Gregory J. Millman – Wall Street Journal – May 28, 2014
Shareholder advisory firm ISS strongly disapproves of Walmart Stores Inc.’s corporate governance, assigning it “8” on a 10-point scale where 10 indicates the highest level of risk. In its report on Walmart, ISS criticized the Bentonville, Ark.-based retailer for lack of transparency about its bribery problems, and recommended “no” votes on chairman S. Robson Walton and director Michael T. Duke, formerly chief executive officer. The advisor also called for a “no” vote in the say-on-pay ballot, citing several issues of which the “most troubling” was moving the goal posts on pay-for-performance by retroactive adjustments to incentive plans that had the result of rewarding executives despite performance declines. Walmart rejected the criticism, the Wall Street Journal reported. No matter the merits of its case, the ISS report may do little more than prove the wisdom of the old Arab adage, “The dog barks, but the caravan moves on.”
Alan Johnson, managing director at compensation consulting firm Johnson Associates, told Risk & Compliance Journal that Walmart’s practice of adjusting compensation when performance targets are not achieved is neither unusual nor unjustifiable. “I have many clients that do that,” he said, noting that in a complex, global company facing pressures on several fronts, boards often want to retain flexibility. However, he also noted that “Walmart does not do a very good job of explaining.” But when half of the stock is in the control of the founding family, shareholder outreach may be an understandably low priority.
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