A cashier working at Wal-Mart for $7.50 an hour should not ask for a raise. She should ask instead to be put on the Wal-Mart Board of Directors. That same cashier, if allowed to join the Board, could make 15 times more money in a lot less time. On June 2, 2006, Wal-Mart shareholders will vote on a new 13 member Board of Directors for the world’s largest retailer. Wal-Mart’s directors are “elected” at each annual shareholder’s meeting, and hold office for one year at a time. This year, for example, 11 of the 13 seats will be filled by people already on the board, including retired chairman David Glass, who ran the company for 12 years, current CEO Lee Scott, and two of Sam Walton’s sons, Jim and Rob. The latter is also Chairman of the Board. After the two new members come onboard, the Wal-Mart Directors will have two latino members, three women, and 2 blacks. One of the new board members comes from former President Bill Clinton’s cabinet, and the other is retired from the Harvard Business School. Also sitting on Wal-Mart’s board is the retired chairman of Telemundo, the Spanish-language TV channel, and the retired chairman of Coca-Cola. The average age of the Wal-Mart board is 57 years old. Each Wal-Mart director who is not part of the Wal-Mart management, is paid a “base compensation” of $140,000 worth of Wal-Mart stock, plus an annual retainer of $60,000. For this $200,000 in compensation, the board members have to attend 4 regular meetings and “three telephonic meetings.” Some board members also serve one of the five subcommittees for the corporation. The Executive Committee, however, has only 3 insiders: David Glass, Lee Scott, and Rob Walton. According to Wal-Mart, each board member this past year attended at least 75% of the board and committee meetings on which they served. Two board members left Wal-Mart the hard way this past year: John
Walton, Sam’s son, died in a plane crash in June, and Tom Coughlin “resigned” from the board in March of 2005 during a scandal over misuse of corporate funds.
The corporation set CEO Lee Scott’s base salary in January, 2005 at $1.3 million. The report to stockholders says, “Mr. Scott did not receive an increase in base salary for fiscal 2007.” Scott also received $3.9 million as an “incentive payment” based on the fact that Wal-Mart reached 86.63% of “the maximum pre-tax profit performance goals for the total company.” Scott also received more than 1.15 million shares of Wal-Mart stock tied to performance measures. He also used the company’s airplane 89.3 hours over the course of the year, and the company paid for “security monitoring of his home.” Scott also has a “post termination agreement and non-competition agreement” which says that if he is “involuntarily separated” from the company, he gets two years of his base salary (a total of $2.6 million) minus any earnings he receives from other employment. Scott also gets a Wal-Mart discount card. Scott’s total annual compensation and long-term compensation in 2006 came to more than $11 million. He was also given stock options that are worth $5 million. The average Wal-Mart worker also gets a discount card. That’s where the similarity ends.
