Thanks to a series of stock buybacks, members of the founding Walton family have seized control of 50.9 percent of Walmart (NYSE:WMT). That majority ownership has triggered the world's largest retailer to be considered a controlled company according to New York Stock Exchange rules, Bloomberg reports. That allows Walmart to opt out of a requirement to have a majority of independent directors.
Even though the chain is now permitted to not have independent directors, it says it will still have them. But Bloomberg reports that the board has decided to eliminate three of those independent directors, shrinking the 17-member board to 14.
The three independent board members Walmart did not renominate were James Breyer, partner in Accel Partners, founder and CEO of Breyer Capital; M. Michele Burns, executive director and CEO of the Retirement Policy Center; and Arne M. Sorenson, president and CEO of Marriott International.
Then there's the definition of independent. Walmart said that seven of the remaining nine independent directors have outside financial ties to the company. That SEC filing specified that two independent board members (Sorenson, who will no longer be a board member, and Yahoo CEO Marissa Mayer) are officers of a Walmart vendor or service provider. It also found that eight are also directors or trustees of a Walmart vendor or service provider (Mayer again, Sorenson again, James Cash, Harvard Business School Professor James E. Robison, retired Coca-Cola CEO Douglas Daft, retired KPMG International Chairman Timothy Flynn, Wake Forest University Dean of Business Steven Reinemund and Williams Capital Group CEP Christopher Williams).
It found that three board members (former U.S. Small Business Administration chief Aida Alvarez, Breyer and Reinemund) each were a "member of a board of trustees or advisory board of or held a position in a not-for-profit institution, entity, association or organization to which Walmart made or committed to make donations." And it found that two board members (Alvarez and Reinemund) had "immediate family members" that are "employed by Walmart vendors or service providers."
OK, so like any major corporate board, many of them do all kinds of business together outside the boardroom. There are good reasons why so many raise an eyebrow at the term "independent board member."
- See Bloomberg story
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