart management jobs. In 2005, he started Madrone Capital Partners, a firm backed by money from Wal-Mart Chairman Rob Walton and other family members. Penner then joined Wal-Mart’s board in 2008.
By elevating him to the newly created vice chairman position, the Waltons are betting that Penner’s technology experience can help guide the company into a new era of e-commerce and smaller-format stores. The move also could raise hackles among Wal-Mart’s critics, who say the Waltons already have too much control over the company. Wal-Mart described the change as an act of succession planning and said Penner will begin standing in as chairman when Rob Walton isn’t present.
“I am committed to the long-term success of Wal-Mart,” Penner said in a statement today. “I look forward to contributing to a stronger Wal-Mart in any way possible, including how we develop new digital capabilities to add to our store offering.”
Wal-Mart declined to make Penner available for an interview, and he didn’t immediately respond to a separate request for comment.
Penner is the son of two sex therapists in Pasadena, California, who have written numerous books. He joined the billionaire Wal-Mart family by marrying Carrie Walton Penner, the granddaughter of Sam Walton, who died in 1992. The couple both attended Georgetown University as undergraduate students and went on to earn graduate degrees at Stanford. The Penners have four kids and live in the wooded Silicon Valley suburb of Atherton.
Before founding Madrone, he was chief financial officer of Wal-Mart Japan and the senior vice president of finance and strategy for Walmart.com. He also served as a general partner at Peninsula Capital, an early-stage venture firm, and worked as a financial analyst at Goldman Sachs Group Inc. early in his career. He first worked for Wal-Mart in 1994 as a manager trainee and an assistant buyer.
Madrone was set up to fund venture deals, as well as private-equity transactions and stock investments, with a focus on alternative energy and China. It was one of the backers of Solyndra LLC, the solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt.
Madrone also has invested in at least one company with closer ties to Wal-Mart. It was a venture backer of Progreso Financiero, a financial institution serving Hispanic customers who don’t have bank accounts. That company’s chief executive officer, Raul Vazquez, is a former Wal-Mart executive, and Wal-Mart director Aida Alvarez serves on the Progreso board.
The retail chain accepts Progreso purchase cards and allows borrowers to make loan payments at its stores, though it has no direct relationship with the lender, Wal-Mart has said.
Madrone participated in multiple Progreso venture capital rounds between 2009 and 2011, helping the startup raise more than $71 million, according to documents filed with the U.S. Securities and Exchange Commission.
Making Penner Wal-Mart’s vice chairman solidifies the Walton family’s control of the board at a time when some investors and employees are calling for more independent directors. Rob Walton, 69, is the son of Sam Walton, who started the company in 1962. Rob’s brother Jim also serves on the board, and the family controls more than 50 percent of Wal-Mart’s outstanding shares.
“It’s absolutely in the opposite direction that we wanted,” said Charmaine Givens-Thomas, an electronics saleswoman at a Wal-Mart store in Evergreen Park, Illinois. “We want Wal-Mart to put an independent person in there to be more fair to the associates and shareholders.”
Rob Walton, Penner’s father-in-law, has a net worth of $36.3 billion, according to Bloomberg Billionaires data. That makes him the eighth richest person in the U.S. His brother Jim is valued at $37.2 billion, and his sister Alice is worth $35.5 billion. Sam Walton’s other child, John T. Walton, died in 2005 when his homemade airplane crashed in Wyoming. His widow Cristy Walton is worth $39 billion, making her the world’s richest woman.
An unsuccessful proposal at today’s meeting, presented by Givens-Thomas, would have made it Wal-Mart’s policy for the chairman to be someone without close ties to the company. Wal-Mart opposed the measure, noting that it already separated the CEO and chairman roles in 1988, letting the chairman focus on oversight and governance. Wal-Mart CEO Doug McMillon, who took the reins in February, is not a member of the Walton family.
Penner is “a relative. He’s a Walton,” said Givens-Thomas, who has worked for Wal-Mart for eight years and is a member of the union-backed Organization United for Respect at Walmart. “I don’t feel that it gives Wal-Mart the opportunity for fresh ideas or to take the company in a different direction.”
New York Comptroller Scott Stringer, who helps oversee the 4.6 million Wal-Mart shares held by the city’s pension funds, also criticized Penner’s appointment.
‘Bending Over Backwards’
“A substantial block of Wal-Mart’s outside shareowners keep voting for a more independent board, and the directors keep bending over backwards to make the board and its leadership less independent,” he said in an e-mailed statement.
Penner and his wife have ties to the charter-school movement. Carrie Penner serves on boards for Alliance for School Choice, the California Charter Schools Association, and of the KIPP Foundation, a national public charter school network. Greg Penner is a director for the Charter School Growth Fund and Teach for America’s national board. The Walton Family Foundation, the family’s charitable arm, has donated more than $300 million to charter schools since 1997.
Penner is a partner in DT Capital Partners, a China-based venture firm that focuses on investments in consumer, media, energy and technology sectors. That firm touts its affiliation with Madrone on its website. And he’s a board member of Hyatt Hotels Corp., a company that Madrone has invested in. He’s also on the board of EHarmony Inc. and Baidu Inc., a Chinese search engine that Madrone has backed.
The new vice chairman’s parents, Clifford and Joyce Penner, have earned their own renown. They are the authors of sex-advice books written from a Christian perspective, including “The Gift of Sex: A Guide to Sexual Fulfillment” and “Restoring the Pleasure.”
A 1994 book on sex for engaged and newlywed couples, “Getting Your Sex Life Off to a Great Start,” contained a dedication to Greg and Carrie Penner: “To our son, Greg, and soon-to-be daughter-in-law, Carrie, in celebration of your engagement and upcoming marriage. May your love mature with the same beauty with which it has budded and blossomed.”
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