Wal-Mart Makes Penner Vice Chairman in Board Succession PlanRenee Dudley
Wal-Mart Stores Inc., the world’s largest retail chain, named board member Greg Penner to the new role of vice chairman, putting him in position to be a successor to Chairman Rob Walton.
As part of the move, Penner will serve as chairman when Walton is not present, Bentonville, Arkansas-based Wal-Mart said today at its annual shareholder meeting. Penner, 44, is Walton’s son-in-law and has served on the board since 2008.
“One of the board’s most important responsibilities is long-term succession planning, and the company spends considerable time planning for stability and continuity,” Walton said in a statement. “I’m excited about Greg working closely with me, the board and the management team in guiding Wal-Mart into the future.”
The move solidifies the Walton family’s control of the board at a time when some investors are calling for more independent directors. Rob Walton, 69, is the son of Sam Walton, who started the company in 1962. His brother Jim C. Walton also serves on the board, and the family controls more than 50 percent of Wal-Mart’s outstanding shares.
Institutional Shareholder Services Inc., an investor-advisory firm, last month reiterated a demand for Wal-Mart to appoint an independent chairman. A proposal at today’s meeting 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 chief executive officer 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.
The measure was voted down today, along with two other shareholder proposals. One would have required disclosure on the clawback of executive compensation, and the other requested a report on lobbying payments and policy.
The union-backed CtW Investment Group led a separate unsuccessful campaign to get shareholders to vote against Wal-Mart’s executive compensation at today’s meeting. The company also has drawn criticism from ISS for its handling of a foreign-bribery scandal.
Wal-Mart has been contending with questions on that issue since November 2011, when the company disclosed possible violations in Mexico to the Justice Department and Securities and Exchange Commission. The New York Times reported in 2012 that the retailer paid $24 million in alleged bribes in Mexico. That year, the retailer announced that the probe had expanded to other countries, including China, India and Brazil.
ISS cited the scandal in calling for investors to vote against the re-election of Rob Walton and fellow board member Mike Duke, who was CEO until February and remains a company adviser. That effort also was unsuccessful: All the board members up for election were voted in.
Penner is a former Wal-Mart executive who has served as general partner of investment firm Madrone Capital Partners since 2005. The Menlo Park, California-based company is backed by the Walton family. Before that, he worked as a chief financial officer for Wal-Mart’s Japan division and managed finance and strategy for Walmart.com. Penner also served as a financial analyst at Goldman Sachs Group Inc.
“Wal-Mart has benefited from his broad expertise in strategic planning, finance and investment matters,” Walton said.
Investors have been waiting for a rebound at the retailer, which delivered a disappointing second-quarter forecast last month. Wal-Mart shares have declined 1.9 percent this year, compared with a 5.5 percent gain for the Standard & Poor’s 500 Index. The stock fell 0.1 percent to $77.21 today in New York.
The Waltons’ majority control means that investor critics were unlikely to gain much traction at today’s meeting. Most Wal-Mart shareholders have probably made peace with that, advisory firm Glass Lewis & Co. said in its own report last month.
“We suspect that most, if not all, shareholders both understand and accept the nature and extent of the Walton family’s control over the company and the composition of its board,” the firm said.