Walmart is facing calls to shake up its executive pay, boardroom composition and approach to workplace sexual harassment at the US retailer's annual meeting, expected to be gatecrashed by presidential candidate Bernie Sanders.
Two influential shareholder advisory groups are recommending votes against the world's biggest retailer at the Arkansas gatheringnext week, according to people close to the situation.
Glass Lewis has advised investors to vote against Walmart's remuneration plans, citing a "pay and performance disconnect". Doug McMillon, chief executive, was handed a US$23.6 million ($36m) package for last year.
Institutional Shareholder Services has backed the pay plan but thrown its weight behind an investor motion that demands Walmart strengthen board oversight to prevent workplace sexual harassment.
The proxy recommendations threaten to add institutional shareholder heft to political and activist scrutiny of Walmart. Sanders, the leftwing Vermont senator who has put Walmart at the centre of his campaign to strengthen worker rights, is to demand that employees are represented on its board.
Walmart, which employs about 2.2 million people globally, gave the average worker a pay rise last year of less than 3 per cent. The median employee received US$21,952 in the year to the end of January, up from US$19,177 the previous year.
McMillon received about 1,000 times more. His total package, including salary, performance-dependent bonuses and other benefits, rose 3.6 per cent.
Judith McKenna, the former Asda executive promoted to run Walmart's international business last year, received a US$12.9m package. US division chief Greg Foran picked up US$13.5m, chief financial officer Brett Biggs US$9.4m and Sam's Club head John Furner US$9.3m.
Walmart, which has a US$294 billion market capitalisation, said its pay plans were designed to motivate and retain top executives "with the ultimate goal of generating strong operating results". The company said a substantial majority of their remuneration was performance-based, reflecting a "pay-for-performance culture".
The retailer generated operating income of US$22b last year on revenues that rose 2.8 per cent to US$515b. Ecommerce sales rose 40 per cent.
Walmart faces investor activism over executive pay, workers' rights and sexual harassment. Photo / 123RF
Glass Lewis, however, noted total shareholder returns last year fell 8 per cent and said it did not believe Walmart's scheme "sufficiently aligns pay with performance". In particular, it criticised the company's long-term incentive plan.
Under the "performance equity" part of the plan, executives are awarded shares based on a one-year performance period. Glass Lewis said "an overwhelming majority of firms with comparable size and scope use multiyear goals in the face of many similar challenges".
Walmart defended the plan's design, pointing out that the shares still vested over a three-year period. Its approach balanced "long-term focus with clear and understandable performance goals".
Sanders, a longtime critic of Walmart and the Walton family descendants of its founders, argues that employee representation on the board would rein in executive pay as well as improve conditions for workers.
The company said in a statement that it hoped Sanders would treat his appearance at the meeting "not as a campaign stop, but as a constructive opportunity to learn" about the opportunities Walmart created for workers.
The scale of any shareholder rebellion on executive pay was unclear ahead of the meeting. Glass Lewis also recommended investors vote against Walmart's executive pay last year, when 9.4 per cent of votes cast failed to back the company.
ISS is supporting United for Respect, which represents retail workers, in its demand that Walmart compile a report reviewing how it deals with sexual harassment allegations.
The advisory group, which is backing similar shareholder motions at Amazon and XPO Logistics, said it would help investors "better gauge" the risk of reputation-damaging scandals.
Walmart said it already had a strong anti-harassment policy in place, adding that such a review would be unnecessary and a distraction. Glass Lewis said it had "significant reservations" about the motion and recommended shareholders vote against it.
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