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Walmart Inc. – ‘DEF 14A’ for 5/30/18

On:  Friday, 4/20/18, at 4:33pm ET   ·   Effective:  4/20/18   ·   For:  5/30/18   ·   Accession #:  1672764-18-8   ·   File #:  1-06991

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/20/18  Walmart Inc.                      DEF 14A     5/30/18    2:16M                                    Phoenix Fin’l P… Corp/FA

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                          Walmart_courtesy                                       

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:
	Preliminary Proxy Statement
	CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material Pursuant to §240.14a-12

Walmart Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
	No fee required.
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	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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OUR BELIEFS

Since Sam Walton founded our company, it always
has been a values-based, ethically led organization. Our beliefs
and values guide our decisions and our leadership.

Dear Fellow Shareholders:

We are pleased to invite you to attend Walmart’s 2018 Annual Shareholders’ Meeting on May 30, 2018 at 10:00 a.m. Central Time, and to our Associates/Shareholders Celebration Event on June 1, 2018 at 8:00 a.m. Central Time. If you plan to attend either or both of these events, please see pages 95-96 for admission requirements. For those unable to join in person, both events will be webcast at http://stock.walmart.com.

From Our Chairman

 

In fiscal 2018, we continued to accelerate our transformation, guided by four key objectives:

 

○	Make every day easier for busy families;
○	Change how we work;
○	Deliver results and operate with discipline; and
○	Be the most trusted retailer.

 

We made significant progress on all four fronts this past year. We’re continuing to accelerate innovation and leverage technology to save our customers both money and time. We’ve continued to invest in our associates’ pay, benefits, tools, and training, which results in a better experience for our customers. We’ve lowered prices and reduced inventory in stores. And we are engaging in the communities we serve to create shared value. Your Board continues to play a key role in overseeing our ongoing transformation.

 

We are committed to thoughtful Board succession planning, and have added six new directors in the past five years. This refreshment has resulted in a Board with a broad mix of skills and diversity in backgrounds and perspectives. I firmly believe that your Board is a strategic asset for Walmart, and I’m excited about the future.

 

Thank you for your investment in Walmart and your continued support. I look forward to seeing many of you at our Annual Shareholders’ Meeting or our celebration for Associates and Shareholders. Regardless of whether you are able to attend our Annual Shareholders’ Meeting in person, your vote is important and I encourage you to vote as described on page 96.

 

Sincerely,   Gregory B. Penner Chairman

From Our Lead Independent Director

 

As Walmart continues its transformation to better serve our customers seamlessly, we are committed to continuously enhancing our Board governance to align with our strategy. We’ve brought fresh and diverse perspectives to the Board by recruiting new independent directors with strong backgrounds in technology, eCommerce, and finance and accounting. We’ve also engaged a third-party consulting firm to help us further develop our long-term Board succession plan and a pipeline of future director candidates. And we recently amended our bylaws to adopt a proxy access provision.

 

Our Compensation and Management Development Committee is committed to ensuring that our compensation program continues to support the transformation of our business. To this end, we made important changes to our executive compensation program, which you can read about in the CD&A beginning on page 39. These changes were informed by our ongoing and extensive engagement with our institutional shareholders, whose views are always important to us. This past year, we engaged with shareholders representing approximately 450 million shares to hear their perspectives on our strategy, governance, compensation, and other topics.

 

After 12 years of service, I will now be retiring from the Board at our upcoming 2018 Annual Shareholders’ Meeting in accordance with our term limits. It has been a privilege to serve this great company and you, our shareholders. I am confident that I leave your company in great hands to win the future of retail.

 

Sincerely,   Dr. James I. Cash, Jr. Lead Independent Director

Letter to Shareholders  •  Walmart  |  2018 Proxy Statement    3

Notice of 2018 Annual
Shareholders’ Meeting

How To Cast Your Vote (PAGE 96)
INTERNET		CALL		MOBILE DEVICE		MAIL		IN PERSON
www.proxyvote.com		1-800-690-6903		Scan the QR code on your proxy card, notice of internet availability of proxy materials, or voting instruction form		Mail your signed proxy card or voting instruction form		Wednesday, May 30, 2018 10:00 a.m., Central Time John Q. Hammons Center 3303 S. Pinnacle Hills Parkway Rogers, AR 72758

The proxy statement and our Annual Report to Shareholders for the fiscal year ended January 31, 2018, are available in the “Investors” section of our corporate website at http://stock.walmart.com/annual-reports.

4    Walmart  |  2018 Proxy Statement

Table of Contents

Walmart  |  2018 Proxy Statement    5

You have received these proxy materials because the Board is soliciting your proxy to vote your Shares at the 2018 Annual Shareholders’ Meeting. This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references (“XX”) are supplied to help you find further information in this proxy statement. Please refer to the Table of Abbreviations on page 102 for the meaning of certain terms used in this summary and the rest of this proxy statement. This proxy statement and the related proxy materials were first released to shareholders and made available on the internet on April 20, 2018.

If you are unable to attend in person, you can view a live webcast of the 2018 Annual Shareholders’ Meeting at http://stock.walmart.com.

In addition, shareholders may be asked to consider and vote on any other business properly brought before the meeting.

6     Walmart  |  2018 Proxy Statement  •  Proxy Summary

Board Nominee Overview

Our Board nominees bring a variety of backgrounds, qualifications, skills and experiences that contribute to a well-rounded Board uniquely positioned to effectively guide our strategy and oversee our operations in a rapidly evolving retail industry.

Proxy Summary  •  Walmart  |  2018 Proxy Statement    7

Our Director Nominees

7 of our 11 Board nominees are independent, all members of the Audit Committee, the CMDC, and the NGC are independent, and our key committee chairs are independent. Our Board has separated the roles of Chairman and CEO, and we have a robust Lead Independent Director role. Despite their significant Share ownership, only three members of the Walton family are Board members.

Key Committee Membership

Chair           l Member

Name/Age

Experience

Director Since

Principal Occupation

Independent

Other Pubic Company Boards

Audit

Compensation & Management Development

Nominating & Governance

Strategic Planning & Finance

Technology & eCommerce

Steve Easterbrook (50)

• Senior Leadership • Brand Management • Global/International • Retail • Finance/Accounting

Nominee

CEO, McDonald’s Corporation

l

1

Tim Flynn (61)

• Senior Leadership • Global/International • Finance/Accounting • Regulatory/Legal

2012

Retired Chairman and CEO, KPMG

l

3

l

Sarah Friar (45)

• Senior Leadership • Global/International • Finance/Accounting • Technology/eCommerce

2018

CFO, Square, Inc.

l

1

l

l

Carla Harris (55)

• Senior Leadership • Global/International • Finance/Accounting • Regulatory/Legal

2017

Vice Chairman, Wealth Management, Managing Director and Head of Multicultural Client Strategy, Morgan Stanley

l

0

l

l

Tom Horton (56)

• Senior Leadership • Global/International • Finance/Accounting • Regulatory/Legal

2014

Senior Advisor, Warburg Pincus LLC, and retired Chairman and CEO, AMR Corporation

l

1

l

l

Marissa Mayer (42)

• Senior Leadership • Global/International • Technology/eCommerce • Marketing/Brand Management

2012

Co-founder, Lumi Labs, Inc. and Former President and CEO, Yahoo! Inc.

l

0

l

l

Doug McMillon (51)

• Senior Leadership • Retail • Global/International • Technology/eCommerce

2013

President and CEO, Walmart

0

Greg Penner (48) (Board Chairman)

• Senior Leadership • Retail • Global/International • Technology/eCommerce • Finance/Accounting

2008

Chairman, Walmart and Partner, Madrone Capital Partners

0

Steve Reinemund (70)

• Senior Leadership • Global/International • Marketing/Brand Management

2010

Retired Dean of Business, Wake Forest University, and retired Chairman and CEO, PepsiCo., Inc.

l

2

l

l

Rob Walton (73)

• Senior Leadership • Retail • Global/International • Regulatory/Legal

1978

Retired Chairman, Walmart

0

l

Steuart Walton (36)

• Retail • Global/International • Regulatory/Legal

2016

Founder and Chair, RZC Investments

0

l

8    Walmart  |  2018 Proxy Statement  •  Proxy Summary

Proxy Summary  •  Walmart  |  2018 Proxy Statement    9

Proposal No. 1

Election of Directors

Director Skills Criteria and Qualifications

What am I voting on?

You are voting to elect each nominee named below as a director of the company for a one-year term. If you return your proxy, your proxy holder will vote your Shares FOR the election of each Board nominee named below unless you instruct otherwise. If the shareholders elect all the director nominees named in this proxy statement at the 2018 Annual Shareholders’ Meeting, Walmart will have 11 directors. Each director nominee named in this proxy statement has consented to act as a director of Walmart if elected. If a nominee becomes unwilling or unable to serve as a director, your proxy holder will have the authority to vote your Shares for any substitute candidate nominated by the Board, or the Board may decrease the size of the Board.

What qualifications do the Nominating and Governance Committee and the Board consider when selecting candidates for nomination?

At Walmart, we believe an effective Board should be made up of individuals who collectively provide an appropriate balance of distinguished leadership, diverse perspectives, strategic skill sets, and professional experience relevant to our business and strategic objectives.

The Nominating and Governance Committee (NGC) selects potential candidates on the basis of: outstanding achievement in their professional careers; broad experience and wisdom; personal and professional integrity; ability to make independent, analytical inquiries; experience and understanding of the business environment; willingness and ability to devote adequate time to Board duties; and such other experience, attributes, and skills that the NGC determines qualify candidates for service on the Board.

The NGC also considers whether a potential candidate satisfies the independence and other requirements for service on the Board and its committees, as set forth in the NYSE Listed Company Rules and the SEC’s rules. Additional information regarding qualifications for service on the Board and the nomination process for director candidates is set forth in the NGC’s charter and our Corporate Governance Guidelines, which are available on the Corporate Governance page of our website at http://stock.walmart.com/investors/corporate-governance/governance-documents.

Director Skills Criteria:

Walmart is moving with speed to better serve our customers and pursue our key objectives of making every day easier for busy families, changing how we work, delivering results and operating with discipline, and being the most trusted retailer. Depending on the current composition of the Board and Board committees and expected future turnover on our Board, the NGC generally seeks director candidates with experience, skills, or background in one or more of the following areas:

STRATEGY				GOVERNANCE		LEADERSHIP		DIVERSITY
Retail		Global or International		Regulatory, Legal, or Risk Management		Senior Leadership		Diversity
Technology or eCommerce		Marketing or Brand Management		Finance, Accounting, or Financial Reporting

10    Walmart  |  2018 Proxy Statement  •  Proposal No. 1: Election of Directors

Strategy
		Retail Experience   As the world’s largest retailer, we seek directors who possess an understanding of financial, operational, and strategic issues facing large retail companies.				Technology or eCommerce Experience   In order to deliver on our strategy to be the first retailer to offer customers a seamless shopping experience at scale, we seek directors who can provide advice and guidance based on their experiences in eCommerce or related industries such as digital, mobile, or consumer internet.
		Global or International Business Experience   As a global organization, directors with broad international exposure provide useful business and cultural perspectives, and we seek directors with experience at multinational companies or in international markets.				Marketing or Brand Management Experience   Directors with relevant experience in consumer marketing or brand management, especially on a global basis, provide important insights to our Board.

Leadership
		Senior Leadership Experience   Directors who have served in relevant senior leadership positions bring unique experience and perspective. We seek directors who have demonstrated expertise in governance, strategy, development, and execution.

Governance
		Finance, Accounting, or Financial Reporting Experience   We value an understanding of finance and financial reporting processes because of the importance our company places on accurate financial reporting and robust financial controls and compliance. We also seek to have multiple directors who qualify as audit committee financial experts.				Regulatory, Legal, or Risk Management Experience   Our company’s business requires compliance with a variety of regulatory requirements across a number of federal, state, and international jurisdictions. Our Board values the insights of directors who have experience advising or working at companies in regulated industries, and it benefits from the perspectives of directors with governmental, public policy, legal, and risk management experience and expertise.

Diversity
		Board Diversity   Diversity and inclusion are values embedded in our culture and fundamental to our business. We believe that a board comprised of directors with diverse backgrounds, experiences, and perspectives improves the dialogue and decision-making in the board room and contributes to overall Board effectiveness. The Board assesses the effectiveness of its approach to Board diversity as part of the Board and committee evaluation process.

Proposal No. 1: Election of Directors  •  Walmart  |  2018 Proxy Statement    11

Summary of Director Nominee Qualifications and Experience

The chart below identifies the balance of skills and qualifications each director nominee brings to the Board. The fact that a particular skill or qualification is not designated does not mean the director nominee does not possess that particular attribute. Rather, the skills and qualifications noted below are those reviewed by the NGC and the Board in making nomination decisions and as part of the Board succession planning process. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well positioned to provide effective oversight and strategic advice to our management.

	Leadership	Strategy				Governance
Director Nominee	Senior Leadership	Retail	Global or International Business	Technology or eCommerce	Marketing or Brand Management	Finance, Accounting, or Financial Reporting	Regulatory, Legal, or Risk Management
Steve Easterbrook	l	l	l		l	l
Tim Flynn	l		l			l	l
Sarah Friar	l		l	l		l
Carla Harris	l		l			l	l
Tom Horton	l		l			l	l
Marissa Mayer	l		l	l	l
Doug McMillon	l	l	l	l
Greg Penner	l	l	l	l		l
Steve Reinemund	l		l		l
Rob Walton	l	l	l				l
Steuart Walton		l	l				l
TOTAL	10	5	11	4	3	6	5

12    Walmart  |  2018 Proxy Statement  •  Proposal No. 1: Election of Directors

Director Nominees for 2018

Who are the 2018 director nominees?

Based on the recommendation of the NGC, the Board has nominated the following candidates for election as directors at the 2018 Annual Shareholders’ Meeting. The information provided below includes, for each nominee, his or her age, principal occupation and employment during the past five years, the year in which he or she first became a director of Walmart, each Board committee on which he or she currently serves, whether he or she is independent, and directorships of other public companies held by each nominee during the past five years.

		Stephen J. Easterbrook   Independent Nominee
		Joined the Board: Nominee   Age: 50		Board Committees •  N/A		Other Current Public Company Directorships McDonald’s Corporation

SKILLS AND QUALIFICATIONS

Mr. Easterbrook brings broad expertise in marketing and brand management developed during more than 20 years of experience with the world’s largest restaurant company with retail locations in 100 countries and more than 25 years of service in the restaurant industry.

Our board would benefit from the valuable insights and perspective Mr. Easterbrook has developed during his extensive career with a large global company with restaurant locations in over 100 countries.

Mr. Easterbrook’s experiences in executive leadership positions at McDonald’s and his expertise as a Chartered Accountant would bring valuable and broad perspective and insights to the Board.

Proposal No. 1: Election of Directors  •  Walmart  |  2018 Proxy Statement    13

		Timothy P. Flynn
		Independent Director
		Joined the Board: 2012   Age: 61		Board Committees •  Audit (Chair) •  SPFC		Other Current Public Company Directorships JPMorgan Chase & Co. Alcoa Corporation UnitedHealth Group Incorporated

SKILLS AND QUALIFICATIONS

Mr. Flynn has more than 32 years of experience in risk management, financial services, financial reporting, and accounting.

Mr. Flynn also brings extensive experience with issues facing complex, global companies, and expertise in accounting, auditing, risk management, and regulatory affairs for such companies.

In addition, Mr. Flynn brings his experiences in executive leadership positions at KPMG and his service on the boards of directors of other large public companies.

		Sarah J. Friar   Independent Director
		Joined the Board: 2018   Age: 45		Board Committees •  Audit •  SPFC		Other Current Public Company Directorships New Relic, Inc.

14    Walmart  |  2018 Proxy Statement  •  Proposal No. 1: Election of Directors

		Carla A. Harris   Independent Director
		Joined the Board: 2017   Age: 55		Board Committees •  CMDC •  SPFC		Other Current Public Company Directorships None

		Thomas W. Horton   Independent Director*
		Joined the Board: 2014   Age: 56		Board Committees •  Audit •  NGC •  SPFC (Chair)		Other Current Public Company Directorships QUALCOMM Incorporated

Proposal No. 1: Election of Directors  •  Walmart  |  2018 Proxy Statement    15

		Marissa A. Mayer   Independent Director
		Joined the Board: 2012   Age: 42		Board Committees •  CMDC •  TeCC		Other Current Public Company Directorships None

		C. Douglas McMillon   President and Chief Executive Officer
		Joined the Board: 2013   Age: 51		Board Committees •  Executive Committee (Chair) •  GCC (Chair)		Other Current Public Company Directorships None

16    Walmart  |  2018 Proxy Statement  •  Proposal No. 1: Election of Directors

		Gregory B. Penner*   Chairman
		Joined the Board: 2008   Age: 48		Board Committees •  Executive Committee •  GCC		Other Current Public Company Directorships None

		Steven S Reinemund   Independent Director
		Joined the Board: 2010   Age: 70		Board Committees •  CMDC (Chair) •  NGC •  TeCC		Other Current Public Company Directorships Exxon Mobil Corporation Marriott International, Inc.

Proposal No. 1: Election of Directors  •  Walmart  |  2018 Proxy Statement    17

		S. Robson Walton*   Director
		Joined the Board: 1978   Age: 73		Board Committees •  SPFC •  Executive Committee •  GCC		Other Current Public Company Directorships None

		Steuart L. Walton*   Director
		Joined the Board: 2016   Age: 36		Board Committee • SPFC		Other Current Public Company Directorships None

18    Walmart  |  2018 Proxy Statement  •  Proposal No. 1: Election of Directors

Are there any directors not standing for re-election?

Yes. Dr. James I. Cash, Jr. and Kevin Y. Systrom will retire from the Board at the conclusion of their current term and will not stand for re-election at the 2018 Annual Shareholders’ Meeting. In accordance with the term limits set forth in our Corporate Governance Guidelines, Dr. Cash is retiring from our Board after 12 years of service. Following discussions, the Board and Mr. Systrom have mutually agreed that he will not stand for re-election at the 2018 Annual Shareholders’ Meeting as he prioritizes work, board responsibilities, and other outside commitments.

		James I. Cash, Jr.   Lead Independent Director
		Joined the Board: 2006   Age: 70		Board Committees •  Audit •  Executive •  NGC (Chair) •  TeCC		Other Current Public Company Directorships Chubb Limited

		Kevin Y. Systrom   Independent Director
		Joined the Board: 2014   Age: 34		Board Committees •  CMDC •  TeCC (Chair)		Other Current Public Company Directorships None

Proposal No. 1: Election of Directors  •  Walmart  |  2018 Proxy Statement    19

Corporate Governance

Effective corporate governance is essential for maximizing long-term value creation for our shareholders. Our values of honesty, accountability, and integrity guide our business and ensure that we maintain the trust of our shareholders, customers, and communities.

Our governance structure is based on our Corporate Governance Guidelines and other key governance documents. These guidelines are reviewed at least annually and updated as needed in response to evolving best practices, regulatory requirements, feedback from our annual Board and committee evaluations, and recommendations made by our shareholders, all with the goal of supporting and effectively overseeing our ongoing strategic transformation.

Our Corporate Governance Guidelines address, among other topics:

20    Walmart  |  2018 Proxy Statement  •  Corporate Governance

Board Leadership Structure

The leadership structure of our Board is designed to ensure robust oversight, independent viewpoints, and the promotion of the overall effectiveness of the Board. The Board annually reviews its leadership structure as part of the process described on page 26. As discussed on page 80, approximately 51% of our company’s Shares are held by members of the family of Sam Walton, our company’s founder. Three generations of Walton family members have served on our Board, which demonstrates the Walton family’s interests in and commitment to the long-term success of our company. Despite their substantial ownership in the company, the members of the Walton family traditionally have held only three seats on our Board. While the NYSE Listed Company Rules provide exemptions from independence requirements for controlled companies, Walmart has not and has no plans to rely on any of those governance exemptions because we believe it is important to have a majority independent board.

Our current Board leadership structure consists of:

Non-Executive Chairman Greg Penner   Primary Responsibilities   •  Presides over meetings of the Board and shareholders   •  Focuses on Board oversight and governance matters   •  Provides advice and counsel to the CEO   •  Agenda review process

Lead Independent Director Jim Cash*   Primary Responsibilities   •  Liaison between Independent Directors and Chairman   •  Agenda review process   •  Board and committee development and evaluation   •  Shareholder engagement

President and CEO Doug McMillon   Primary Responsibilities   •  Leadership of Walmart’s complex global business   •  Implements strategic initiatives   •  Development of robust management team

We have separated the Chairman and CEO roles since 1988. By separating these roles, our CEO is able to focus on managing Walmart’s complex daily operations and our Chairman, who is an Outside Director, can devote his time and attention to matters of Board oversight and governance.

We have had a Lead Independent Director since 2004. The role of the Lead Independent Director is designed to enhance the candor and communication between the independent members of the Board, the Chairman, and the CEO. Our Lead Independent Director is appointed annually by the independent members of the Board and has a robust set of responsibilities, including:

In addition to his role as Lead Independent Director, Dr. Cash also serves as the Chair of the NGC, which means he also oversees the annual Board and Board committee evaluation process and actively participates in the work related to overall Board effectiveness, including Board development, succession planning, and refreshment. Due to the 12 year term limit for independent directors under our Corporate Governance Guidelines, Dr. Cash, who has served on our Board since 2006 and as our Lead Independent Director since 2013, is not standing for re-election at the 2018 Annual Shareholders’ Meeting. In April 2018, the Independent Directors appointed Mr. Horton to succeed Dr. Cash as our next Lead Independent Director effective upon Mr. Horton’s re-election as a Director at the 2018 Annual Shareholders’ Meeting.

Independent Board Committee Chairs: Each of the Board’s key committees currently is led by an independent chair. These committees play a critical role in our governance and strategy, and each committee has access to management and the authority to retain independent advisors as it deems appropriate.

Governance Committees							Strategy Committees
	Audit		Compensation and Management Development		Nominating and Governance			Strategic Planning and Finance		Technology and eCommerce
	Tim Flynn Independent Chair		Steve Reinemund Independent Chair		Jim Cash* Independent Chair			Tom Horton* Independent Chair		Kevin Systrom* Independent Chair

Corporate Governance  •  Walmart  |  2018 Proxy Statement    21

Board Committees

To enhance the effectiveness of the Board’s risk oversight function, the Board regularly reviews its committee structure and committee responsibilities to ensure that the Board has an appropriate committee structure focused on matters of strategic and governance importance to Walmart. Currently, the Board has seven standing committees, which are described below. In addition to the duties described below, our Board committees perform the risk oversight functions described on page 28.

STRATEGIC PLANNING AND FINANCE COMMITTEE

meetings during fiscal 2018

TECHNOLOGY AND eCOMMERCE COMMITTEE

meetings during fiscal 2018

(1) Not standing for re-election at the 2018 Annual Shareholders’ meeting.

22    Walmart  |  2018 Proxy Statement  •  Corporate Governance

AUDIT COMMITTEE

meetings during fiscal 2018

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE

meetings during fiscal 2018

Corporate Governance  •  Walmart  |  2018 Proxy Statement    23

NOMINATING AND GOVERNANCE COMMITTEE

meetings during fiscal 2018

The remaining two standing committees of the Board are responsible for various administrative matters.

GLOBAL COMPENSATION COMMITTEE

 

meetings during fiscal 2018

 

Primary Responsibilities

 

•	Administers Walmart’s equity and cash incentive compensation plans for associates who are not Directors or Executive Officers

 

Total Members: 3

 

Doug McMillon, Chair

Greg Penner
Rob Walton

EXECUTIVE COMMITTEE

 

No meetings* during fiscal 2018

 

Primary Responsibilities

 

•	Implements policy decisions of the Board
•	Acts on the Board’s behalf between Board meetings

 

Total Members: 4

 

Doug McMillon, Chair
Jim Cash¹
Greg Penner
Rob Walton

 

*	The Executive Committee acted by unanimous written consent 13 times during fiscal 2018. The Board reviewed and ratified all unanimous written consents of the Executive Committee during fiscal 2018.
(1)	Not standing for re-election at the 2018 Annual Shareholders’ Meeting.

24    Walmart  |  2018 Proxy Statement  •  Corporate Governance

Governing Documents

In addition to our Corporate Governance Guidelines, each standing committee of the Board has a written charter, which defines the roles and responsibilities of the Board committee. The committee charters and the Corporate Governance Guidelines provide the overall framework for our corporate governance practices. The NGC and the Board review the Corporate Governance Guidelines, and the NGC, the Board, and each Board committee review the Board committee charters at least annually to determine whether any updates or revisions to these documents may be necessary or appropriate.

Board Meetings and Director Attendance

The Board held a total of five meetings during fiscal 2018.The Outside Directors and Independent Directors met regularly in separate executive sessions, with the Lead Independent Director presiding over those sessions. As a whole, during fiscal 2018, our directors attended approximately 97% of the aggregate number of Board meetings and meetings of Board committees on which they served.

Under our Board policy, all directors are expected to attend the company’s annual shareholders’ meetings. While the Board understands that there may be situations that prevent a Director from attending an annual shareholders’ meeting, the Board encourages all Directors to make attendance at all annual shareholders’ meetings a priority.

Eleven Board members attended the 2017 Annual Shareholders’ Meeting, including 8 of the 9 director nominees named in this proxy statement who were members of the Board or Board nominees at the time of the 2017 Annual Shareholders’ Meeting.

Communicating with the Board

The Board welcomes feedback from shareholders and other interested parties. There are a number of ways that you can contact the Board or individual members of the Board.

We receive a large volume of correspondence regarding a wide range of subjects each day, including correspondence relating to ordinary store operations and merchandise in our stores. As a result, our individual directors are often not able to respond to all communications directly. Therefore, the Board has established a process for managing communications to the Board and individual directors.

Communications directed to the Board or individual directors are reviewed to determine whether, based on the facts and circumstances of the communication, a response on behalf of the Board or an individual director is appropriate. If a response on behalf of the Board or an individual director is appropriate, Walmart management may assist the Board or individual director in gathering all relevant information and preparing a response. Communications related to day-to-day store operations, merchandise, and similar matters are typically directed to an appropriate member of management for a response. Walmart maintains records of communications directed to the Board and individual directors, and these records are available to our directors at any time upon request.

Shareholders wishing to recommend director candidates for consideration should do so in writing to the address above. The recommendation should include the candidate’s name and address, a resume or curriculum vitae that demonstrates the candidate’s experience, skills, and qualifications, and other relevant information for the Board’s consideration. All director candidates recommended by shareholders will be evaluated by the NGC on the same basis as any other director candidates.

Corporate Governance  •  Walmart  |  2018 Proxy Statement    25

Board Evaluations and Board Effectiveness

The Board is committed to robust Board and Board committee evaluations as an important tool for promoting effectiveness and continuous improvement. The Board has implemented a two-year evaluation cycle, with the evaluation process led by the Lead Independent Director and by a third-party consulting firm in alternating years. The evaluation process was led by our Lead Independent Director in fiscal 2018 and will be led by a third-party consulting firm in fiscal 2019 to bring an outside perspective to the evaluation process.

Board Refreshment and Succession Planning

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Director Onboarding and Engagement

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Management Development and Succession Planning

Our Board places a high priority on senior management development and succession planning. The CMDC has primary responsibility for overseeing the succession planning and retention practices for our Executive Officers and other senior leaders. Executive Officer succession planning and senior management development is a regular topic on the agendas for the meetings of the CMDC.

At these meetings, the members of our CMDC, in consultation with our CEO, our Executive Vice President – Global People, and others as the CMDC may deem appropriate, engage in comprehensive deliberations regarding the development and evaluation of current and potential senior leaders, as well as the development of executive succession plans, including succession plans for our CEO position. This process has contributed to two successful CEO transitions since 2009. The Board has also adopted a CEO succession planning process to address unanticipated events and emergency situations.

The Board’s Role in Risk Oversight

Taking reasonable and responsible risks is an inherent part of Walmart’s business and is critical to our continued innovation, growth, and achievement of our strategic objectives. The Board and the Board committees actively oversee and monitor the management of the most significant risks that could impact our company’s operations. The Board does not view risk in isolation, but instead considers risk in conjunction with its oversight of Walmart’s strategy and operations.

Walmart identifies, assesses, and assigns responsibility for managing risks through its annual enterprise risk assessment process, other internal processes, and internal control environment. The Board, Board committees, and management coordinate the risk oversight role in a manner that serves the long-term interests of our company and our shareholders through established periodic reporting and open lines of communication.

Additional information regarding the roles and responsibilities of our Board committees can be found under “Board Committees” beginning on page 22.

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Board Oversight of Legislative Affairs, Public Policy Engagement, Charitable Giving, and Sustainability

The NGC reviews and advises management regarding the company’s legislative affairs and public policy engagement strategy, as well as the company’s charitable giving strategy and other social, community, and sustainability initiatives. Walmart engages in the political process when we believe that doing so will serve the best interests of the company and our shareholders. Walmart is committed to engaging in the political process as a good corporate citizen and in a manner that complies with all applicable laws. Over the years, Walmart has provided greater transparency regarding the company’s political engagement. Since 2015, we have compiled lobbying disclosure information from our U.S. state-level public filings and presented them on our corporate website, and since 2016 we have also disclosed on our corporate website the lobbying expense from our public filings at the U.S. federal level.

Shareholder Outreach and Engagement

We recognize the value of listening and taking into account the views of our shareholders, and the relationship with our shareholders is an integral part of our corporate governance practices. We conduct shareholder outreach throughout the year to ensure that management and the Board understand and consider the issues of importance to our shareholders and are able to address them appropriately.

Senior leaders and subject matter experts from the company meet regularly with representatives at many of our top institutional shareholders and periodically with leading proxy advisory firms to discuss Walmart’s strategy, governance practices, executive compensation, compliance programs, and other ESG related matters. Members of our Board participate from time to time in these meetings. Management reports regularly to the CMDC and NGC about these meetings, including feedback on these diverse topics and concerns raised by our shareholders.

We are continuing this program of shareholder engagement during fiscal 2019, in addition to our customary participation at industry and investment community conferences, investor road shows, and analyst meetings. We also have incorporated into this proxy statement some of the feedback we received during these meetings. We also respond to individual shareholders who provide feedback about our business. We have had success engaging with parties to understand shareholder concerns and reach resolutions on issues that are in the best interests of our shareholders, and we remain committed to these ongoing initiatives.

Corporate Governance  •   Walmart  |  2018 Proxy Statement    29

How We Determine Director Independence

Our Board is committed to ensuring its membership consists of the right mix of skill sets in light of Walmart’s strategy, the Board’s tenure policies, and the Board’s desire to maintain at all times a majority of directors who are independent in accordance with the NYSE Listed Company Rules. Historically, three members of the Walton family have been members of our Board, and the NGC and the Board believe this is appropriate in light of the Walton family’s significant and long-term Share ownership. Our CEO also serves on the Board, and our former CEOs have historically served on the Board for a period of time after they retire. Our incoming CEOs have supported this practice and we believe this practice has contributed to successful CEO transitions during our company’s history. Consistent with our Board’s commitment to independent Board oversight, the Board generally seeks to fill the remaining Board seats with directors who are independent as defined in the NYSE Listed Company Rules.

In making independence determinations, the Board complies with all NYSE criteria, and with respect to Board committee membership, certain SEC criteria, and considers all relevant facts and circumstances. Under the NYSE Listed Company Rules, to be considered independent:

To aid in the director independence assessment process, the Board has adopted materiality guidelines that it considers in its independence assessment process. While not determinative of independence, these guidelines identify the following categories of relationships that the Board has determined will generally not affect a director’s independence.

In April 2018, the Board and the NGC conducted their annual review of the directors’ and the director nominee’s responses to a questionnaire soliciting information regarding their direct and indirect relationships with the company (and the directors’ and the director nominee’s immediate family members’ direct and indirect relationships with the company) and other relationships that may be relevant to independence. They also reviewed due diligence performed by management regarding any transactions, relationships, or arrangements between the company and the directors and director nominee or parties related to the directors and director nominee.

As a result of this review, the Board has determined that the following directors and the director nominee either are or will be Independent Directors under the independence standards in the NYSE Listed Company Rules: Stephen J. Easterbrook; Timothy P. Flynn; Sarah J. Friar; Carla A. Harris;Thomas W. Horton; Marissa A. Mayer; and Steven S Reinemund. The Board has also determined that James I. Cash, Jr. and Kevin Y. Systrom, who are not standing for re-election at the 2018 Annual Shareholders’ Meeting, are Independent Directors. In addition, the Board determined that the currently serving members of the Audit Committee and the CMDC meet the heightened independence

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standards for membership on those Board committees under the NYSE Listed Company Rules and the SEC’s rules. The Board also determined that Linda S. Wolf, who did not stand for re-election at the 2017 Annual Shareholders’ Meeting and, therefore, ceased to be a director of Walmart on June 2, 2017, was independent and met the heightened independence standards under the NYSE Listed Company Rules and the SEC’s rules for compensation committee membership during the portion of fiscal 2018 during which she served on the Board.

In making its determination as to the independence of our Independent Directors and our director nominee, the Board considered whether any relationship between a director or director nominee and Walmart is a material relationship based on the materiality guidelines discussed above, the facts and circumstances of the relationship, the amounts involved in the relationship, the director’s or director nominee’s interest in such relationship, if any, and such other factors as the Board, in its judgment, deemed appropriate. In each case, the Board found the relationship with our Independent Directors and director nominee to be immaterial to the director’s or director nominee’s independence. The types of relationships considered by the Board are noted below:

*Mr. Horton has been nominated to serve as a director of a Walmart vendor.

The aggregate amounts involved in each of the relationships and transactions described in the preceding table were less than $1 million or, if greater, 2% of the consolidated gross revenues for the entity’s last fiscal year, with the exception of certain relationships involving Mr. Reinemund.

Immediate family members of Mr. Reinemund are or were employed by and had a less than 5% ownership interest in (but are not executive officers of) a Walmart supplier or vendor that received payments from Walmart during the entity’s last fiscal year that account for more than 2% of the entity’s consolidated gross revenues for that entity’s last fiscal year. The Board determined these relationships were immaterial to Mr. Reinemund’s independence because in each case neither Mr. Reinemund nor his immediate family member: (i) is or was an executive officer of the entity; (ii) is or was involved in the marketing or sale of goods or services to Walmart, the negotiation of transactions, or the management of the business relationship between Walmart and the entity; (iii) does or did receive compensation from the entity based on the marketing or sale of the entity’s goods or services to Walmart; or (iv) had an advancement within or continued employment with such entity based on the marketing or sale of the entity’s goods or services to Walmart. Further, the payments made by Walmart to the entities, or by the entities to Walmart, were for various products and services in the ordinary course of business, and Walmart has had a relationship with these entities prior to Mr. Reinemund’s immediate family members’ employment with these entities.

The Board does not believe S. Robson Walton, Gregory B. Penner, or Steuart L. Walton have any relationships with Walmart that would disqualify them from being considered independent under the NYSE Listed Company Rules. However, the Board has deferred its determination as to their independence. If the Board had made such an independence determination, then

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10 of 11 of Walmart’s nominees, or 91%, would have been independent.

In addition, although the Walton family holds approximately 51% of our company’s Shares, we have not and do not plan to rely on any of the exemptions from certain board independence requirements available to controlled companies under the NYSE Listed Company Rules. Our Board is committed to maintaining a majority independent Board and believes that this independence ensures robust oversight, independent viewpoints, and promotes the Board’s overall effectiveness.

Related Person Transaction Review Policy

The Board has adopted a written policy applicable to all Walmart officers who serve as executive vice presidents or above; all directors and director nominees; all shareholders beneficially owning more than five percent of Walmart’s outstanding Shares; and the immediate family members of each of the preceding persons (collectively, the “Covered Persons”). Any entity in which a Covered Person has a direct or indirect material financial interest or of which a Covered Person is an officer or holds a significant management position (each a “Covered Entity”) is also covered by the policy. The Transaction Review Policy applies to any transaction or series of similar or related transactions in which a Covered Person or Covered Entity has a direct or indirect material financial interest and in which Walmart is a participant (each, a “Covered Transaction”).

Under this Transaction Review Policy, each Covered Person is responsible for reporting to Walmart’s chief audit executive any Covered Transactions of which he or she has knowledge. Walmart’s chief audit executive, with the assistance of other appropriate Walmart personnel, reviews each Covered Transaction and submits the results of this review to the Audit Committee. The Audit Committee reviews each Covered Transaction and either approves or disapproves the transaction. To approve a Covered Transaction, the Audit Committee must find that:

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Related Person Transaction Process

The following chart shows our process for identification and disclosure of related person transactions.

Fiscal 2018 Review of Related Person Transactions

Our company’s Legal Department reviews each Covered Person transaction that exceeds $120,000. The purpose of this review is to determine whether the related person has a direct or indirect material interest in the transaction.

Our Legal Department has developed and implemented processes and controls for obtaining information about proposed or existing related person transactions from our directors, director nominees, Executive Officers, and principal shareholders. The Legal Department analyzes each related person transaction and, based upon the facts and circumstances, determines whether the related person has or will have a material interest in the transaction. If so, under the company’s Transaction Review Policy, then the related person transaction is presented to the Audit Committee for its review and approval or ratification. As described in our “Transaction Review Policy,” the Audit Committee also considers the following factors when reviewing a related person transaction:

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Other Transactions

During fiscal 2018, certain banking subsidiaries of a bank holding company that is collectively owned by Mr. Jim C. Walton, Mr. S. Robson Walton, and certain members of the Walton family and related trusts, made payments to Walmart in the aggregate amount of approximately $336,000 for supercenter, discount store, and Neighborhood Market banking facility rent pursuant to negotiated arrangements. The banking subsidiaries made other payments to Walmart pursuant to similar arrangements that were awarded by Walmart on a competitive-bid basis. The leases of banking facility space in various stores remains in effect, and we anticipate that in fiscal 2019 such banking subsidiaries will pay Walmart approximately $330,000 pursuant to those leases not awarded on a competitive-bid basis. Mr. Jim C. Walton is the father of Mr. Steuart L. Walton, a director of Walmart. We do not believe that either Walmart or the members of the Walton family have a direct or indirect material interest in any of the transactions between Walmart and the banking subsidiaries.

Director Compensation

Walmart’s compensation program for Outside Directors is intended to:

Each year, the CMDC and Board undertake a comprehensive review of Outside Director compensation including a comparison of director compensation at Walmart’s peer group companies. Based on this review, the CMDC and Board determined to make no changes to Walmart’s Outside Director compensation for the term beginning at the 2018 Annual Shareholders’ Meeting, with the exception of introducing an additional retainer for the Chair of the NGC, as described below.

Components of Director Compensation

Our Outside Director compensation program consists of the following primary components:

Other Compensation

Each Outside Director who attends in person a Board meeting held at a location that requires intercontinental travel from his or her residence is paid an additional $4,000 meeting attendance fee. Also, each member of the Audit Committee received an additional fee during fiscal 2018. Since 2011, the Audit Committee has been conducting an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other alleged crimes or misconduct in connection with certain foreign subsidiaries, and whether prior allegations of these violations and/or misconduct were appropriately handled by Walmart. The Audit Committee and Walmart have engaged outside counsel from a number of law firms and other advisors who are assisting in the ongoing investigation of these matters. This investigation continues to result in a significant increase in the workload of the Audit Committee members, and during fiscal 2018, the Audit Committee members received frequent updates regarding the investigation via conference calls and other means of communication with outside counsel and other advisors. In light of this continuing significant additional time commitment, during fiscal 2018, the Audit Committee Chair received an additional fee of $90,000, and the other members of the Audit Committee received an additional fee of $45,000.

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Form and Timing of Payment

Stock grants to Outside Directors are made annually upon election to the Board at our annual shareholders’ meeting, which was most recently held on June 2, 2017. Each Outside Director may elect to defer the receipt of this stock grant in the form of stock units that are settled in Shares following the end of the director’s Board service. The other components of Outside Director compensation listed above are paid quarterly in arrears. Each Outside Director can elect to receive these other components in the form of cash, Shares (with the number of Shares determined based on the closing price of Shares on the NYSE on the payment date), deferred in stock units, or deferred into an interest-credited cash account.

Director Stock Ownership Guidelines

Each Outside Director is required to own, within five years of his or her initial election to the Board, Shares or deferred stock units with a value equal to five times the annual retainer portion of the Outside Director compensation established by the Board in the year the director was initially elected. All Outside Directors who have reached the five-year compliance date own sufficient Shares or deferred stock units to satisfy this requirement.

Director Compensation for Fiscal 2018

Explanation of information in the columns of the table:

Name (column (a))

C. Douglas McMillon is omitted from this table because he received compensation only as an associate of our company during fiscal 2018 and did not receive any additional compensation for his duties as a director. Sarah J. Friar is omitted from this table because she was appointed to the Board after the end of fiscal 2018 and therefore did not receive any compensation from Walmart during fiscal 2018.

Fees Earned or Paid in Cash (column (b))

Certain Outside Directors elected to either receive Shares in lieu of some or all of these amounts or defer these amounts in the form of deferred stock units, as shown below. These amounts were converted into Shares or deferred stock units quarterly using the closing price of a Share on the NYSE as of the respective payment dates.

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Stock Awards (column (c))

In accordance with SEC rules, the amounts in this column are the aggregate grant date fair value of stock awards granted during fiscal 2018, computed in accordance with the stock-based accounting rules that are part of GAAP (as set forth in Financial Accounting Standards Board’s Accounting Standards Codification Topic 718). Each Outside Director other than Mr. Penner that was elected to the Board at the 2017 Annual Shareholders’ Meeting received a stock award of 2,198 Shares ($175,000 divided by $79.62, the closing price of a Share on the NYSE on the grant date, and rounded to the nearest Share). Mr. Penner received a stock award of 3,454 Shares ($275,000 divided by $79.62, rounded to the nearest Share). Dr. Cash, Mr. Flynn, Ms. Mayer, Mr. Penner, Mr. Rob Walton, and Mr. Steuart Walton elected to defer these Shares in the form of deferred stock units. Ms. Craig and Ms. Wolf did not stand for re-election at the 2017 Annual Shareholders’ Meeting and, therefore, did not receive a stock grant during fiscal 2018.

Option Awards and Non-Equity Incentive Plan Compensation (columns (d) and (e))

We do not issue stock options to our Outside Directors and do not provide our Outside Directors with any non-equity incentive plan compensation. Therefore, we have omitted these columns from the table.

Change in Pension Value and Non-Qualified Deferred Compensation Earnings (column (f))

While directors are permitted to defer cash retainers into an interest-credited account under the Director Compensation Deferral Plan, none of our current directors have elected to do so and do not have any balances in any such account. Therefore, we have omitted this column from the table.

All Other Compensation (column (g))

The amounts in this column include tax gross-up payments paid during fiscal 2018 relating to imputed income attributable to spousal travel expenses, meals, and related activities in connection with certain Board meetings during fiscal 2018. The cost of the underlying spousal travel expenses, meals, and related activities for each of the other directors is omitted from this column because the total incremental cost for such benefits for each director was less than $10,000.

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Proposal No. 2 Advisory Vote to Approve Named Executive Officer Compensation

We are asking our shareholders to approve, on a non-binding advisory basis, under Section 14A of the Exchange Act, the compensation of our NEOs as disclosed in this proxy statement. We have held a similar shareholder vote every year since 2011 and expect to hold a similar vote at the 2019 Annual Shareholders’ Meeting.

As described in the CD&A, our executive compensation program is designed with an emphasis on performance and is intended to closely align the interests of our NEOs with the interests of our shareholders. The CMDC regularly reviews our executive compensation program to ensure that compensation is closely tied to aspects of our company’s performance that our Executive Officers can impact and that are likely to have an impact on shareholder value.

Our compensation program is also designed to balance long-term performance with shorter-term performance and to mitigate any risk that an Executive Officer would be incentivized to pursue good results with respect to a single performance measure, company segment, or area of responsibility to the detriment of our company as a whole.

In the CD&A, we discuss why we believe the compensation of our NEOs for fiscal 2018 was appropriately aligned with our company’s performance during fiscal 2018. The CD&A also describes feedback we received regarding our executive compensation program during our shareholder outreach efforts, and is intended to provide additional clarity and transparency regarding the rationale for and philosophy behind our executive compensation program and practices. We urge you to read carefully the CD&A, the compensation tables, and the related narrative discussion in this proxy statement when deciding how to vote on this proposal.

The vote on this proposal is advisory, which means that the vote will not be binding on Walmart, the Board, or the CMDC. However, the Board and CMDC value our shareholders’ opinions, and the CMDC will consider the results of the vote on this proposal when making future decisions regarding executive compensation and when establishing our NEOs’ compensation opportunities.

In view of the foregoing, shareholders will vote on the following resolution at the 2018 Annual Shareholders’ Meeting:

RESOLVED, that the company’s shareholders hereby approve, on an advisory basis, the compensation of the Named Executive Officers of Walmart as disclosed in Walmart’s proxy statement for the 2018 Annual Shareholders’ Meeting in accordance with the Securities and Exchange Commission’s compensation disclosure rules.

38     Walmart  |  2018 Proxy Statement  •   Proposal No. 2 Advisory Vote to Approve Named Executive Officer Compensation