SEC sheds light on Wal-Mart agenda items

NWA Media/JASON IVESTER --06/06/2014--
Doug McMillon, Wal-Mart chief executive officer, gets in the middle of a group of employees from Global eCommerce on Friday, June 6, 2014, before the annual Shareholders Meeting inside Bud Walton Arena in Fayetteville.
NWA Media/JASON IVESTER --06/06/2014-- Doug McMillon, Wal-Mart chief executive officer, gets in the middle of a group of employees from Global eCommerce on Friday, June 6, 2014, before the annual Shareholders Meeting inside Bud Walton Arena in Fayetteville.

Shareholder proposals concerning political rights, employee morale, executive compensation and the sale of certain types of firearms are among those submitted to Wal-Mart Stores Inc. for possible inclusion on the agenda at its annual meeting.

Which of those proposals will not make it to a vote when shareholders gather at Bud Walton Arena in Fayetteville on June 5 are becoming more clear thanks to filings with the Securities and Exchange Commission.

At least two proposals have been voluntarily withdrawn after conversations with company officials. Wal-Mart has requested that another be excluded because it is too vague and deals with day-to-day business operations. The fate of a fourth proposal is being considered in the 3rd U.S. Circuit Court of Appeals.

Institutional Shareholder Services, a corporate governance firm, has been tracking nine proposals submitted to Wal-Mart by shareholders, including seven that deal with social and environmental issues. Wal-Mart would not disclose how many proposals have been submitted or the number that will be formally presented for a vote.

Companies generally issue their proxy statements, which include proposals being considered, 45 days before annual meetings.

"We haven't published the number of proposals we've received," Wal-Mart spokesman Randy Hargrove said. "They're in various stages of review."

In a letter dated March 16, the SEC recognized that National Center for Public Policy Research was pulling its request related to employees being able to participate in political action without retribution. Wal-Mart was able to obtain a withdrawal by proposing, according to a March 16 letter from the National Center for Public Policy Research, "new policy language that would protect its workers from potential workplace discrimination consistent with the parameters of our proposal."

Also withdrawn after conversations with company officials was a proposal calling for a review of executive compensation and how it compared with the median wage of store employees. That withdrawal was officially recognized by the SEC in a letter dated March 12.

Sister Ginger Hedstrom, representing a group of Catholic nuns, wrote on Feb. 25 that the proposal was being pulled. The decision came after Wal-Mart announced that it was raising pay for about 500,000 of its 1.3 million employees in the U.S.

"Given this positive step toward a more fair wage for the lower-paid workers, and, in the hope of continued conversations on this critical issue, I would like to inform you that I, on behalf of the Sisters of St. Joseph of Carondelet, St. Paul Province, and the other co-filers, hereby withdraw our resolution," Hedstrom wrote.

Excluding other proposals has proved more challenging.

Wal-Mart is seeking a ruling from the 3rd Circuit Court of Appeals on a proposal submitted by Trinity Wall Street, an Episcopal church in New York. The church is asking for Wal-Mart's board to have oversight of policies regarding the sale of items that "would reasonably be considered by many offensive to the family and community values integral to the company's promotion of its brand."

Specifically, the proposal cites the sale of rifles with high-capacity magazines as something it would like the board to review.

"To be clear: ours was not an "anti-gun" proposal, nor a proposal to end the sale of certain products," the Rev. James Cooper wrote in a letter to parishioners. "We simply asked that shareholders be allowed to consider whether the Board has an obligation to assure that the company's standards and values are uniformly considered and applied when the sale of certain products can have momentous consequences."

Wal-Mart was given permission by the SEC to exclude the proposal, and Trinity sued in federal court. The court ruled that Wal-Mart had to include the proposal in 2015, and the retailer then filed an appeal.

"We think the district court ruling has far-reaching implications for the retail industry," Wal-Mart's Hargrove said. "This reversed 40-year-old SEC guidance."

Wal-Mart originally opposed the proposal because it "is impermissibly vague and indefinite so as to be inherently misleading" and "deals with matters relating to the company's ordinary business operations."

A proposal linking executive pay to employee engagement also is being fought by Wal-Mart, and it filed a request for no-action with the SEC on Jan. 30. It is awaiting a response from the SEC.

Wal-Mart is arguing that the proposal, submitted by Connecticut treasurer Denise Nappier, deals with matters related to ordinary business and that the company has substantially implemented the proposal.

Hargrove noted the wage increase for employees, and new training and scheduling initiatives implemented by the company also are proof that Wal-Mart is already working toward improving employee engagement, which generally involves steps taken to ensure that workers are motivated and happy. Bonuses for managers and the company's executives are tied to diversity and inclusion, which the company argues are related to employee engagement.

"We're incentivizing executive officers to foster a workplace in which associates of all backgrounds feel included and empowered," Hargrove said, noting that in 2014 the company's employees gave management the highest marks ever related to leadership and inclusion.

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