Executive Compensation
John Furner
EVP, President and CEO, Sam’s Club
Fiscal 2019 Highlights
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Sam’s Club delivered continued solid top-line results, with comp sales growth of 3.8% excluding fuel, and eCommerce growth of 27%.
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Sam’s Club accelerated innovation, launching free shipping for Plus members, converting four Sam’s Clubs to eCommerce fulfillment centers, and announcing a partnership with Instacart for last-mile delivery
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Improvements in membership signups and penetration of Plus memberships.
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Fiscal 2019 Target TDC
$8.8 million
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Fiscal 2019 Incentive Payouts
Annual cash incentive.
Mr. Furner’s annual cash incentive is based on a combination of total company and Sam’s Club performance, as calculated for incentive plan purposes and as described above on page 59.
Performance Metric
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Weighting
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Performance (% of Target)
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Payout (% of Target)
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Fiscal 2019 Incentive Payout
|
Total Company OI
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|
|
|
125.0%
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|
125.0%
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|
$1,791,903
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Sam’s Club OI
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|
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125.0%
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Sam’s Club Sales
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|
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99.6%
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Long-term incentive.
Mr. Furner’s long-term performance equity is based on Sam’s Club sales and total company ROI performance, as calculated for incentive plan purposes and as described above on page 59. The table below shows the number of shares Mr. Furner earned from his original 2016 performance share grant with a performance period ending January 31, 2019.
Performance Metric
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|
Weighting
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|
3 Year Performance (% of Target)
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Number of Shares Earned
|
Sam’s Club Sales
|
|
|
|
133.0%
|
|
18,121
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Total Company ROI
|
|
|
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In addition, as disclosed in our 2018 CD&A and in accordance with our customary practice when executives are promoted to significantly larger roles, in connection with his promotion to his current position on February 1, 2017, Mr. Furner received an additional grant of performance equity for fiscal 2019. This additional grant was intended to allow Mr. Furner to realize a performance equity payout for fiscal 2019 commensurate with his current role for performance equity cycles already in progress. This additional grant was based 50% on Sam’s Club sales and 50% on total company ROI during fiscal 2019, and was earned at 150.0% of target based on fiscal 2019 performance as shown above on page 58. As a result, Mr. Furner earned 49,392 shares upon the vesting of this additional award.
Key Compensation Decisions for Fiscal 2019
For fiscal 2019, the CMDC increased Mr. Furner’s salary by 2.5% in light of his peer group positioning and his continuing strong performance. This base salary increase resulted in a 0.6% increase in Mr. Furner’s target TDC. The CMDC believes that Mr. Furner, as the head of our Sam’s Club operations, has responsibilities comparable to many CEO positions within our peer group companies, and that it is likely that he would be recruited for a CEO position in the retail industry or elsewhere. When compared to COO positions within our peer group, Mr. Furner’s target TDC is above the median; however, when compared to CEO positions within our peer group companies, Mr. Furner’s target TDC is below the median. Mr. Furner received no special awards during fiscal 2019.
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Executive Compensation
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Other Compensation Programs and Policies
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What perquisites and other benefits do our NEOs receive?
Our NEOs receive a limited number of perquisites and supplemental benefits. We cover the cost of annual physical examinations for our NEOs and provide each NEO with personal use of our aircraft for a limited number of hours each year. Our NEOs also receive company-paid life and accidental death and dismemberment insurance. Additionally, our NEOs are entitled to benefits available to our officers generally, such as participation in the Deferred Compensation Matching Plan, and benefits available to associates generally, including a Walmart discount card, a limited 15 percent match of purchases of Shares through our Associate Stock Purchase Plan, participation in our 401(k) Plan, medical benefits, and foreign business travel insurance. We provide these perquisites and supplemental benefits to attract talented executives to our company and to retain our current executives, and we believe their limited cost is outweighed by the benefits to our company.
What types of retirement and other benefits are our NEOs eligible to receive?
Our NEOs are eligible for the same retirement benefits as our officers generally, such as participation in our Deferred Compensation Matching Plan. They may also take advantage of other benefits available more broadly to our associates, such as our 401(k) Plan. With the exception of Ms. McKenna, who has an interest in a pension plan related to her prior employment with our U.K. subsidiary, our NEOs do not participate in any pension or other defined benefit retirement plan. Ms. McKenna is not eligible to make any further contributions to this U.K. pension plan.
What are our practices for granting equity awards?
Timing of Equity Awards.
The CMDC meets each January to approve and grant annual equity awards to our Executive Officers, including our NEOs, for the upcoming fiscal year. Because of the timing of these meetings, these equity grants are reported in the executive compensation tables appearing in this proxy statement as granted during the most recently completed fiscal year. The CMDC meets again in February and/or March to establish the performance goals applicable to the performance share units and any other performance-based equity granted at the January meeting.
Any special equity grants to Executive Officers during the year are approved by the CMDC at a meeting or by unanimous written consent.
Option Exercise Prices.
We have not granted stock options to our Executive Officers since 2007, and stock options are not currently a part of our executive compensation program. If and when we grant stock options in the future, the exercise price will be equal to the fair market value of our common stock on the date of grant.
Does the CMDC take tax consequences into account when setting executive compensation?
Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for certain executive officers. While the CMDC considers the deductibility of awards as one factor in determining executive compensation, the CMDC also looks at other factors in making its decisions and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by Walmart for tax purposes.
Historically, our annual cash incentive opportunities and performance-based equity awards granted to our Executive officers were designed in a manner intended to be exempt from the deduction limitation of Section 162(m) because they were paid based on the achievement of pre-determined performance goals established by the CMDC pursuant to our shareholder-approved incentive plans. Additionally, the CMDC had adopted a policy requiring our “covered employees” subject to Section 162(m) to defer annual restricted stock grants until after they separate from employment from Walmart, subject to certain exceptions.
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Executive Compensation
Federal legislation signed into law on December 22, 2017, referred to as the Tax Cuts and Jobs Act (the “Tax Act”), repealed the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017. In addition, the Tax Act expanded the group of covered employees under Section 162(m) to include the chief financial officer and mandated that once an individual is treated as a covered employee for a given year, that individual will be treated as a covered employee for all subsequent years. Accordingly, any compensation paid to our covered Executive Officers in excess of $1 million in any one year, regardless of employment status, will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Despite the CMDC’s efforts to structure incentive compensation in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) as revised by the Tax Act, including the uncertain scope of the transition relief applicable to certain outstanding arrangements, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will in fact be exempt. Further, the CMDC reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with the objectives of our executive compensation program.
Do we have employment agreements with our NEOs?
We do not have employment agreements with any of our NEOs. Our NEOs are employed on an at-will basis.
Do we have severance agreements with our NEOs?
We have entered into a non-competition agreement with each NEO. As described in more detail under “Potential Payments Upon Termination or Change in Control” on page 77, these agreements provide that, if we terminate the NEO’s employment for any reason other than his or her violation of company policy, we will generally make limited severance payments to the NEO.
Under these agreements, each NEO has agreed that for a period of time following his or her termination of employment, he or she will not participate in a business that competes with us and will not solicit our associates for employment. For purposes of these agreements, a competing business generally means any retail, wholesale, or merchandising business that sells products of the type sold by Walmart with annual revenues in excess of certain thresholds.
These agreements reduce the risk that any of our former NEOs would use the skills and knowledge they gained while with us for the benefit of one of our competitors during a reasonable period of time after leaving our company. We do not have any contracts or other arrangements with our NEOs that provide for payments or other benefits upon a change in control of our company.
Does our compensation program contain any provisions addressing the recovery or non-payment of compensation in the event of misconduct?
Yes. Our MIP and our Stock Incentive Plan both provide that we will recoup awards to the extent required by Walmart policies. Furthermore, our MIP provides that, in order to be eligible to receive an incentive payment, the participant must have complied with our policies, including our Global Statement of Ethics, at all times. It further provides that if the CMDC determines, within twelve months following the payment of an incentive award, that prior to the payment of the award, a participant has violated any of our policies or otherwise committed acts detrimental to the best interests of our company, the participant must repay the incentive award upon demand. Similarly, our Stock Incentive Plan provides that if the CMDC determines that an associate has committed any act detrimental to the best interests of our company, he or she will forfeit all unexercised options and unvested equity awards. In addition, both the MIP and the Stock Incentive Plan provide that all awards under these plans, whether or not previously paid or deferred, will be subject to the company’s policies and applicable law regarding clawbacks in effect from time to time.
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Executive Compensation
Are our NEOs subject to any minimum requirements regarding ownership of our stock?
Yes. Our senior officers have been subject to stock ownership guidelines since 2003. In June 2013, our Board enhanced the stock ownership guidelines applicable to our CEO and senior officers, as follows:
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Our CEO must maintain beneficial ownership of unrestricted Shares having a market value equal to seven times his current annual base salary; and
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Our other NEOs and certain other senior officers must maintain beneficial ownership of unrestricted Shares having a market value equal to five times his or her current annual base salary.
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The CEO and other senior officers must satisfy these stock ownership guidelines no later than the fifth anniversary of his or her appointment to a position covered by the stock ownership guidelines. If any covered officer is not in compliance with these stock ownership guidelines, he or she may not sell or otherwise dispose of more than 50 percent of any Shares that vest pursuant to any equity award until such time as he or she is in compliance with the guidelines and such sale would not cause the covered officer to cease to be in compliance with the guidelines. Further, as noted below, any pledged Shares would not be counted when determining whether the officer is in compliance with the guidelines. Currently, each of our NEOs is in compliance with our stock ownership guidelines.
Are there any restrictions on an NEO’s ability to engage in transactions involving Walmart stock?
Yes. Our Insider Trading Policy contains the following restrictions:
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Our directors and Executive Officers may trade in our stock only during open window periods, and then only after they have pre-cleared such transactions with our Corporate Secretary.
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Our directors and Executive Officers may not enter into trading plans pursuant to SEC Rule 10b5-1 without having such plans pre-approved by our Corporate Secretary.
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Our directors and Executive Officers may not, at any time, engage in hedging transactions (such as swaps, puts and calls, collars, and similar financial instruments) that would eliminate or limit the risks and rewards of Walmart stock ownership.
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Our directors and Executive Officers may not at any time engage in any short selling, buy or sell options, puts or calls, whether exchange-traded or otherwise, or engage in any other transaction in derivative securities that reflects speculation about the price of our stock or that may place their financial interests against the financial interests of our company.
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Our directors and Executive Officers are prohibited from using Walmart stock as collateral for any margin loan.
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Before using Walmart stock as collateral for any other borrowing, our directors and Executive Officers must satisfy the following requirements:
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The pledging arrangement must be pre-approved by Walmart’s Corporate Secretary; and
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Any Walmart Shares pledged will not be counted when determining whether the director or Executive Officer is in compliance with our stock ownership guidelines.
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Currently, none of our directors or Executive Officers has any pledging arrangements in place involving Walmart stock.
Compensation Committee Report
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The CMDC has reviewed and discussed with our company’s management the CD&A included in this proxy statement and, based on that review and discussion, the CMDC recommended to the Board that the CD&A be included in this proxy statement.
The CMDC submits this report:
Stephen J. Easterbrook
Carla A. Harris
Marissa A. Mayer
Steven S Reinemund,
Chair
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Executive Compensation
Risk Considerations in our Compensation Program
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The CMDC, pursuant to its charter, is responsible for reviewing and overseeing the compensation and benefits structure applicable to our associates generally, including any risks that may arise from our compensation program. We do not believe that our compensation policies and practices for our associates give rise to risks that are reasonably likely to have a material adverse effect on our company. In reaching this conclusion, we considered the following factors:
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Our compensation program is designed to provide a mix of both fixed and variable incentive compensation.
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Our performance-based compensation is balanced between an annual incentive and a long-term incentive program. We believe this design mitigates any incentive for short-term risk-taking that could be detrimental to our company’s long-term best interests.
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Our incentive compensation programs reward performance based on a mix of operating income-based metrics, sales-based metrics, and return on investment. We believe that this mix of performance metrics mitigates any incentive to seek to maximize performance under one metric to the detriment of performance under other metrics. For example, our long-term performance share plan is based equally on sales and ROI performance. We believe that this structure mitigates any incentive to pursue strategies that would increase our sales at the detriment of ROI performance. The CMDC regularly reviews the mix and weightings of the performance metrics used in our incentive compensation programs and has concluded that they are aligned with our strategy and provide appropriate incentives to encourage sustainable shareholder value creation.
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Maximum payouts under both our annual cash incentive plan and our performance share program are capped at 125% and 150% of target payouts, respectively. We believe that these limits mitigate excessive risk-taking, since the maximum amount that can be earned in a single cycle is limited.
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A significant percentage of our management’s incentive compensation is based on the performance of our total company. This is designed to mitigate any incentive to pursue strategies that might maximize the performance of a single operating segment or area of responsibility to the detriment of our company as a whole.
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Our senior executives are subject to robust stock ownership guidelines, which we believe motivate our executives to consider the long-term interests of our company and our shareholders and discourage excessive risk-taking that could negatively impact our stock price.
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Our performance-based incentive compensation programs are designed with payout curves that are relatively smooth and do not contain steep payout “cliffs” that might encourage short-term business decisions in order to meet a payout threshold.
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Our Executive Officers’ cash incentive payments are subject to reduction or elimination if compliance objectives are not satisfied.
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Finally, our cash incentive plan and our Stock Incentive Plan both contain robust “clawback” provisions under which awards may be recouped or forfeited if an associate has not complied with our policies, including our Global Statement of Ethics, or has committed acts detrimental to the best interests of our company.
Compensation Committee Interlocks and Insider Participation
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None of the directors who served on the CMDC or the predecessor committee at any time during fiscal 2019 were officers or associates of Walmart or were former officers or associates of Walmart. Further, none of the members who served on the CMDC or the predecessor committee at any time during fiscal 2019 had any relationship with our company requiring disclosure under the section of this proxy statement entitled “Fiscal 2019 Review of Related Person Transactions.” Finally, no Executive Officer serves, or in the past fiscal year has served, as a director of, or as a member of the compensation committee (or other board committee performing equivalent functions) of, any entity that has one or more of its executive officers serving as a director of Walmart or as a member of the CMDC or the predecessor committee.
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Table of Contents
Executive Compensation Tables
Name and
Principal Position
(a)
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|
Fiscal
Year ended
Jan. 31
(b)
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|
Salary
($)
(c)
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|
Bonus
($)
(d)
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|
Stock Awards
($)
(e)
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|
Non-Equity
Incentive Plan
Compensation
($)
(g)
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|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(h)
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|
All Other
Compensation
($)
(i)
|
|
Total
($)
|
C. Douglas McMillon
President and CEO
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2019
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1,276,892
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|
0
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|
15,592,404
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|
5,088,000
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|
1,090,984
|
|
569,953
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|
23,618,233
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|
2018
|
|
1,276,982
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|
0
|
|
15,692,464
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|
4,736,750
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|
611,315
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|
473,765
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|
22,791,276
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2017
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|
1,278,989
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|
0
|
|
15,224,706
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|
4,851,561
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|
510,155
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|
486,732
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22,352,143
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M. Brett Biggs
Executive Vice President and CFO
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2019
|
|
892,948
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|
0
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5,710,085
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2,223,926
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|
269,005
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|
324,450
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|
9,420,414
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2018
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|
871,087
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|
0
|
|
4,237,993
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|
2,027,759
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|
140,199
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|
316,133
|
|
7,593,171
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|
2017
|
|
854,670
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|
0
|
|
3,176,574
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|
2,026,251
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|
101,880
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|
249,785
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|
6,409,160
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Gregory S. Foran
Executive Vice President
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|
2019
|
|
1,104,201
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|
0
|
|
8,812,816
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|
3,300,230
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|
20,366
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|
248,880
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|
13,486,493
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2018
|
|
1,051,426
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|
0
|
|
6,857,031
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|
2,921,173
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|
9,954
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|
178,168
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|
11,017,752
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2017
|
|
1,006,424
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|
0
|
|
6,650,490
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|
2,861,535
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|
7,731
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|
1,027,673
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11,553,853
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Judith McKenna
Executive Vice President
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2019
|
|
1,044,210
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|
0
|
|
9,186,749
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|
2,267,949
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|
140,460
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|
282,956
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12,922,324
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John Furner
Executive Vice President
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|
2019
|
|
799,425
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|
0
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|
6,275,780
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|
1,791,903
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|
92,800
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|
326,869
|
|
9,286,777
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|
2018
|
|
780,827
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|
0
|
|
9,856,525
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|
1,665,728
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|
35,324
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|
538,384
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|
12,876,788
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Explanation of information in the columns of the table:
Name and Principal Position and Fiscal Year ended Jan. 31 (columns (a) and (b))
Mr. Furner was an NEO for the first time in fiscal 2018. Accordingly, only information relating to his fiscal 2018 and fiscal 2019 compensation is included. Ms. McKenna was an NEO for the first time in fiscal 2019. Accordingly, only information relating to her fiscal 2019 compensation is included.
Salary (column (c))
Represents salaries earned during the fiscal years shown. Mr. McMillon, Mr. Biggs, and Mr. Furner elected to defer $130,000, $260,000, and $25,974 of their fiscal 2019 base salaries, respectively, under the Deferred Compensation Matching Plan.
Stock Awards (column (e))
The CMDC generally grants equity awards to our Executive Officers each January, just prior to the end of our fiscal year, that are intended as part of each Executive Officer’s compensation opportunity for the following year. Under the SEC’s rules, however, these awards are reported as compensation for the year in which the grant date falls. Accordingly, this column includes, for each NEO, an award of restricted stock and performance-based restricted stock units approved by the CMDC on January 28, 2019.
In accordance with SEC rules, the amounts included in this column are the grant date fair value for awards granted in the fiscal years shown, computed in accordance with the stock-based compensation accounting rules that are a part of GAAP (as set forth in Financial Accounting Standards Board’s Accounting Standards Codification Topic 718), but excluding the effect of any estimated forfeitures of such awards.
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Executive Compensation Tables
The number of performance-based restricted stock units that vest, if any, depends on whether we achieve certain levels of performance with respect to certain performance measures. The grant date fair values of the performance-based restricted stock units included in this column are based on payouts at target, which we have determined, in accordance with the stock-based compensation accounting rules, to be the probable levels of achievement of the performance goals related to those awards. The table below shows the grant date fair value of the performance-based restricted stock units granted to each NEO during fiscal 2019, assuming that: (i) our performance with respect to those performance measures will be at target levels (i.e., probable performance); and (ii) our performance with respect to those performance measures will be at levels that would result in a maximum payout. The grant date fair value of each performance-based restricted stock unit was determined based on the closing price of a Share on the NYSE on the grant date discounted for the expected dividend yield for such Shares during the vesting period:
Name
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|
Fiscal Year of Grant
|
|
Grant Date Fair Value
(Probable Performance)
($)
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|
Grant Date Fair Value
(Maximum Performance)
($)
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C. Douglas McMillon
|
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2019
|
|
11,749,896
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17,624,843
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M. Brett Biggs
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2019
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4,270,103
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6,405,200
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Gregory S. Foran
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2019
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|
5,187,819
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7,781,729
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Judith McKenna
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2019
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|
7,686,784
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11,530,268
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John Furner
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2019
|
|
4,775,815
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|
7,163,768
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Option Awards (column (f))
We have omitted this column because we did not grant any option awards to NEOs during fiscal 2019, and stock options are not currently part of our executive compensation program.
Non-Equity Incentive Plan Compensation (column (g))
These amounts represent annual cash incentive payments earned by our NEOs for performance during fiscal 2019, fiscal 2018, and fiscal 2017, respectively, but paid to our NEOs during the following fiscal year. Certain of our NEOs elected to defer a portion of their annual cash incentive payment for fiscal 2019, as follows:
Name
|
|
Amount of Fiscal 2019
Annual Cash Incentive Deferred
($)
|
C. Douglas McMillon
|
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1,272,000
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M. Brett Biggs
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889,570
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Judith McKenna
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2,222,546
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John Furner
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1,212,667
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Change in Pension Value and Nonqualified Deferred Compensation Earnings (column (h))
The amounts shown in this column represent above-market interest credited on deferred compensation under our company’s nonqualified deferred compensation plans, as calculated pursuant to Item 402(c)(2)(viii)(B) of SEC Regulation S-K. In addition, Ms. McKenna participates in pension plans administered by Asda Group Limited (“Asda”), the company’s U.K. subsidiary. During fiscal 2019, the actuarial present value of Ms. McKenna’s accumulated benefit in these plans decreased by $168,869 (converted from British Pounds using an average exchange rate during fiscal 2019 of 1 GBP = 1.3237 USD). In accordance with Instruction 3 to Item 402(c)(2)(viii) of Regulation S-K, this negative amount is not included in this column. These pension plans were closed to further accruals in 2011, but participants’ accrued pension balances are adjusted for inflation until they begin to receive distributions from the plan. See the Pension Benefits table on page 74 for more information.
All Other Compensation (column (i))
“All other compensation” for fiscal 2019 includes the following amounts:
Name
|
|
401(k) Plan Matching
Contributions
($)
|
|
Personal Use
of Company Aircraft
($)
|
|
Company Contributions to
Deferred Compensation Plans
($)
|
C. Douglas McMillon
|
|
16,500
|
|
156,137
|
|
392,435
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M. Brett Biggs
|
|
16,500
|
|
121,510
|
|
181,434
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Gregory S. Foran
|
|
16,500
|
|
131,438
|
|
0
|
Judith McKenna
|
|
0
|
|
73,993
|
|
181,989
|
John Furner
|
|
16,500
|
|
156,733
|
|
138,759
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Executive Compensation Tables
The value shown for personal use of Walmart aircraft is the incremental cost to our company of such use, which is calculated based on the variable operating costs to our company per hour of operation, which include fuel costs, maintenance, and associated travel costs for the crew. Fixed costs that do not change based on usage, such as pilot salaries, depreciation, insurance, and rent, are not included.
“All other compensation” for fiscal 2019 also includes the following amounts:
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$47,092 in tax preparation and related services provided to Mr. Foran in connection with his prior expatriate assignments and current position based in the U.S. outside of his home country, as well as tax gross-ups primarily related to these services in the amount of $51,886.
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●
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$19,376 in tax gross-ups for Ms. McKenna primarily related to her prior expatriate assignment and current position based in the U.S. outside her home country.
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The amounts in this column for fiscal 2019 also include tax gross-up payments for certain of our other NEOs in amounts less than $10,000. The amounts in this column for fiscal 2019 also include the cost of term life insurance premiums and physical examinations for certain of our NEOs. The values of these personal benefits are based on the incremental aggregate cost to our company and are not individually quantified because none of them individually exceed the threshold set forth in Instruction 4 to Item 402(c)(2)(ix) of Regulation S-K.
Fiscal 2019 Grants of Plan-Based Awards
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
All Other
Stock Awards:
Number of
Shares
of Stock
or Units
(#)
(i)
|
|
Grant Date
Fair Value of
Stock and
Option Awards
($)
(l)
|
Name
|
|
Grant
Date
|
|
Threshold
($)
(c)
|
|
Target
($)
(d)
|
|
Maximum
($)
(e)
|
|
Threshold
(#)
(f)
|
|
Target
(#)
(g)
|
|
Maximum
(#)
(h)
|
|
|
C. Douglas McMillon
|
|
|
|
1,144,899
|
|
3,052,800
|
|
3,816,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/19
|
|
|
|
|
|
|
|
64,638
|
|
129,276
|
|
193,914
|
|
|
|
11,749,896
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,589
|
|
3,842,508
|
M. Brett Biggs
|
|
|
|
514,888
|
|
1,373,036
|
|
1,716,294
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/19
|
|
|
|
|
|
|
|
23,491
|
|
46,981
|
|
70,472
|
|
|
|
4,270,103
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,836
|
|
1,439,982
|
Gregory S. Foran
|
|
|
|
785,624
|
|
2,094,997
|
|
2,618,746
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/19
|
|
|
|
|
|
|
|
28,539
|
|
57,078
|
|
85,617
|
|
|
|
5,187,819
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,742
|
|
1,624,979
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,606
|
|
2,000,018
|
Judith McKenna
|
|
|
|
719,694
|
|
1,919,185
|
|
2,398,982
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/19
|
|
|
|
|
|
|
|
26,273
|
|
52,545
|
|
78,818
|
|
|
|
4,775,815
|
|
|
1/28/19
|
|
|
|
|
|
|
|
15,323
|
|
30,645
|
|
45,968
|
|
|
|
2,910,969
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,454
|
|
1,499,965
|
John Furner
|
|
|
|
553,154
|
|
1,475,078
|
|
1,843,848
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/19
|
|
|
|
|
|
|
|
26,273
|
|
52,545
|
|
78,818
|
|
|
|
4,775,815
|
|
|
1/28/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,454
|
|
1,499,965
|
Table of Contents
Executive Compensation Tables
Explanation of information in the columns of the table:
Estimated Future Payments Under Non-Equity Incentive Plan Awards (columns (c), (d) and (e))
The amounts in these columns represent the threshold, target, and maximum amounts of potential annual cash incentive payments that may be earned by our NEOs under the Management Incentive Plan for performance during fiscal 2020. The performance measures and weightings applicable to these awards for each of our NEOs are as follows:
Name
|
|
Weighting
|
C. Douglas McMillon
|
|
75% Total Company Operating Income
|
|
25% Total Company Sales
|
M. Brett Biggs
|
|
75% Total Company Operating Income
|
|
25% Total Company Sales
|
Gregory S. Foran
|
|
25% Total Company Operating Income
|
|
25% Walmart U.S. Sales
|
|
50% Walmart U.S. Operating Income
|
|
Judith McKenna
|
|
25% Total Company Operating Income
|
|
25% International Sales
|
|
50% International Operating Income
|
|
John Furner
|
|
25% Total Company Operating Income
|
|
25% Sam’s Club Sales
|
|
50% Sam’s Club Operating Income
|
|
The CD&A provides additional information regarding our annual cash incentive plan.
Estimated Future Payouts Under Equity Incentive Plan Awards (columns (f), (g), and (h))
The amounts in these columns represent the threshold, target, and maximum number of Shares that may vest with respect to performance-based restricted stock units granted during fiscal 2019. Holders of performance-based restricted stock units do not earn dividends or enjoy other rights of shareholders until such performance-based restricted stock units have vested. All performance-based restricted stock units granted to our NEOs in fiscal 2019 are scheduled to vest on January 31, 2022, with the number of units vesting based on performance during fiscal 2020, with the exception of 30,645 of the target performance-based restricted stock units granted to Ms. McKenna, which are scheduled to vest on January 31, 2020, with the number of units vesting based on performance during fiscal 2020. The CD&A provides additional information regarding our performance equity program and the related performance measures. For these grants made in fiscal 2019 related to performance in fiscal 2020, the applicable performance measures are: (i) return on investment; and (ii) sales growth of our company or one of its operating segments, depending on each NEO’s primary area of responsibility. Each NEO’s performance measure weighting for fiscal 2020 is as follows:
Name
|
|
Weighting
|
C. Douglas McMillon
|
|
50% Total Company Return on Investment
|
|
50% Total Company Sales
|
M. Brett Biggs
|
|
50% Total Company Return on Investment
|
|
50% Total Company Sales
|
Gregory S. Foran
|
|
50% Total Company Return on Investment
|
|
50% Walmart U.S. Sales
|
Judith McKenna
|
|
50% Total Company Return on Investment
|
|
50% International Sales
|
John Furner
|
|
50% Total Company Return on Investment
|
|
50% Sam’s Club Sales
|
All Other Stock Awards: Number of Shares of Stock or Units (column (i))
The amounts in this column represent Shares of restricted stock and restricted stock units granted during fiscal 2019. Restricted stock and restricted stock units vest based on the continued service of the NEO as an associate through the vesting date. All Shares of restricted stock included in this column are scheduled to vest on January 18, 2022, with the exception of the grant of 20,606 shares to Mr. Foran which is scheduled to vest 50% on February 4, 2020 and 50% on February 2, 2021.
All Other Option Awards: Number of Securities Underlying Options and Exercise or Base Price of Option Awards (columns (j) and (k))
These columns are omitted because options are not currently part of our executive compensation program and Walmart did not grant options to NEOs during fiscal 2019.
Grant Date Fair Value of Stock and Option Awards (column (l))
Fair values of equity awards are computed in accordance with the stock-based compensation accounting rules, and exclude the effect of any estimated forfeitures. The grant date fair values of performance-based restricted stock units are based on the probable outcome of those awards on the date of grant. The fair values of performance-based restricted stock units and restricted stock units are discounted for the expected dividend yield during the vesting period. The grant date fair value of the equity awards awarded on January 28, 2019 was determined based on a per-share amount of $97.06, which was the closing price of a Share on the NYSE on that date. Performance-based restricted stock units granted on
72
|
|
2019 Proxy Statement
|
Table of Contents
Executive Compensation Tables
January 28, 2019 with a vesting period ending January 31, 2022 were valued using a discounted per-share value of $90.89. The performance-based restricted stock units granted to Ms. McKenna on January 28, 2019 with a vesting period ending January 31, 2020 were valued at a discounted per-share value of $94.99.
Outstanding Equity Awards at Fiscal 2019 Year-End
|
|
Stock Awards
|
Name
|
|
Number of Shares
or Units of Stock
That Have Not
Vested
(#)
(g)
|
|
Market Value of
Shares or Units of
Stock That Have
Not Vested
($)
(h)
|
|
Equity Incentive Plan
Awards: Number of
Unearned Shares, Units or
Other Rights That Have
Not Vested
(#)
(i)
|
|
Equity Incentive Plan
Awards: Market or Payout
Value of Unearned Shares,
Units or Other Rights That
Have Not Vested
($)
(j)
|
C. Douglas McMillon
|
|
534,665
|
|
51,236,947
|
|
193,914
|
|
18,582,779
|
M. Brett Biggs
|
|
130,979
|
|
12,551,718
|
|
70,472
|
|
6,753,332
|
Gregory S. Foran
|
|
253,261
|
|
24,270,002
|
|
85,617
|
|
8,204,677
|
Judith McKenna
|
|
148,735
|
|
14,253,275
|
|
124,786
|
|
11,958,242
|
John Furner
|
|
221,590
|
|
21,234,970
|
|
78,818
|
|
7,553,129
|
Explanation of information in the columns of the table:
Option Awards (columns (b) through (f))
We have omitted these columns because none of our NEOs held any options to purchase shares or other Walmart securities as of the end of fiscal 2019.
Number of Shares or Units of Stock that Have Not Vested (column (g))
The amounts in this column represent Shares of restricted stock with service-based vesting requirements, including performance-based restricted stock units for which the performance conditions have been satisfied, scheduled to vest in amounts and on the dates shown in the following table:
Vesting Date
|
|
C. Douglas McMillon
|
|
M. Brett Biggs
|
|
Gregory S. Foran
|
|
Judith McKenna
|
|
John Furner
|
March 5, 2019
|
|
—
|
|
—
|
|
—
|
|
7,559
|
|
—
|
March 19, 2019
|
|
—
|
|
—
|
|
—
|
|
5,451
|
|
4,542
|
October 1, 2019
|
|
|
|
—
|
|
|
|
6,241
|
|
—
|
January 21, 2020
|
|
57,652
|
|
11,253
|
|
24,381
|
|
—
|
|
22,506
|
January 31, 2020
|
|
230,543
|
|
49,149
|
|
100,842
|
|
26,569
|
|
95,565
|
February 4, 2020
|
|
—
|
|
—
|
|
10,303
|
|
—
|
|
—
|
March 17, 2020
|
|
—
|
|
—
|
|
—
|
|
6,844
|
|
—
|
January 19, 2021
|
|
35,075
|
|
9,694
|
|
14,833
|
|
—
|
|
13,692
|
January 31, 2021
|
|
171,806
|
|
46,047
|
|
75,857
|
|
80,617
|
|
69,831
|
February 2, 2021
|
|
—
|
|
—
|
|
10,303
|
|
—
|
|
—
|
January 18, 2022
|
|
39,589
|
|
14,836
|
|
16,742
|
|
15,454
|
|
15,454
|
Market Value of Shares or Units of Stock That Have Not Vested (column (h))
This column shows the market value of the Shares of restricted stock and restricted stock units in column (g), based on the closing price of a Share on the NYSE on the last trading day of fiscal 2019 ($95.83 on January 31, 2019).
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (column (i))
The amounts in this column represent performance-based restricted stock units held by our NEOs, the vesting of which is subject to our company meeting certain performance goals as described in the CD&A and in the notes to the Summary Compensation and Fiscal 2019 Grants of Plan-Based Awards tables. The amounts in this column assume that performance-based restricted stock units will vest at maximum levels. All awards in this column are subject to performance conditions for fiscal 2020, and are subject to further service-based vesting requirements through January 31, 2022 (except for 45,968 of the performance-based restricted stock units held by Ms. McKenna, which are scheduled to vest on January 31, 2020).
Table of Contents
Executive Compensation Tables
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (column (j))
This column shows the market value of the performance share units in column (i), assuming payouts at maximum levels and based on the closing price of a Share on the NYSE on the last trading day of fiscal 2019 ($95.83 on January 31, 2019).
Fiscal 2019 Option Exercises and Stock Vested
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
(b)
|
|
Value Realized
on Exercise
($)
(c)
|
|
Number of Shares
Acquired on Vesting
(#)
(d)
|
|
Value Realized
on Vesting
($)
(e)
|
C. Douglas McMillon
|
|
—
|
|
—
|
|
301,809
|
|
29,500,171
|
M. Brett Biggs
|
|
—
|
|
—
|
|
62,006
|
|
6,030,784
|
Gregory S. Foran
|
|
—
|
|
—
|
|
129,522
|
|
12,669,859
|
Judith McKenna
|
|
—
|
|
—
|
|
82,915
|
|
7,963,840
|
John Furner
|
|
—
|
|
—
|
|
72,607
|
|
7,042,400
|
Explanation of information in the columns of the table:
Number of Shares Acquired on Vesting (column (d))
2,454 of the shares shown for Mr. Foran and 5,094 of the shares shown for Mr. Furner represent the vesting of cash-settled awards. All other vestings during fiscal 2019 shown on this table were settled in shares. The receipt of certain of the shares shown in this column was deferred until a future date, as shown on the table below:
Name
|
Shares Deferred
(#)
|
C. Douglas McMillon
|
58,557
|
M. Brett Biggs
|
45,116
|
Gregory S. Foran
|
27,135
|
John Furner
|
4,880
|
Value Realized on Vesting (column (e))
The values in this column equal the number of Shares vested multiplied by the fair market value of a Share, as defined in the Stock Incentive Plan, on the various vesting dates.
Name
|
|
Plan Name
|
|
Number of Years
Credited Service
(#)
|
|
Present Value of
Accumulated Benefit
($)
(1)
|
|
Payments During
Last Fiscal Year
($)
|
Judith McKenna
|
|
Asda Group
Pension Scheme
|
|
14.7
|
|
1,891,567
|
|
0
|
|
|
Asda Unfunded
Unapproved Retirement
Benefit Scheme
|
|
11.1
|
|
1,340,908
|
|
0
|
(1)
|
These amounts were valued in Great British Pounds (GBP) and have been reported here using an average currency exchange rate during fiscal 2019 of 1 GBP = 1.3237 USD.
|
In connection with her former employment with Asda, the company’s U.K. subsidiary, Ms. McKenna is a participant in the Asda Group Pension Scheme, the pension plan for colleagues of Asda. The plan provides for an annual pension, payable for life, based on the participant’s years of participation in the plan and salary at the date of retirement from Asda. Pension benefits are generally payable beginning at age 60, but a participant may receive payments beginning at age 55, subject to a reduction in the pension amount. Both before and after payment commences, the pension amount
74
|
|
2019 Proxy Statement
|
Table of Contents
Executive Compensation Tables
increases in line with inflation, subject to an annual limitation. On death either before or after payment commences, the plan provides for payment of spouse’s and dependents’ pensions. Ms. McKenna’s balance in this plan was partially funded by her own contributions to the plan and partially funded by Asda. The Asda Group Pension Scheme was frozen to new accruals in February 2011.
Also in connection with her former employment with Asda, Ms. McKenna participates in the Asda Unfunded Unapproved Retirement Benefits Scheme, a non-tax qualified pension plan which commenced in January 2000 and was open to Asda colleagues with salary in excess of the salary cap that applied in the Asda Group Pension Scheme. The Asda Unfunded Unapproved Retirement Benefits Scheme provides benefits using the same accrual formula as the Asda Group Pension Scheme, but benefits are limited according to a salary cap based on seniority. Ms. McKenna did not contribute to this plan and her plan balance will be funded by Asda. The Asda Unfunded Unapproved Retirement Benefits Scheme was frozen to new accruals in February 2011.
The table above reflects the present value of benefits accrued by Ms. McKenna from the Asda Group Pension Scheme and the Asda Unfunded Unapproved Retirement Benefits Scheme. The amounts were computed in accordance with U.S. GAAP using the following assumptions: (i) a retirement age of 60 (the earliest age at which Ms. McKenna could retire without any benefit reduction due to age); (ii) a discount rate of 2.9% per year; and (iii) an assumed inflation rate of 3.1% per year.
Fiscal 2019 Nonqualified Deferred Compensation
|
Name
|
|
Executive
Contributions
in Last FY
($)
(b)
|
|
Company
Contributions
in Last FY
($)
(c)
|
|
Aggregate
Earnings
in Last FY
($)
(d)
|
|
Aggregate
Withdrawals/
Distributions
($)
(e)
|
|
Aggregate
Balance
at Last FYE
($)
(f)
|
C. Douglas McMillon
|
|
7,161,667
|
|
392,435
|
|
3,054,865
|
|
0
|
|
100,260,151
|
M. Brett Biggs
|
|
5,552,440
|
|
181,435
|
|
681,511
|
|
971,139
|
|
24,491,558
|
Gregory S. Foran
|
|
2,676,921
|
|
0
|
|
173,999
|
|
0
|
|
9,313,569
|
Judith McKenna
|
|
2,222,545
|
|
181,989
|
|
243,213
|
|
0
|
|
7,537,417
|
John Furner
|
|
1,673,393
|
|
138,759
|
|
166,688
|
|
47,142
|
|
5,166,142
|
Explanation of information in the columns of the table:
Executive Contributions in Last FY (column (b))
These amounts represent salary, cash incentive payments, and/or the value of equity awards that vested during fiscal 2019 but the receipt of which was deferred. This includes amounts earned during fiscal 2019 but credited to NEOs’ deferred compensation accounts after the end of fiscal 2019. Salary and cash incentive payments deferred are included in the Summary Compensation table under “Salary” and “Non-Equity Incentive Plan Compensation,” respectively, for fiscal 2019. Deferrals of equity awards were deferred upon vesting pursuant to an election made in a prior year by the NEO or pursuant to the terms of the awards, and deferred equity is valued using the closing Share price on the NYSE on the deferral date. The following table shows the deferred portion of each NEO’s salary, cash incentive payments, and equity awards that vested in fiscal 2019, and the form of deferral:
Name
|
|
Contributions
|
|
Form of Deferral
|
|
Amount
($)
|
C. Douglas McMillon
|
|
Salary
|
|
Cash
|
|
130,000
|
|
|
Cash Incentive
|
|
Cash
|
|
1,272,000
|
|
|
Equity
|
|
Share Units
|
|
5,759,667
|
M. Brett Biggs
|
|
Salary
|
|
Cash
|
|
260,000
|
|
|
Cash Incentive
|
|
Cash
|
|
889,570
|
|
|
Equity
|
|
Share Units
|
|
4,402,870
|
Gregory S. Foran
|
|
Equity
|
|
Share Units
|
|
2,676,921
|
Judith McKenna
|
|
Cash Incentive
|
|
Cash
|
|
2,222,545
|
John Furner
|
|
Salary
|
|
Cash
|
|
25,974
|
|
|
Cash Incentive
|
|
Cash
|
|
1,212,677
|
|
|
Equity
|
|
Share Units
|
|
434,742
|
Table of Contents
Executive Compensation Tables
Company Contributions in Last FY (column (c))
The amounts in this column represent participation incentive contributions under the ODCP and matching contributions to the DCMP, as shown in the table below. See “Walmart’s Deferred Compensation Plans” on page 77 for more information on company contributions under these plans.
Name
|
|
ODCP Participation
Incentive
($)
|
|
DCMP Matching
Contributions
($)
|
C. Douglas McMillon
|
|
27,335
|
|
365,100
|
M. Brett Biggs
|
|
11,169
|
|
170,266
|
Judith McKenna
|
|
|
|
181,989
|
John Furner
|
|
|
|
138,759
|
Aggregate Earnings in Last FY (column (d))
The amounts in this column represent all interest on ODCP and DCMP account balances, SERP earnings, and dividend equivalents and interest earned on dividend equivalents in equity deferral accounts under the Stock Incentive Plan during fiscal 2019, as shown in the table below. The “above market” portion of this interest and earnings is included in the fiscal 2019 amounts in the Summary Compensation table under “Change in Pension Value and Nonqualified Deferred Compensation Earnings.”
Name
|
|
ODCP
Interest
($)
|
|
DCMP
Interest
($)
|
|
SERP
Interest
($)
|
|
Dividend
Equivalents and
Interest
($)
|
C. Douglas McMillon
|
|
1,062,024
|
|
513,723
|
|
57,429
|
|
1,421,689
|
M. Brett Biggs
|
|
170,802
|
|
268,198
|
|
10,218
|
|
232,293
|
Gregory S. Foran
|
|
0
|
|
18,061
|
|
0
|
|
155,938
|
Judith McKenna
|
|
0
|
|
243,213
|
|
0
|
|
0
|
John Furner
|
|
35,163
|
|
122,663
|
|
2,767
|
|
6,095
|
Aggregate Withdrawals/Distributions (column (e))
The amount in this column for Mr. Biggs includes $331,441 in Shares previously deferred upon the vesting of performance shares granted in prior periods that were distributed during fiscal 2019. The remaining amounts in this column represent cash compensation earned in prior fiscal years and voluntarily deferred until specific distribution dates in fiscal 2019.
Aggregate Balance at Last FYE (column (f))
The aggregate balance for each NEO includes certain amounts included in the Summary Compensation table in prior fiscal years, as shown in the following table. The deferred equity amounts included in the table below are valued using the closing Share price on the NYSE on the last trading day of fiscal 2019, with the exception of deferred performance share units with a performance period ending January 31, 2019 which are valued using the fair market value of a Share, as defined in the Stock Incentive Plan, on March 11, 2019, the date such performance shares were credited to the NEOs’ deferral accounts.
Name
|
|
Amount Previously Reported on
Summary Compensation Table
($)
|
|
Fiscal Years
When Reported
|
C. Douglas McMillon
|
|
64,957,595
|
|
2009-2018
|
M. Brett Biggs
|
|
14,140,981
|
|
2016-2018
|
Gregory S. Foran
|
|
5,233,184
|
|
2015-2018
|
Judith McKenna
|
|
0
|
|
N/A
|
John Furner
|
|
1,074,334
|
|
2018
|
76
|
|
2019 Proxy Statement
|
Table of Contents
Executive Compensation Tables
Walmart’s Deferred Compensation Plans
|
Under the Deferred Compensation Matching Plan, which took effect on February 1, 2012, officers may elect to defer base salary and cash incentive amounts until separation of employment or until a specified payment date. Interest accrues on amounts deferred at an interest rate set annually based on the ten-year Treasury note yield on the first business day of January plus 2.70%. For fiscal 2019, the interest rate was 5.16%. In addition, our company allocates to each participant’s Deferred Compensation Matching Plan account a matching contribution of up to 6% of the amount by which the participant’s base salary and cash incentive payment exceed the then-applicable limitation in Section 401(a)(17) of the Internal Revenue Code. A participant is required to be employed on the last day of the fiscal year to receive a matching contribution for that year. A participant will become vested in the matching contribution credited to his or her account once the participant has participated in the Deferred Compensation Matching Plan for three plan years after his or her initial deferral.
The Deferred Compensation Matching Plan replaced the Officer Deferred Compensation Plan. Participants may no longer elect to defer amounts into the Officer Deferred Compensation Plan. However, participants’ Officer Deferred Compensation Plan account balances will continue to earn interest at the same rate as Deferred Compensation Matching Plan balances until distribution. Additionally, participants who made contributions to the Officer Deferred Compensation Plan in prior years continue to earn incentive contributions to their Officer Deferred Compensation Plan accounts, as follows:
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In the tenth year of continuous employment beginning with the year the participant first made a deferral under the Officer Deferred Compensation Plan, our company credits the deferral account with an increment equal to 20% of the sum of the principal amount of base salary and cash incentive payments deferred (taking into account a maximum amount equal to 20% of base salary) plus accrued interest on such amounts (the “20% Increment”) in each of the first six years of the participant’s deferrals.
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In the eleventh and subsequent years of continuous employment, the 20% Increment is credited based on the recognized amount deferred five years earlier, plus earnings thereon.
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In addition, in the fifteenth year of continuous employment beginning with the year the participant first made a deferral under the Officer Deferred Compensation Plan, our company credits the deferral account with an amount equal to 10% of the principal amount of base salary and cash incentive payments deferred (taking into account a maximum amount equal to 20% of base salary) plus accrued interest on such amount (the “10% Increment”) in each of the first six years of the participant’s deferrals.
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In the sixteenth and subsequent years of continuous employment, the 10% Increment is credited based on the amount deferred 10 years earlier, plus earnings thereon.
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Only contributions to the Officer Deferred Compensation Plan are taken into account for purposes of calculating the 20% Increment and 10% Increment; contributions to the Deferred Compensation Matching Plan are not considered.
The SERP was designed to supplement the historic profit sharing component of the Walmart 401(k) Plan by providing mirror contributions to participants’ accounts in excess of applicable compensation limits set by the Internal Revenue Service. Because the Walmart 401(k) was amended in 2011 to eliminate the profit sharing component, the SERP was frozen to new contributions as of January 31, 2013. However, SERP balances continue to earn interest.
Finally, officers may also elect to defer the receipt of equity awards granted under the Stock Incentive Plan until a specified payout date or until after separation from employment with Walmart. Any deferrals of vested Shares or Share units are credited with dividend equivalents until the payout date, and these dividend equivalents earn interest at the same rate as amounts deferred under the Deferred Compensation Matching Plan.
Potential Payments Upon Termination or Change in Control
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Most of our company’s plans and programs, including our deferred compensation plans and the terms of our equity awards, contain provisions specifying the consequences of a termination of employment. These provisions are described below. Our company does not have any employment agreements with its NEOs. Furthermore, our plans and programs do not have any provisions under which our NEOs would be entitled to payments, accelerated equity vestings, or any other benefits upon a change in control of our company.
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Executive Compensation Tables
Non-competition agreements.
Our company has entered into a non-competition agreement with each of our NEOs. Each of these agreements provides that the NEO is prohibited from participating in a business that competes with our company and from soliciting our company’s associates for employment for a specified period of time after his or her employment with Walmart terminates. For purposes of these agreements, a “competing business” includes any retail, wholesale, or merchandising business that sells products of the type sold by our company, is located in a country in which our company has retail operations or in which the NEO knows our company expects to have retail operations in the near future, and has annual retail sales revenue above certain thresholds. Each agreement also provides that, if Walmart terminates an NEO’s employment for any reason other than his or her violation of Walmart policy, our company will generally pay the NEO an amount equal to two times the NEO’s base salary over a two-year period.
In the event of a breach of the restrictive covenants contained in the agreement, the NEO would no longer have a right to receive additional payments, and the company would have a right to recoup any payments previously made. Using each NEO’s base salary as of January 31, 2019, the maximum total payments by our company to each NEO under such termination circumstances would be as follows:
C. Douglas McMillon
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$
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2,544,000
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M. Brett Biggs
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$
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1,786,063
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Gregory S. Foran
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$
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2,216,928
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Judith McKenna
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$
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2,080,418
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John Furner
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$
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1,599,000
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Equity awards.
Certain equity awards granted under our Stock Incentive plan held by our NEOs provide for accelerated vesting in the event employment is terminated under certain circumstances:
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Restricted stock.
Under the terms of outstanding equity awards held by our NEOs, any restricted stock awards that would have vested within 90 days of his or her termination of employment due to death or disability would immediately vest. Upon termination of employment for any other reason, unvested restricted stock does not vest and is forfeited.
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The following table shows the value of all unvested restricted stock that would have vested upon the death or disability of certain of our NEOs on January 31, 2019 (based on the closing price of a Share on the NYSE on the last trading day of the fiscal year ($95.83 on January 31, 2019):
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Upon Death
($)
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Upon Disability
($)
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Judith McKenna
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1,246,748
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1,246,748
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John Furner
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435,260
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435,260
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The CMDC has discretion to accelerate the vesting of any equity awards and to make other payments or grant other benefits upon a retirement or other severance from our company.
Deferred Compensation Matching Contribution.
Walmart makes a limited matching contribution on participant contributions to the Deferred Compensation Matching Plan, as described above under “Walmart’s Deferred Compensation Plans. This company matching contribution becomes vested once an officer has participated in the Deferred Compensation Matching Plan for three years. Any unvested company matching contribution would immediately vest in the event that a participant dies or becomes disabled before the completion of the vesting period.
The Officer Deferred Compensation Plan
provides for a prorated 10% increment or 20% increment to be paid upon separation from service in certain circumstances if age and service-based requirements are met. As of January 31, 2019, Mr. Furner had a prorated company matching contribution in the amount of $19,329 that would immediately vest if his death or disability were to occur prior to his separation from service.
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Executive Compensation Tables
In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median associate, which is a reasonable estimate calculated in a manner consistent with SEC rules and is based on our payroll and employment records and the methodology described below. In calculating this ratio, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. As discussed on pages 49-50 above, our company is unique because we are significantly larger than most of our peer group companies in terms of revenue, market capitalization, and the size and scope of our worldwide associate population. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industries, scope of international operations, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios.
As permitted by SEC rules, we used the same median associate that was identified in the preparation of our pay ratio disclosure last year (the “Median Associate”) because we believe there has been no change in our associate population or associate compensation arrangements that would result in a significant change to our pay ratio disclosure. For fiscal 2019, annual total compensation of our CEO was $23,618,233, annual total compensation of our Median Associate was $21,952, and the ratio of these amounts was 1,076:1.
Below is a brief description of how we identified the Median Associate last year.
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Associate Population.
Last year, we identified our Median Associate using our associate population as of December 31, 2017, when we employed approximately 2,306,496 associates worldwide, other than our CEO. As permitted by SEC rules, in order to determine our Median Associate, we excluded approximately 3.9% of our total associate population or approximately 89,951 associates outside of the U.S. from the following countries: Argentina (12,737); Bangladesh (95); Botswana (864); Costa Rica (16,390); El Salvador (4,314); France (2); Ghana (164); Guatemala (10,299); Holland (2); Honduras (3,997); Hong Kong (7); India (5,529); Indonesia (11); Ireland (22); Italy (2); Kenya (69); Lesotho (173); Luxembourg (2); Malawi (141); Morocco (3); Mozambique (519); Namibia (272); Nicaragua (4,021); Nigeria (370); Pakistan (23); Peru (6); South Africa (29,089); Spain (20); Sri Lanka (52); Swaziland (46); Tanzania (67); Thailand (4); Turkey (75); Uganda (78); Vietnam (25); and Zambia (461). Therefore, an aggregate associate population of approximately 2,216,545 was considered (the “considered population”) in determining our Median Associate last year.
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Identifying our Median Associate.
In determining our Median Associate last year, we used calendar year 2017 gross earnings – meaning total amounts paid before deductions or adjustments, including wages, overtime, bonuses, and the value of any equity awards that vested and were paid to an associate during calendar year 2017. Adjustments were made to annualize the gross earnings of all newly hired permanent associates in the considered population who did not work for the entire calendar year 2017. From the considered population, we then used statistical sampling to identify a group of associates who were paid within a range of 0.5% above or below what we estimated to be our median gross earnings amount (the “median population”). We then reviewed recent historical taxable wage data of the median population, and for those associates within the median population with stable wages, we calculated each of their fiscal 2018 total compensation in the same way as we calculated our CEO’s fiscal 2018 total compensation as set forth in the Summary Compensation table of our 2018 proxy statement and identified the median compensated associate from this group.
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Table of Contents
Proposal No. 3
Ratification of Independent Accountants
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What am I voting on?
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Although shareholder ratification is not required, we are asking shareholders to ratify the appointment of EY as the company’s independent accountants for fiscal 2020 at the 2019 Annual Shareholders’ Meeting because the Board believes it is a good corporate governance practice. The Audit Committee will take shareholders’ opinions regarding EY’s appointment into consideration in future deliberations. If EY’s selection is not ratified at the 2019 Annual Shareholders’ Meeting, the Audit Committee will consider the engagement of other independent accountants. The Audit Committee may terminate EY’s engagement as the company’s independent accountants without the approval of the company’s shareholders whenever the Audit Committee deems termination appropriate.
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Engagement of Independent Accountants
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The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent accountants. The Audit Committee has appointed EY as the company’s independent accountants to audit the consolidated financial statements of the company for fiscal 2020. EY and its predecessor, Arthur Young & Company, have been Walmart’s independent accountants since 1969 prior to the company’s initial offering of securities to the public. EY served as the company’s independent accountants for fiscal 2019 and reported on the company’s consolidated financial statements for that fiscal year.
The Audit Committee annually reviews EY’s independence and performance in determining whether to retain EY or engage another independent registered public accounting firm as our company’s independent accountants. As part of that annual review, the Audit Committee considers, among other things, the following:
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The quality and efficiency of the current and historical services provided to our company by EY, including the results of an annual internal survey of key global financial management;
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EY’s capability and expertise in handling the breadth and complexity of our company’s global operations;
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The quality and candor of EY’s communications with the Audit Committee;
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External data on EY’s audit quality and performance, including recent Public Company Accounting Oversight Board reports on EY;
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EY’s independence from our company;
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The appropriateness of EY’s fees; and
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EY’s tenure as our company’s independent accountants, including the benefits of having a long-tenured auditor.
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Proposal No. 3 Ratification of Independent Accountants
Benefits of Long Tenure
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Independence Controls
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Higher audit quality –
Through almost 50 years of experience with our company, EY has gained institutional knowledge of and deep expertise regarding Walmart’s global operations and businesses, accounting policies and practices, and internal control over financial reporting.
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Audit Committee oversight –
The Audit Committee’s oversight includes regular private sessions with EY, discussions with EY regarding the scope of its audit, an annual evaluation when determining whether to engage EY, and direct involvement by the Audit Committee and its Chair in the periodic transition to a new lead engagement partner in connection with the mandatory five-year rotation of that position.
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Efficient fee structure –
EY’s aggregate fees are competitive with peer companies because of EY’s familiarity with our company.
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Limits on non-audit services
– The Audit Committee pre-approves audit and permissible non-audit services to be performed by EY in accordance with its pre-approval policy.
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Avoids
costs associated with a new independent accountant –
Onboarding a new independent
accountant is costly and requires a significant time commitment that could distract from management’s focus on
financial reporting and controls.
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Internal EY independence processes –
EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on our company’s account and rotates engagement partners consistent with independence requirements.
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Regulatory framework –
Because EY is an independent registered public accounting firm, it is subject to PCAOB inspections, peer review by other “Big 4” accounting firms, and PCAOB and SEC oversight.
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Based on this evaluation, the Audit Committee believes that EY is independent and well-qualified to serve as our company’s independent accountants. Further, the Audit Committee and the Board believe it is in the best interests of Walmart and our company’s shareholders to retain EY as our company’s independent accountants for fiscal 2020.
Representatives of EY will attend the 2019 Annual Shareholders’ Meeting. They will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions.
Audit Committee Pre-Approval Policy
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To maintain the independence of our independent accountants and to comply with applicable securities laws, the NYSE Listed Company Rules, and the Audit Committee charter, the Audit Committee is responsible for reviewing, deliberating on, and, if appropriate, pre-approving all audit, audit-related, and non-audit services to be performed for our company by the independent accountants. For that purpose, the Audit Committee has established a policy and related procedures regarding the pre-approval of all audit, audit-related, and non-audit services to be performed by our company’s independent accountants (the “Pre-Approval Policy”).
The Pre-Approval Policy provides that our company’s independent accountants may not perform any audit, audit-related, or non-audit service for Walmart, subject to those exceptions that may be permitted by applicable law, unless: (i) the service has been pre-approved by the Audit Committee; or (ii) Walmart engaged the independent accountants to perform the service pursuant to the pre-approval provisions of the Pre-Approval Policy. In addition, the Pre-Approval Policy prohibits the Audit Committee from pre-approving certain non-audit services that are prohibited from being performed by our company’s independent accountants by applicable securities laws. The Pre-Approval Policy also provides that Walmart’s corporate controller will periodically update the Audit Committee as to services provided by the independent accountants. For each of these services, the independent accountants provide detailed back-up documentation to the corporate controller.
Under the Pre-Approval Policy, the Audit Committee has pre-approved certain categories of services to be performed by the independent accountants and a maximum amount of fees for each category. The Audit Committee annually reassesses these service categories and the associated fees. Individual projects within the approved service categories have been pre-approved only to the extent that the fees for each individual project do not exceed a specified dollar limit, which amount is reassessed annually. Projects within a pre-approved service category with fees in excess of the specified fee limit for individual projects may not proceed without the specific prior approval of the Audit Committee (or a member to whom
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Proposal No. 3 Ratification of Independent Accountants
pre-approval authority has been delegated). In addition, no project within a pre-approved service category will be considered to have been pre-approved by the Audit Committee if the project would cause the maximum amount of fees for the service category to be exceeded, and the project may only proceed with the prior approval of the Audit Committee (or a member to whom pre-approval authority has been delegated) to increase the aggregate amount of fees for the service category.
At least annually, the Audit Committee designates a member of the Audit Committee to whom it delegates its pre-approval responsibilities. That member has the authority to approve interim requests as set forth above within the defined, pre-approved service categories, as well as interim requests to engage Walmart’s independent accountants for services outside the Audit Committee’s pre-approved service categories. The member has the authority to pre-approve any audit, audit-related, or non-audit service that falls outside the pre-approved service categories, provided that the member determines that the service would not compromise the independent accountants’ independence and the member informs the Audit Committee of his or her decision at the Audit Committee’s next regular meeting. The Audit Committee approved all of the audit-related fees, tax fees, and all other fees paid to the company’s independent accountants in fiscal 2019.
Independent Accountant Fees
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EY’s fees for fiscal 2019 and fiscal 2018 were as follows:
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Fiscal 2019
($)
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Fiscal 2018
($)
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Audit Fees
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26,493,000
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22,379,000
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Audit-Related Fees
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855,000
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1,094,000
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Tax Fees
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753,000
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965,000
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All Other Fees
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—
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—
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TOTAL FEES
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28,101,000
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24,438,000
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A description of the types of services provided in each category is as follows:
Audit Fees
– Includes the audit of the company’s annual financial statements, the audit of the effectiveness of internal control over financial reporting, the review of the company’s annual report on Form 10-K, the review of the company’s quarterly reports on Form 10-Q, statutory audits required internationally, and consents for and review of registration statements filed with the SEC or other documents issued in connection with securities offerings.
Audit-Related Fees
– Includes audits of the company’s employee benefit plans, due diligence in connection with acquisitions and accounting consultations related to GAAP, the application of GAAP to proposed transactions, statutory financial statement audits of non-consolidated affiliates, and work related to the company’s compliance with its obligations under SOX.
Tax Fees
– Includes tax compliance at international locations, domestic and international tax advice and planning, assistance with tax audits and appeals, and tax planning for acquisitions and restructurings.
All Other Fees
– Includes fees for services that are not contained in the above categories and consists of permissible advisory services.
None of the services described above were approved pursuant to the de minimis exception provided in Rule 2-01(c)(7)(i)(C) of Regulation S-X promulgated by the SEC.
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FOR
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The Board recommends that shareholders vote
FOR
the ratification of the appointment of EY as the company’s independent accountants for fiscal 2020.
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Proposal No. 3 Ratification of Independent Accountants
Audit Committee Independence and Financial Expert Determination
The Audit Committee currently consists of three Independent Directors, each of whom has been determined by the Board to meet the heightened independence and financial literacy criteria for Audit Committee members under the SEC and NYSE Listed Company Rules. The current members of the Audit Committee are Timothy P. Flynn, the Chair of the Audit Committee; Sarah J. Friar; and Thomas W. Horton; each of whom the Board has designated as an “audit committee financial expert” as defined under the SEC rules. Additional information regarding the members of the Audit Committee and the Audit Committee’s roles and responsibilities is described under “Director Nominees for 2019” beginning on page 14 and under “Board Committees” on page 25.
2019 Audit Committee Meetings
The Audit Committee held twelve meetings in fiscal 2019. During the fiscal year, the Audit Committee had separate private sessions with our company’s CEO, CFO, Chief Legal Officer, Chief Audit Executive, Global Chief Ethics and Compliance Officer, Chief Accounting Officer, EY, and others. In these sessions, candid discussions took place regarding our company’s financial, accounting, auditing, and internal control over financial reporting, Exchange Act reporting, enterprise risk management, information systems, information security, and cybersecurity, and ethics and compliance matters. Throughout the year, the Audit Committee had full access to management, EY, and internal auditors.
At its meetings during the fiscal year, the Audit Committee, among other things, reviewed and discussed the financial statements to be included in the company’s Form 10-Q and Form 10-K filings, met with its legal counsel and the company’s management regarding the Audit Committee’s independent FCPA-related investigation and other investigations, reviewed and discussed ongoing enhancements to our global ethics and compliance program, and received updates from management regarding areas of risk the Audit Committee oversees. Additional information about the Audit Committee’s role in risk oversight may be found under “The Board’s Role in Risk Oversight” on page 30 and its role in the FCPA investigation may be found under “Board Committees” on page 25.
The Audit Committee’s meeting agendas are established by the Chair of the Audit Committee in consultation with the Chairman of the Board, the Lead Independent Director, the Chief Audit Executive, the company’s Corporate Secretary, and other members of senior management.
Responsibilities and 2019 Committee Actions
The Audit Committee operates under a written charter, which may be found in the “Corporate Governance” section of Walmart’s website located at
http://stock.walmart.com/investors/corporate-governance/governance-documents
. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis and, when appropriate, recommends charter changes to the Board.
To fulfill its oversight responsibilities as detailed in its charter, during or after fiscal 2019, in addition to certain other matters described elsewhere in this section, the Audit Committee did, among other things, the following:
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reviewed and discussed with Walmart’s management and EY Walmart’s audited consolidated financial statements for fiscal 2019;
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reviewed management’s representations that those consolidated financial statements were prepared in accordance with GAAP and fairly present the consolidated results of operations and consolidated financial position of our company for the fiscal years and as of the dates covered by those consolidated financial statements;
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discussed with EY the matters required to be discussed by applicable audit standards of the Public Company Accounting Oversight Board (the “PCAOB”), including matters related to the planning and results of the audit of Walmart’s consolidated financial statements;
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received the written disclosures and the letter from EY required by applicable requirements of the PCAOB relating to EY’s communications with the Audit Committee concerning EY’s independence from Walmart, and discussed with EY its independence from Walmart;
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Proposal No. 3 Ratification of Independent Accountants
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based on the review and discussions with management and EY discussed above, recommended to the Board that Walmart’s audited annual consolidated financial statements for fiscal 2019 be included in Walmart’s annual report on Form 10-K for fiscal 2019 filed with the SEC;
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reviewed and discussed with management and EY Walmart’s earnings releases and the financial statements in the quarterly reports on Form 10-Q;
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monitored, reviewed, and approved, in accordance with the Pre-Approval Policy adopted by the Audit Committee, all audit, audit-related, and non-audit services performed for Walmart by EY, and considered whether EY’s provision of non-audit services was compatible with EY’s independence from Walmart. For more information about the Audit Committee’s Pre-Approval Policy, please see “Audit Committee Pre-Approval Policy” on page 81;
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evaluated the performance of EY and continued its support of EY’s preparation for the transition to a new lead engagement partner for the company’s fiscal 2020 audit, in conjunction with the mandated rotation for such positions. For more information about the Audit Committee’s evaluation, appointment, and compensation of EY, please see “Proposal No. 3, Ratification of Independent Accountants” on page 80;
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monitored the progress and results of the testing of internal control over financial reporting pursuant to Section 404 of SOX, reviewed a report from management and the internal auditors of our company regarding the design, operation, and effectiveness of internal control over financial reporting, and reviewed an attestation report from EY regarding the effectiveness of internal control over financial reporting as of January 31, 2019;
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reviewed and discussed with management and EY changes in accounting principles that may affect the company, the company’s significant accounting policies and the appropriateness of the disclosures of non-GAAP measures that the company publicly made during or with respect to fiscal 2019, including in the company’s earnings releases;
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reviewed the fiscal 2019 internal audit plan, budget, and activities;
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reviewed the company’s related person transactions and approved these transactions in accordance with the Transaction Review Policy, which is discussed under “Related Person Transaction Review Policy,” on page 35;
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reviewed the company’s enterprise risk management process with members of senior management and regularly received status reports on significant risks identified by management in various areas of the company, including legal, compliance, ethics, information systems, information security, and cybersecurity;
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monitored management’s progress on the implementation of enhancements to the company’s global ethics and compliance program, and determined that management had achieved adequate progress in implementing the enhancements applicable for fiscal 2019. For more information about the Audit Committee’s oversight role regarding our global ethics and compliance program, please see the “Ethics and Compliance Goals” discussion on page 53; and
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received regular reports from management regarding our company’s policies, processes, and procedures regarding compliance with applicable laws and regulations and Walmart’s Global Statement of Ethics.
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The Audit Committee submits this report:
Timothy P. Flynn,
Chair
Sarah J. Friar
Thomas W. Horton
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Shareholder Proposals
Included in this proxy statement are two separate shareholder proposals that have been submitted under SEC rules by shareholders who notified the company of their intention to present the proposals for voting at the 2019 Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions about Walmart that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written request made to Walmart Inc., c/o Gordon Y. Allison, Senior Vice President, Office of the Corporate Secretary, Chief Counsel for Finance and Corporate Governance, 702 Southwest 8th Street, Bentonville, Arkansas 72716-0215, (479) 273-4000.
The Board recommends a vote
AGAINST
each of the following shareholder proposals for the reasons stated in Walmart’s statements in opposition following each shareholder proposal.
Table of Contents
Proposal No. 4
Request to Strengthen Prevention of Workplace
Sexual Harassment
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RESOLVED:
Shareholders of Walmart Inc. (“Walmart”) urge the Board of Directors to strengthen Walmart’s prevention of workplace sexual harassment by formalizing the Board’s oversight responsibility, aligning senior executive compensation incentives, reviewing (and if necessary overseeing revision of) company policies, and reporting to shareholders by December 31, 2019 on actions taken (omitting confidential and proprietary information).
WHEREAS:
Recently, workplace sexual harassment has generated major attention from the media and policy makers, and spurred significant public debate. The high-profile #MeToo social media hashtag, and sexual harassment claims involving public figures like Bill O’Reilly, Steve Wynn, Les Moonves and Travis Kalanick, have highlighted the prevalence of harassment and its impact. The proportion of Americans who believe that sexual harassment in the workplace is a serious problem increased from 47 percent in 2011 to 64 percent in 2017.
1
One hundred twenty-five laws were introduced in 2018 in 32 legislatures on the subject of sexual harassment in the legislature itself.
2
Workplace sexual harassment can damage companies in several ways. First, it may harm corporate reputation, which can alienate consumers. A recent study in Harvard Business Review found that a single sexual harassment claim makes a company seem less equitable, and that sexual harassment, more than financial misconduct, is perceived as evidence of a problematic corporate culture.
3
Additionally, a company whose culture tolerates sexual harassment tends to have higher turnover and less productive employees. According to sociologist Heather McLaughlin, 80 percent of women who’ve been harassed leave their jobs within two years.
4
The Center for American Progress (CAP) found that the retail industry had the second highest incidence of harassment claims in the private sector, representing 13.4 percent of all claims.
5
Furthermore, CAP found that “women—particularly women of color—are more likely to work lower-wage jobs [like retail], where power imbalances are often more pronounced and where fears of reprisals or losing their jobs can deter victims from coming forward.”
6
Sexual harassment allegations can also lead to declines in share value. For example, the market capitalization of Wynn Resorts dropped by $3 billion over two days after allegations of sexual harassment against CEO Steve Wynn surfaced (MarketWatch, 1/27/2018).
7
Robust board oversight is especially important at Walmart following ongoing issues of sexual harassment at the company. A well-publicized article this year documented a female associate’s struggle to hold her manager accountable for inappropriately touching her.
8
Similar complaints of harassment, from employees taking inappropriate pictures to discrimination against transgender employees, have been lodged.
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As the largest corporate employer of women in the U.S., Walmart can and should be a leader in establishing policies and protocols that enable women and men to reach their full potential at Walmart while holding wrongdoers accountable.
We urge shareholders to vote for this proposal.
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1
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https://cornerstonecapinc.com/wp-content/uploads/Structural-Complicity-February-2018.pdf
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2
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http://www.ncsl.org/research/about-state-legislatures/2018-legislative-sexuaI-harassment-legislation.aspx
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3
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https://hbr.org/2018/06/research-how-sexual-harassment-affects-a-companys-public-image
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4
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https://hbr.org/2017/11/the-insidious-economic-impact-of-sexual-harassment
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5
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https://law.vanderbilt.edu/phd/faculty/joni-hersch/2015_Hersch_Sexual_Harassment_in_the_Workplace_IZAWOL_Oct15.pdf
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6
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https://nwlc.org/wp-content/uploads/2017/08/Low-Wage-Jobs-are-Womens-Jobs.pdf
|
|
https://www.nwlc.org/sites/default/files/pdfs/final_nwlc_vancereport2014.pdf
|
|
http://www.jwj.org/fighting-against-sexual-harassment-in-the-workplace
|
|
https://www.americanprogress.org/issues/women/news/2017/11/20/443139/not-just-rich-famous/
|
7
|
https://www.marketwatch.com/story/wynn-resorts-shares-tank-after-report-of-sexual-misconduct-by-owner-steve-wynn-2018-01-26
|
8
|
https://www.nytimes.com/2018/05/22/business/hollywood-times-up-harassment.html
|
|
https://d3n8a8pro7vhmx.cloudfront.net/united4respect/pages/107/attachments/original/1526484530/Final_Sign_On_Letter_-_Ending_Harassment
____Walmart____(3).pdf?1526484530
|
9
|
https://www.dailybreeze.com/2018/03/16/walmart-sued-over-explicit-photos-of-worker-at-torrance-store/
|
|
http://www.newnownext.com/waImart-sams-club-transgender-discrimination-eeoc/08/2017/
|
86
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2019 Proxy Statement
|
Table of Contents
Proposal No. 4 Request to Strengthen Prevention of Workplace Sexual Harassment
Walmart’s Statement in Opposition to Proposal No. 4
The Board believes the adoption of this proposal is unnecessary in light of the Company’s policies and procedures and our corresponding associate training and education programs, the risk oversight responsibility for legal and regulatory compliance that is already formalized in the charter of the Audit Committee, and the fact that the Company’s incentive compensation plans include robust clawback provisions that reinforce the Company’s policies.
The Company’s policies prohibit sexual harassment, and the Company’s training and education programs raise awareness about the policies and how to report concerns.
One of the basic beliefs upon which our company was founded is “respect for the individual” – meaning every associate is responsible for creating a culture of trust and respect that promotes a positive work environment. This means treating one another with fairness and courtesy in all of our interactions in the workplace.
Our policy strictly prohibits discrimination or harassment by or directed at associates, job applicants, customers, members, suppliers or people working on Walmart’s behalf, and we believe our policies are broader than the minimum required by law. As part of the onboarding process, our associates participate in training modules about our Global Statement of Ethics, which includes a discussion about our policies prohibiting discrimination and harassment. In addition, all managers and hourly supervisors are required to take a refresher training module on a regular basis.
Our ongoing associate training, as well as our Global Statement of Ethics, includes a component about how to report concerns. If an associate experiences, observes, or otherwise becomes aware of any conduct that may violate our policies, the associate can report his or her concerns to any salaried member of management using our Open Door process. The associate may also report the issue confidentially or anonymously to our Global Ethics Office via email or phone. The Company takes all allegations of inappropriate conduct seriously, and we believe we have robust policies and practices in place regarding the investigation of harassment complaints of all types.
In addition to the training modules and refresher courses regarding our Global Statement of Ethics, we recently launched a number of additional education and awareness training programs designed to reinforce our non-discrimination and harassment policies, enhance awareness about preventing workplace sexual harassment, and remind our associates how to report concerns.
Risk oversight responsibility is already formalized in the Audit Committee charter.
The charter of the Audit Committee, which is reviewed and approved by the Audit Committee and the full Board on a regular basis, already refers to the Audit Committee’s role and responsibility for oversight of risks related to legal and regulatory compliance, as well as the Global Statement of Ethics. More specifically, the Audit Committee charter states that the Audit Committee shall discuss with management and advise the Board with respect to the Company’s policies, processes and procedures regarding compliance with applicable laws, regulations, and our Global Statement of Ethics, and instances of non-compliance therewith. The risk oversight role of the Audit Committee has been described in our proxy materials for several years, including this year on page 30.
The Company’s incentive compensation plans include clawback provisions for violations of Company policies.
As described in this and previous proxy statements, the Company’s incentive compensation plans support the Company’s efforts to enforce its policies. For example, the Company has already disclosed that annual cash incentive payments to the Company’s senior executives may be reduced by up to 30% if they violate the Company’s discrimination and harassment policies. Likewise, the Company has already disclosed that awards to senior executives under our incentive compensation plans may be subject to the relevant clawback provisions of the Management Incentive Plan and the Stock Incentive Plan if the senior executive violates Company policies, including our policies that prohibit workplace sexual harassment.
|
|
|
|
Table of Contents
Proposal No. 4 Request to Strengthen Prevention of Workplace Sexual Harassment
|
|
|
Summary.
Walmart remains committed to being a great place to work. In light of our current policies and programs and the Audit Committee’s risk oversight function, which have already been described in our public disclosures, as well as the clawback provisions in the Company’s incentive compensation plans, the Board believes the adoption of this proposal is unnecessary and would distract from the execution of other important and ongoing strategic initiatives.
|
|
|
|
AGAINST
|
|
|
|
|
For the above reasons, the Board recommends that the shareholders vote
AGAINST
this proposal.
|
88
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2019 Proxy Statement
|
Table of Contents
Proposal No. 5
Request to Adopt Cumulative Voting
RESOLVED:
“That the stockholders of Walmart assembled in Annual Meeting in person and by proxy, hereby request the Board of Directors to take the necessary steps to provide for cumulative voting in the election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit. Cumulative voting is recommended by the late Benjamin Graham in the book
Security Analysis
coauthored by David Dodd. Cumulative voting gives shareholders improved distinction in electing directors.
Some Walmart stockholders believe raising concerns at public companies should be improved. Currently Walmart written policy prohibits retaliation for those raising concerns. This language appears similar in scope to retaliation and employment language used by General Electric Company. General Electric Company promises strict confidentiality for those raising concerns in its
Spirit and Letter
. General Electric in writing also promises strict confidentiality in its arbitration agreement. These written promises have given some employees including their reputable counsel cause to formally request relief when they believed these promises were breached see Case # 3:08-CV-00082-JHM-DW. General Electric using counsel obtained a summary judgement against this employee, effectively removing the retaliation jurisdiction from an impartial jury or arbitrator. Procedures of retaliation against employees of the General Electric Company by the Company appear similar to Walmart’s as no effective oversight outside the Company performing the alleged retaliation exists. General Electric makes a mockery of its promises, handling concerns raised after many promises of strict confidentiality, so they appear on internet
https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2013/martinharangozorecon030413-14a8.pdf
. This website contains an e-mail dated November 7, 2010 by Matthew Johnson, who appears to count income for year 2010 for parts not sold that year, and not projected to be sold until later in year 2011. General Electric was fined and rebuked by the Securities Exchange Commission for accounting fraud
https://www.sec.gov/news/press/2009/2009-178.htm
, accounting appearing similar to that used by Matthew Johnson. Some General Electric Stockholders believe Matthew Johnson lied under oath.
Walmart is confederate with General Electric as it places General Electric Products on its store shelves. General Electric, once a most valuable company lost most of that value all while the broad stock market gained in value. This prosperity decline mirrors poor prosperity in environments using secrecy and oppression. Comparing per capita income of the United States to that of North Korea illustrates this point. Increased stockholder voice as represented by cumulative voting may be critical in transparency and success.
|
|
|
|
Table of Contents
Proposal No. 5 Request to Adopt Cumulative Voting
|
|
|
Walmart’s Statement in Opposition to Proposal No. 5
|
|
|
|
|
The Board recommends that shareholders vote against this proposal because our current majority voting election process is a commonly-accepted best practice that we believe promotes a more overall effective board of directors. Additionally, our current corporate governance documents and practices already provide meaningful opportunities for shareholders to promote director accountability.
At Walmart, like many other companies, each Share is entitled to one vote for each director nominee. In uncontested director elections, like the one presented in this proxy statement, Walmart directors are elected by an affirmative majority of the votes cast. In contested elections, where there are more director nominees than there are director seats available, our directors are elected by an affirmative plurality of the votes cast.
Cumulative voting could result in the election of a director interested in representing only the special interests of a small group of shareholders rather than all our shareholders. We believe the impacts of cumulative voting can weaken the ability of a board of directors to work together productively, which is essential to the successful functioning of any board of directors. Therefore, the consequences of cumulative voting could be detrimental to the effective functioning of the Board.
The Board supports our current majority voting standard, which is widely considered a best practice and is widely and commonly applied among most S&P 500 companies and Fortune 100 companies. In contrast, according to FactSet, only approximately 3% of S&P 500 companies currently permit cumulative voting. Furthermore, the Board believes that our Bylaws, Corporate Governance Guidelines, and other governance practices already provide Walmart’s shareholders with the right tools to promote director accountability. For example:
●
Our Bylaws include a market-standard proxy access right that allows qualifying shareholders to submit director nominees for inclusion in our proxy materials
●
All of our directors are elected annually
●
Shareholders have a right to call special shareholders’ meetings
●
No supermajority voting requirement
●
Where appropriate, our Lead Independent Director can be available for consultation with major shareholders – generally defined as those holding 2% or more of the Company’s outstanding Shares
●
No poison pill provision in our Bylaws
|
|
|
|
|
|
|
|
Summary.
The Board believes that our current majority voting standard, shareholder rights in our governance documents, and our other corporate governance practices are fair and are more likely to result in an effective board of directors that represents all of our shareholders.
|
|
|
|
AGAINST
|
|
|
|
|
For the above reasons, the Board recommends that the shareholders vote
AGAINST
this proposal.
|
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2019 Proxy Statement
|
Table of Contents
Stock Ownership
Equity Compensation Plan Information
|
The following table provides certain information as of the end of fiscal 2019 with respect to Shares that may be issued under our company’s existing equity compensation plans.
Plan Category
|
|
(a) Number of Securities to
Be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
|
|
|
(b) Weighted Average
Exercise Price of Outstanding
Options, Warrants and Rights
($)
|
|
|
(c) Number of Securities
Remaining Available For
Future Issuance Under Equity
Compensation Plans (Excluding
Securities Reflected in Column (a))
|
|
Equity compensation plans approved by security holders
|
|
37,786,899
|
(1)
|
|
61.22
|
(2)
|
|
224,131,473
|
(3)
|
Equity compensation plans not approved by security holders
|
|
2,428,160
|
(4)
|
|
—
|
|
|
—
|
|
TOTAL
|
|
40,215,059
|
|
|
61.22
|
(2)
|
|
224,131,473
|
|
(1)
|
In addition to options to purchase Shares, this amount includes 9,503,164 Shares that may be issued upon the vesting of performance equity granted under the Stock Incentive Plan, which represents the maximum number of Shares that may be issued upon the vesting of this performance equity if maximum performance goals are achieved for each performance cycle, and 21,526,715 Shares that may be issued upon the vesting of restricted stock units granted under the Stock Incentive Plan. This amount also includes 1,728,125 Shares deferred in the form of Shares by officers and Outside Directors. This amount also includes 4,983,146 Shares available under equity compensation plans in which associates of ASDA participate.
|
(2)
|
Represents the weighted average exercise price of options to purchase 45,749 Shares and the rights to acquire 4,983,146 Shares that may be issued under the equity compensation plans for ASDA associates described in footnote (1) above. This weighted average does not take into account Shares that may be issued upon the vesting of other forms of equity described in footnote (1) above.
|
(3)
|
This amount includes 111,676,554 shares available under the Associate Stock Purchase Plan.
|
(4)
|
This amount includes 2,428,160 restricted stock units issued to Marc E. Lore, an Executive Officer of Walmart, as part of Walmart’s acquisition of Jet.com. For additional information about the restricted stock units issued to Mr. Lore, see the Related Person Transaction discussion on page 37.
|
Holdings of Major Shareholders
|
The following table lists the beneficial owners of greater than 5% of the Shares outstanding as of April 12, 2019. As of April 12, 2019, there were 2,867,124,617 Shares outstanding.
|
|
|
|
|
Shared Voting and Investment Power
|
|
|
|
|
|
|
Name and
Address of
Beneficial Owner
(1)
|
|
Direct or Indirect
Ownership with
Sole Voting and
Investment Power
|
|
|
Shared, Indirect
Ownership
Through Walton
Enterprises, LLC
|
(1)
|
|
Shared, Indirect
Ownership Through
the Walton Family
Holdings Trust
|
(1)
|
|
Other Indirect
Ownership with
Shared Voting and
Investment Power
|
|
|
Total
|
|
Percent
of Class
|
|
Alice L. Walton
|
|
6,748,580
|
|
|
1,415,891,131
|
(3)
|
|
13,466,938
|
(4)
|
|
52,174
|
(5)(6)
|
|
1,436,158,823
|
|
50.09
|
%
|
Jim C. Walton
|
|
17,502,080
|
(2)
|
|
1,415,891,131
|
(3)
|
|
13,466,938
|
(4)
|
|
2,174
|
(6)
|
|
1,446,862,323
|
|
50.46
|
%
|
John T. Walton Estate Trust
|
|
0
|
|
|
1,415,891,131
|
(3)
|
|
0
|
|
|
0
|
|
|
1,415,891,131
|
|
49.38
|
%
|
S. Robson Walton
|
|
3,347,511
|
|
|
1,415,891,131
|
(3)
|
|
13,466,938
|
(4)
|
|
2,347
|
(7)
|
|
1,432,707,927
|
|
49.97
|
%
|
(1)
|
The business address of Alice L. Walton, Jim C. Walton, the John T. Walton Estate Trust, S. Robson Walton, Walton Enterprises, LLC, and the Walton Family Holdings Trust is P.O. Box 1508, Bentonville, Arkansas, 72712.
|
(2)
|
Jim C. Walton has pledged 4,251,488 of the Shares directly owned by him as security for a line of credit extended to a company not affiliated with Walmart.
|
(3)
|
Walton Enterprises, LLC holds a total of 1,415,891,131 Shares. Alice L. Walton, Jim C. Walton, and S. Robson Walton share voting and dispositive power with respect to all Shares held by Walton Enterprises, LLC, individually as managing members of Walton Enterprises, LLC, and in their capacities as cotrustees of the John T. Walton Estate Trust, which is also a managing member of Walton Enterprises, LLC. The managing members of Walton Enterprises, LLC have the power to sell and vote those Shares.
|
Table of Contents
Stock Ownership
(4)
|
The Walton Family Holdings Trust holds a total of 13,466,938 Shares. Alice L. Walton, Jim C. Walton, and S. Robson Walton, as cotrustees, share voting and dispositive power.
|
(5)
|
This number includes Shares held by a corporation organized and operated for charitable purposes as to which Alice L. Walton shares voting and dispositive power.
|
(6)
|
The number includes 2,174 Shares held by a trust as to which Jim C. Walton, Alice L. Walton, and an entity under her control, as cotrustees, share voting and dispositive power.
|
(7)
|
This number includes 2,347 Shares held by various trusts in which S. Robson Walton, as cotrustee thereof, shares voting and dispositive power.
|
Holdings of Officers and Directors
|
This table shows the number of Shares held by each director and NEO on April 12, 2019. It also shows the Shares held by all of Walmart’s directors and Executive Officers as a group on that date. As of April 12, 2019, there were 2,867,124,617 Shares outstanding.
Name of Beneficial Owner
|
|
Direct or Indirect
with Sole Voting and
Investment Power
(1)
|
|
Indirect with
Shared Voting and
Investment Power
|
|
Total
|
|
Percent
of Class
|
M.
Brett Biggs
|
|
286,345
|
|
0
|
|
286,345
|
|
*
|
Cesar
Conde
|
|
701
|
|
0
|
|
701
|
|
*
|
Stephen
J. Easterbrook
|
|
2,973
|
|
0
|
|
2,973
|
|
*
|
Timothy
P. Flynn
|
|
43,344
|
|
0
|
|
43,344
|
|
*
|
Gregory
S. Foran
|
|
362,861
|
|
0
|
|
362,861
|
|
*
|
Sarah
J. Friar
|
|
4,407
|
|
0
|
|
4,407
|
|
*
|
John
R. Furner
|
|
274,684
|
|
0
|
|
274,684
|
|
*
|
Carla
A. Harris
|
|
5,240
|
|
0
|
|
5,240
|
|
*
|
Thomas
W. Horton
|
|
10,258
|
|
0
|
|
10,258
|
|
*
|
Marissa
A. Mayer
|
|
26,648
|
|
0
|
|
26,648
|
|
*
|
Judith
J. McKenna
|
|
229,616
|
|
33,851
|
|
263,468
|
|
*
|
C.
Douglas McMillon
(2)
|
|
1,310,203
|
|
432,212
|
|
1,742,415
|
|
*
|
Gregory
B. Penner
|
|
56,586
|
|
482,878
|
|
539,464
|
|
*
|
Steven
S Reinemund
|
|
23,902
|
|
0
|
|
23,902
|
|
*
|
S.
Robson Walton
(3)
|
|
3,347,511
|
|
1,429,360,416
|
|
1,432,707,927
|
|
49.97%
|
Steuart
L. Walton
|
|
246,618
|
|
0
|
|
246,618
|
|
*
|
Directors
and Executive Officers as a Group
(21 persons)
|
|
9,690,165
|
|
1,430,309,357
|
|
1,439,999,522
|
|
50.22%
|
*
|
Less than 1%.
|
(1)
|
These amounts include Shares of unvested restricted stock and restricted stock units held by certain Executive Officers and stock units deferred by certain Outside Directors and certain Executive Officers. For Gregory S. Foran, this amount includes 36,843 deferred stock units that settle in the form of cash upon payout. For John R. Furner, this amount includes 4,880 deferred stock units that settle in the form of cash upon payout. These amounts also include Shares that the following persons had a right to acquire within 60 days after April 12, 2019, through vested Shares they hold in the 401(k) Plan:
|
|
Name
|
Shares Held in the
401(k) Plan
|
|
C. Douglas McMillon
|
1,749
|
|
John R. Furner
|
1,708
|
|
M. Brett Biggs
|
399
|
|
Directors and Executive Officers as a Group (21 persons)
|
3,856
|
(2)
|
C. Douglas McMillon also holds 1,900 American Depository Receipts of Wal-Mart de Mexico, S.A.B. de C.V. and 1,200 American Depository Receipts of Massmart Holdings Ltd. These holdings represent less than 1% of each class of security.
|
(3)
|
The amount shown for S. Robson Walton includes 1,415,891,131 Shares held by Walton Enterprises, LLC and 13,466,938 held by the Walton Family Holdings Trust.
|
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2019 Proxy Statement
|
Table of Contents
Stock Ownership
Section 16(a) Beneficial Ownership Reporting Compliance
|
Section 16(a) of the Exchange Act requires Walmart’s directors, Executive Officers, and persons who own more than 10% of the outstanding Shares to file reports of Share ownership and changes in Share ownership with the SEC. SEC regulations require Walmart to identify anyone who failed to file a required report or filed a late report during fiscal 2019. Walmart believes that all Section 16(a) filing requirements were timely met during fiscal 2019.
Table of Contents
Annual Meeting Information
What is a proxy statement, and what is a proxy?
A proxy statement is a document that SEC rules require us to provide you when we ask you to vote on certain matters yourself or when we ask you to sign a proxy designating certain individuals to vote on those matters on your behalf. A proxy is your legal designation of another person to vote the Shares you own. If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. By signing the proxy card we provide to you, you will designate our Chairman and our CEO as your proxies to cast your vote at the 2019 Annual Shareholders’ Meeting. Walmart’s Board is soliciting your proxy to vote your Shares at the 2019 Annual Shareholders’ Meeting and any adjournment or postponement thereof. Walmart pays the cost of soliciting your proxy and reimburses brokers and others for forwarding to you the proxy statement, proxy card, or voting instruction form, and Annual Report to Shareholders and, for certain shareholders, the notice of internet availability of our proxy materials.
Formal Business Meeting and
Associate/Shareholder Celebration
|
What is the difference between the formal meeting and the celebration?
Formal Business – June 5:
The 2019 Annual Shareholders’ Meeting will be held on
Wednesday, June 5, 2019
, at
10:30 a.m. Central Time
at the
John Q. Hammons Convention Center
, located at 3303 S. Pinnacle Hills Parkway, Rogers, AR 72758, in Ambassador Ballrooms A-E.
All formal business
, including voting on the election of directors and the other matters included in this proxy statement, will take place at this time. There will be no entertainment or other activities at the 2019 Annual Shareholders’ Meeting.
Celebration, Recognitions, Presentations, and Entertainment – June 7:
As noted above, and like last year, formal business will be addressed on a different date. However, our long-standing tradition of recognizing and celebrating our associates and shareholders, complete with entertainment acts and presentations from management (the “Associate/Shareholder Celebration”) will take place on Friday, June 7, 2019, at 8:00 a.m. Central Time at Bud Walton Arena on the campus of the University of Arkansas, located at 1240 Leroy Pond Drive, Fayetteville, AR 72701.
There will be no voting or formal business taking place at this time.
Why are the Annual Shareholders’ Meeting and the Associate/Shareholder Celebration being held separately?
As Walmart continues its exciting transformation, we’re changing the way we work and do business, and it made sense to change how we approach our annual shareholders’ meetings and celebrations. In 2018, after careful deliberation, we determined that separating our formal business and our celebration into two, distinct events helps focus each meeting on its respective purpose and will provide a more relevant and valuable overall experience to our shareholders and associates.
Which meeting should I attend? Do I need to attend both meetings?
If you held Shares as of the close of business on April 12, 2019, then you or your proxy holder may attend one or both of the meetings pursuant to the admission instructions below. If you or your proxy holder decide not to attend the 2019 Annual Shareholders’ Meeting to be held on Wednesday, June 5, 2019, you may still vote your Shares on the formal business matters by mail, phone, or electronically as described in more detail on page 97.
94
|
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2019 Proxy Statement
|
Table of Contents
Annual Meeting Information
●
|
If you wish to attend the
formal meeting
at which you or your proxy may
vote your Shares
on the election of directors and the other matters included in this proxy statement, please attend the 2019 Annual Shareholders’ Meeting on
Wednesday, June 5, 2019
, at the
John Q. Hammons Convention Center
.
|
●
|
If you wish to enjoy the
recognitions, presentations, and other entertainment
and events that have traditionally occurred at our past annual shareholders’ meetings, please attend the 2019 Associate/Shareholder Celebration on
Friday, June 7, 2019,
at
Bud Walton Arena
.
|
2019 Annual Shareholders’ Meeting - Formal Business
|
What will occur at the 2019 Annual Shareholders’ Meeting?
The 2019 Annual Shareholders’ Meeting will be the formal portion of our traditional annual shareholders’ meetings at which shareholders can vote on the proposals detailed in this proxy statement, including the election of directors, the non-binding, advisory resolution to approve named executive officer compensation, the ratification of EY as the company’s independent accountants for fiscal 2020, the shareholder proposals, and any other matters that may be properly presented at the meeting.
There will be no entertainment, celebratory events, or other festivities at the 2019 Annual Shareholders’ Meeting.
When is the 2019 Annual Shareholders’ Meeting?
The 2019 Annual Shareholders’ Meeting will be held at 10:30 a.m. Central Time on Wednesday, June 5, 2019.
Where will the 2019 Annual Shareholders’ Meeting be held?
The 2019 Annual Shareholders’ Meeting will be held in Ambassador Ballrooms A-E at the John Q. Hammons Convention Center, located at 3303 S. Pinnacle Hills Parkway, Rogers, AR 72758.
The formal 2019 Annual Shareholders’ Meeting at which shareholders can vote on the election of directors and other matters detailed in this proxy statement will be held at the John Q. Hammons Convention Center and not at Bud Walton Arena.
Associate/Shareholder Celebration
|
What will occur at the Associate/Shareholder Celebration?
The recognitions, presentations, and other entertainment and activities that have traditionally occurred at our past annual shareholders’ meetings. In 2018, we decided to start recognizing and celebrating our associates and shareholders at a meeting separate from the annual shareholders’ meeting. Accordingly, like last year, the recognitions, presentations, and other entertainment and activities will occur at the Associate/Shareholder Celebration. At the Associate/Shareholder Celebration, our shareholders and associates will have the opportunity to connect with other shareholders and associates from around the world, hear updates about Walmart’s continued growth and transformation, and enjoy the entertainment that has become a staple of our annual meetings.
There will be no voting on any matters or formal business at the Associate/ Shareholder Celebration on June 7, 2019. If you wish to vote your Shares in person at the 2019 Annual Shareholders’ Meeting, you or your proxy should attend the formal meeting to be held on June 5, 2019 or otherwise vote your shares as described on page 97.
When is the Associate/Shareholder Celebration?
The Associate/Shareholder Celebration will be held at 8:00 a.m. Central Time on Friday, June 7, 2019.
Where will the Associate/Shareholder Celebration be held?
The Associate/Shareholder Celebration will be at Bud Walton Arena on the University of Arkansas Campus, located at 1240 Leroy Pond Drive, Fayetteville, AR 72701.
Table of Contents
Annual Meeting Information
How can I attend the 2019 Annual Shareholders’ Meeting and/or Associate/Shareholder Celebration? What do I need to bring?
NOTICE:
If you plan to attend either the 2019 Annual Shareholders’ Meeting or the Associate/Shareholder Celebration in person, you must follow the instructions below to gain admission.
Only shareholders who owned Shares as of the close of business on April 12, 2019, are entitled to attend the 2019 Annual Shareholders’ Meeting and the Associate/Shareholder Celebration.
To be admitted to either the 2019 Annual Shareholders’ Meeting or the Associate/Shareholder Celebration, you must present valid proof of Share ownership as described below and photo identification (such as a valid driver’s license or passport) at the entrance of the venue at which the meeting is being held. In order to provide valid proof of Share ownership:
●
|
If your Shares are registered in your name and you received your proxy materials by mail, then you should bring the proxy statement you received in the mail or the proxy card that you received in the mail to the meeting. If you have already completed and returned your proxy card, then bring the top part of the proxy card marked “keep this portion for your records.”
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If your Shares are registered in your name and you received a notice of internet availability of the proxy materials in the mail, you should bring that notice of internet availability with you to the meeting.
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If you received an email with instructions containing a link to the website where our proxy materials are available and a link to the proxy voting website, bring that email with you to the meeting.
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If you are a beneficial owner of Shares and your Shares are held in street name as described above, you will be admitted to the 2019 Annual Shareholders’ Meeting and the Associate/ Shareholder Celebration only if you present either: a valid legal proxy from your bank, broker, or other nominee as to your Shares, the notice of internet availability of the proxy materials (if you received one), a voting instruction form that you received from your bank, broker, or other nominee (if you have not already completed and returned the voting instruction form), or a recent bank, brokerage, or other statement showing that you owned Shares as of the close of business on April 12, 2019.
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Each shareholder may appoint only one proxy holder or representative to attend the meeting on behalf of such shareholder.
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The use of cameras, camcorders, videotaping equipment, and other recording devices will not be permitted in the John Q. Hammons Convention Center for the 2019 Annual Shareholders’ Meeting or in Bud Walton Arena for the Associate/Shareholder Celebration. Attendees may not bring into either venue large packages or other material that could pose a safety threat or disruption hazard (e.g., banners, fireworks, noisemakers, horns, confetti, etc.).
Photographs and videos taken at the 2019 Annual Shareholders’ Meeting and the Associate/Shareholder Celebration may be used by Walmart. By attending the 2019 Annual Shareholders’ Meeting or the Associate/Shareholder Celebration, you will be agreeing to Walmart’s use of any photographs and videos taken at the 2019 Annual Shareholders’ Meeting or the Associate/Shareholder Celebration, as the case may be, and waive any claim or rights with respect to those photographs and videos and their use.
If I am unable to attend, can I view either meeting via webcast?
Yes. Both meetings can be viewed via live webcast at
http://stock.walmart.com
. If you are unable to attend either the 2019 Annual Shareholders’ Meeting or the Associate/Shareholder Celebration in person, the webcast of both meetings will be available for viewing on our corporate website for a limited time after the Associate/Shareholder Celebration.
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Who may vote at the 2019 Annual Shareholders’ Meeting?
You may vote at the 2019 Annual Shareholders’ Meeting on Wednesday, June 5, 2019, if you were the holder of record of Shares at the close of business on April 12, 2019, the record date set by the Board for determining those shareholders who are entitled to receive notice of, and to vote on matters at, the 2019 Annual Shareholders’ Meeting. You are entitled to one vote on each matter properly presented at the 2019 Annual Shareholders’ Meeting for each Share you owned of record as of close of business on the record date.
If your Shares are registered directly in your name with the company’s transfer agent, Computershare Trust Company, N.A., you are considered a shareholder of record with respect to these Shares. Some shareholders hold Shares through a bank, broker, or other nominee, and are often said to hold these shares in “street name.” These shareholders are considered “beneficial owners” of those Shares. If you held Shares as a beneficial owner in “street name” at the close of business on April 12, 2019, you must obtain a legal proxy, executed in your favor, from the holder of record of those Shares as of that time, to be entitled to be admitted to the meeting and to vote those Shares at the meeting. As of the close of business on April 12, 2019, Walmart had 2,867,124,617 Shares outstanding.
How do I vote?
The process for voting your Shares depends on how your Shares are held. Generally, as discussed above, you may hold Shares as a “record holder” (that is, in your own name) or in “street name” (that is, through a nominee, such as a broker or bank). As explained above, if you hold Shares in “street name,” you are considered to be the “beneficial owner” of those Shares.
Voting by Record Holders.
If you are a record holder, you may vote by proxy or you may vote in person on Wednesday, June 5, at the 2019 Annual Shareholders’ Meeting. If you are a record holder and would like to vote your Shares by proxy prior to the 2019 Annual Shareholders’ Meeting, you have four ways to vote:
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go to the website
www.proxyvote.com
and follow the instructions at that website;
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scan the QR code on your proxy card or notice of availability with your mobile device and follow the instructions provided;
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call 1-800-690-6903 using a touch-tone phone (toll charges may apply for calls made from outside the United States) and follow the instructions provided on the call; or
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if you received a proxy card in the mail, complete, sign, date, and mail the proxy card in the return envelope provided to you.
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Please note that proxies will not be accepted by telephone or internet voting following 11:59 p.m. Eastern time on June 4, 2019. If you wish to submit a proxy to vote by telephone or internet, follow the instructions on your proxy card (if you received a paper copy of the proxy materials) or in the notice of availability of the proxy materials. If you received a proxy card in the mail and wish to vote by completing and returning the proxy card via mail, please note that your completed proxy card must be received before the polls close for voting at the 2019 Annual Shareholders’ Meeting on Wednesday, June 5, 2019.
If you plan to attend the 2019 Annual Shareholders’ Meeting on Wednesday, June 5, 2019, and wish to vote in person, you will be provided a ballot at the 2019 Annual Shareholders’ Meeting. Even if you vote by proxy prior to June 5, 2019, you may still attend the 2019 Annual Shareholders’ Meeting.
Voting by Beneficial Owners of Shares Held in “Street Name.”
If your Shares are held in the name of a broker, bank, or other nominee (that is, your Shares are held in “street name”), you should receive separate instructions from the record holder of your Shares describing how to vote. If your Shares are held in the name of a broker, bank, or other nominee and you want to vote in person, you will need to obtain (and bring with you to the 2019 Annual Shareholders’ Meeting on Wednesday, June 5, 2019) a legal proxy from the record holder of your Shares (who must have been the record holder of your Shares as of the close of business on April 12, 2019) indicating that you were a beneficial owner of Shares as of the close of business on April 12, 2019, as well as the number of Shares of which you were the beneficial owner on the record date, and appointing you as the record holder’s proxy to vote the Shares covered by that proxy at the 2019 Annual Shareholders’ Meeting.
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Annual Meeting Information
Voting of Shares Held in the 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan.
If your Shares are held through the 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan, you must provide instructions on how you wish to vote your Shares held through such plans no later than 11:59 p.m. Eastern time on May 30, 2019. If you do not provide such instructions by that time, your Shares will be voted by the Retirement Plans Committee of the respective plan in accordance with the rules of the applicable plan.
What are my voting choices for each of the proposals to be voted on at the 2019 Annual Shareholders’ Meeting?
On Wednesday, June 5, 2019, you are voting on the following items:
PROPOSAL NO. 1: ELECTION OF 12 DIRECTORS
Voting Choices and Board Recommendation:
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vote in favor of each nominee;
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vote in favor of one or more specific nominees;
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vote against each nominee;
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vote against one or more specific nominees;
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abstain from voting with respect to each nominee; or
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abstain from voting with respect to one or more specific nominees.
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The Board recommends a vote
FOR
each of the nominees.
PROPOSAL NO. 2: NON-BINDING, ADVISORY RESOLUTION TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Voting Choices and Board Recommendation:
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vote in favor of the advisory resolution;
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vote against the advisory resolution; or
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abstain from voting on the advisory resolution.
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The Board recommends a vote
FOR
the advisory resolution.
PROPOSAL NO. 3: RATIFICATION OF EY’s APPOINTMENT AS INDEPENDENT ACCOUNTANTS FOR FISCAL 2020
Voting Choices and Board Recommendation:
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vote in favor of the ratification;
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vote against the ratification; or
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abstain from voting on the ratification.
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The Board recommends a vote
FOR
the ratification.
PROPOSAL NOS. 4-5: SHAREHOLDER PROPOSALS APPEARING IN THIS PROXY STATEMENT IF PROPERLY PRESENTED AT THE MEETING
Voting Choices and Board Recommendation:
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vote in favor of each shareholder proposal;
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vote against each shareholder proposal;
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vote in favor of one or more shareholder proposals;
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vote against one or more shareholder proposals;
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abstain from voting on one or more shareholder proposals; or
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abstain from voting on all shareholder proposals.
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The Board recommends a vote
AGAINST
each of the shareholder proposals.
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Who counts the votes? Are my votes confidential?
Broadridge will count the votes. The Board has appointed two employees of Broadridge as the inspectors of election. Your proxy card or ballot and voting records (including votes cast by phone, mobile device, or over the internet) will not be disclosed unless the law requires disclosure, you request disclosure, or your vote is cast in a contested election (a “contested election” is explained in more detail below). If you write comments on your proxy card or ballot, your comments will be provided to Walmart by Broadridge, but how you voted will remain confidential.
What is the quorum requirement for holding the 2019 Annual Shareholders’ Meeting?
The holders of a majority of the Shares outstanding and entitled to vote as of the record date for the meeting must be present in person or represented by proxy for business to be transacted at the meeting.
What vote is required to elect a director at the 2019 Annual Shareholders’ Meeting?
To be elected in an “uncontested election” of directors, which under our Bylaws is an election in which the number of nominees for director is not greater than the number of directors to be elected, a director nominee must receive affirmative votes representing a majority of the votes cast by the holders of Shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors (a “majority vote”). To be elected in a “contested election” of directors, which our Bylaws define as an election in which the number of nominees for director is greater than the number of directors to be elected, a director nominee must receive a plurality of the votes of the holders of Shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. We expect the election of directors at the 2019 Annual Shareholders’ Meeting to be an uncontested election.
What happens if a director nominee fails to receive a majority vote in an uncontested election at the 2019 Annual Shareholders’ Meeting?
Any incumbent director who is a director nominee and who does not receive a majority of the votes cast must promptly tender his or her offer of resignation as a director for consideration by the Board. Each director standing for re-election at the 2019 Annual Shareholders’ Meeting has agreed to resign, effective upon acceptance of such resignation by the Board, if he or she does not receive a majority of the votes cast. The Board must accept or reject the resignation within 90 days following certification of the shareholder vote in accordance with the procedures established by the Bylaws.
If a director’s resignation offer is not accepted by the Board, that director will continue to serve until our company’s next annual shareholders’ meeting and his or her successor is duly elected and qualified or until the director’s earlier death, resignation, or removal.
Any director nominee who is not an incumbent director and who fails to receive a majority of the votes cast in an uncontested election will not be elected as a director, and a vacancy will be left on the Board. The Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority of the votes cast pursuant to the Bylaws or decrease the size of the Board to eliminate the vacancy.
What vote is required to pass the other proposals at the 2019 Annual Shareholders’ Meeting?
At any meeting at which a quorum has been established, the affirmative vote of the holders of a majority of the Shares present in person or represented by proxy at the meeting and entitled to vote on the proposal at issue is required for:
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the adoption of the non-binding, advisory resolution to approve the compensation of our NEOs (Proposal No. 2);
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the ratification of the appointment of EY as Walmart’s independent accountants for fiscal 2020 (Proposal No. 3);
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the approval of each of the shareholder proposals (Proposal Nos. 4 and 5); and
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any other matters properly presented at the meeting.
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What is the effect of an “abstention” or a “broker non-vote” on the proposals to be voted on at the 2019 Annual Shareholders’ Meeting?
Abstentions.
A Share proxy or ballot marked “abstain” with respect to any proposal is considered as present and entitled to vote with respect to that proposal, but is not considered a vote cast with respect to that proposal. Therefore, an abstention will not have any effect on the election of directors. Because each of the other proposals requires the affirmative vote of the holders of a majority of the Shares present and entitled to vote on each such proposal, an abstention will have the effect of a vote against each of the other proposals.
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Annual Meeting Information
Broker Non-Votes.
A “broker non-vote” occurs if your Shares are not registered in your name (that is, if you hold your Shares in “street name”) and you do not provide the record holder of your Shares (usually a bank, broker, or other nominee) with voting instructions on any matter as to which, under the NYSE rules for member organizations (such as brokers), a broker may not vote without instructions from you, but the broker nevertheless provides a proxy for your Shares. Shares as to which a broker non-vote occurs are considered present for purposes of determining whether a quorum exists, but are not considered “votes cast” or Shares “entitled to vote” with respect to a voting matter. Therefore, a broker non-vote will not have any effect on the outcome of the proposals.
Under the NYSE rules for member organizations, matters on which a broker may not vote without your instructions are:
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the election of directors;
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the non-binding, advisory vote to approve the compensation of our NEOs; and
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each of the shareholder proposals described in this proxy statement.
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Therefore, if your Shares are not registered in your name and you do not provide instructions to the record holder of your Shares regarding Proposal Nos. 1, 2, 4, and 5, a broker non-vote as to your Shares will result with respect to these proposals. The ratification of the appointment of independent accountants is a routine item under the NYSE rules for member organizations. As a result, brokers who do not receive instructions from you as to how to vote on Proposal No. 3 generally may vote your Shares on that matter in their discretion.
If your Shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your Shares to be voted so you may participate in the shareholder voting on these important matters.
What if I do not specify a choice for a proposal when returning a proxy or a voting instruction form?
We urge all shareholders to express their choices on each voting matter described on the proxy card or the voting instruction form, which you will receive from your broker, bank, or other nominee, if your Shares are held in “street name”.
Shares Owned by Record Holders.
If you are a record owner of Shares and you sign and return a proxy card, unless you indicate otherwise, the persons named as proxies on the proxy card will vote your Shares: (i)
FOR
the election of each of the nominees for director named in this proxy statement; (ii)
FOR
the non-binding advisory resolution to approve the compensation of our NEOs; (iii)
FOR
the ratification of the appointment of EY as Walmart’s independent accountants for fiscal 2020; and (iv)
AGAINST
each of the shareholder proposals appearing in this proxy statement. For any other business or matters properly presented at the 2019 Annual Shareholders’ Meeting, the persons named as proxies on the proxy card shall vote in their discretion.
Shares Held in “Street Name” by Beneficial Owners.
If you are a beneficial owner of Shares held in “street name” and you sign and return a voting instruction form to your bank, broker, or other nominee (in accordance with the voting instructions provided by such bank, broker, or other nominee), but do not provide instructions regarding how you wish your Shares to be voted on each of the voting matters described in this proxy statement, then a “broker non-vote” will result with respect to your Shares regarding:
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the election of each of the nominees for director named in this proxy statement;
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the non-binding, advisory resolution to approve the compensation of our NEOs;
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each of the shareholder proposals appearing in this proxy statement; and
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any other matters properly presented at the meeting.
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Banks, brokers, and other nominees who do not receive instructions from you regarding the ratification of the appointment of independent accountants may generally vote on that matter in their discretion.
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I completed and returned my proxy card, but I have changed my mind about how I want to vote. Can I revoke my proxy and change my vote?
Yes, if you are a record holder, you may revoke a previously submitted proxy and change your vote by:
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delivering a written notice of revocation to Walmart’s Corporate Secretary at 702 Southwest 8
th
Street, Bentonville, AR 72716-0215 before the polls close for voting at the 2019 Annual Shareholders’ Meeting;
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signing a proxy bearing a later date than the proxy being revoked and delivering it to Walmart’s Corporate Secretary at the address provided in the Notice of 2019 Annual Shareholders’ Meeting included in this proxy statement before the polls close for voting at the 2019 Annual Shareholders’ Meeting; or
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voting in person at the 2019 Annual Shareholders’ Meeting.
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If your Shares are held in street name through a broker, bank, or other nominee, you should contact the record holder of your Shares regarding how to revoke your voting instructions.
Why did I receive a notice regarding the internet availability of the proxy materials instead of a paper copy of the proxy materials?
Important Notice Regarding the Availability of Proxy Materials for the 2019 Annual Shareholders’ Meeting to be held on Wednesday, June 5, 2019.
This year, we are again taking advantage of the SEC’s rules that allow us to furnish our proxy materials over the internet. As a result, we are mailing to many of our shareholders a notice of availability of the proxy materials on the internet, rather than a full paper set of the proxy materials.
This notice of availability includes instructions on how to access our proxy materials on the internet, as well as instructions on how shareholders may obtain a paper copy of the proxy materials by mail or a printable copy electronically. Shareholders who have affirmatively requested electronic delivery of our proxy materials will receive instructions via email regarding how to access these materials electronically. All other shareholders, including shareholders who have previously requested to receive a paper copy of the materials, will receive a full paper set of the proxy materials by mail.
This distribution process will contribute to our sustainability efforts and will reduce the costs of printing and distributing our proxy materials.
How can I access the proxy materials over the internet? Can I elect to receive proxy materials for future annual meetings electronically? How can I request a paper copy of the proxy materials?
Accessing the Proxy Materials on the Internet.
You can access the proxy statement and the Annual Report to Shareholders in the “Investors” section of Walmart’s corporate website at
http://stock.walmart.com/annual-reports
. In accordance with the SEC’s rules, we do not use software that identifies visitors accessing our proxy materials on our website.
Electing to Receive Proxy Materials for Future Annual Shareholders’ Meetings Electronically.
If you wish to join in Walmart’s sustainability efforts, you can instruct Walmart to deliver its proxy materials for future annual shareholders’ meetings to you electronically by email. If you choose to access future proxy materials electronically, you will receive an email with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials electronically will remain in effect until you terminate it. You may choose this method of delivery in the “Investors” section of Walmart’s corporate website at
http://stock.walmart.com/annual-reports
.
Obtaining a Paper Copy of the Proxy Materials.
If you received a notice regarding the internet availability of the proxy materials, then you will find instructions about how to obtain a paper copy of the proxy materials and the Annual Report to Shareholders in your notice. If you received an email notification as to the availability of the proxy materials, then you will find instructions about how to obtain a paper copy of the proxy materials and the Annual Report to Shareholders as part of that email notification. We will mail a paper copy of the proxy materials and the Annual Report to Shareholders to all shareholders to whom we do not send a notice of availability or an email notification regarding the internet availability of the proxy materials.
Table of Contents
Annual Meeting Information
What should I do if I receive more than one notice of, or email notification about, the internet availability of the proxy materials or more than one paper copy of the proxy materials?
Some shareholders may receive more than one notice of internet availability, more than one email notification, or more than one paper copy of the proxy materials, including multiple proxy cards.
For example, if you hold your Shares in more than one brokerage account, then you may receive a separate notice of availability, a separate email notification, or a separate voting instruction form for each brokerage account in which you hold Shares. If you are a shareholder of record and your Shares are registered in more than one name, then you may receive a separate notice of availability, a separate email notification, or a separate set of paper proxy materials and proxy card for each name in which you hold Shares. To vote all of your Shares, you must complete, sign, date, and return each proxy card you receive or submit a proxy to vote the Shares to which each proxy card relates by telephone, internet, or mobile device as described above, or vote in person as described above.
If you have Shares held in one or more “street names,” then you must complete, sign, date, and return to each bank, broker, or other nominee through which you hold Shares each voting instruction form received from that bank, broker, or other nominee (or obtain a proxy from each such nominee holder if you wish to vote in person at the 2019 Annual Shareholders’ Meeting).
What is householding, and how can I enroll or opt-out?
If you are a beneficial owner of Shares, your bank, broker, or other nominee may deliver a single set of proxy materials to any household at which two or more shareholders reside unless contrary instructions have been received from you. This procedure, referred to as householding, reduces the volume of duplicate materials shareholders receive and reduces mailing expenses.
Shareholders may revoke their consent to future householding mailings or enroll in householding by contacting their bank, broker, or other nominee. Alternatively, if you wish to receive a separate set of proxy materials for the 2019 Annual Shareholders’ Meeting or future shareholders’ meetings, we will deliver them promptly upon request made by contacting the Global Investor Relations team by any of the means described on page 32 above.
When will the company announce the voting results?
We expect to report the preliminary voting results in a press release on the afternoon of June 5, 2019, which will be available on our corporate website, and we will provide a summary again at the Associate/Shareholder Celebration on June 7, 2019. We will report the official voting results in a filing with the SEC on or before June 11, 2019.
Shareholder Submissions for the 2020 Annual Shareholders’ Meeting
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If you wish to submit a shareholder proposal or nomination for possible inclusion in our proxy statement relating to our 2020 Annual Shareholders’ Meeting, send the proposal or nomination, by registered, certified, or express mail to:
Gordon Y. Allison,
Senior Vice President, Office of the Corporate Secretary, Chief Counsel for Finance and Corporate Governance
Walmart Inc.
702 Southwest 8
th
Street
Bentonville, Arkansas 72716-0215
Any shareholder proposal, other business, or nomination received by the company after the applicable date will not be included in the company’s proxy statement relating to such annual shareholders’ meeting.
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Submissions for inclusion in our 2020 proxy materials
relating to our 2020 Annual Shareholders’ Meeting*
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Must be delivered to or mailed and received at the
company’s principal executive offices:
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Nomination of one or more director nominees submitted under the proxy access provision of our Bylaws
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no earlier than November 25, 2019**
and
no later than close of business on December 25, 2019**
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Shareholder proposals submitted under applicable SEC rules
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no later than close of business on December 25, 2019
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*
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Shareholder proposals submitted for inclusion in the company’s proxy statement relating to an annual shareholders’ meeting must comply with all requirements of SEC Rule 14a-8. Nomination of a director nominee to be included in the company’s proxy statement under the proxy access provision of our Bylaws must comply with all of the requirements of our Bylaws.
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**
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Assumes this proxy statement is first released to shareholders on April 23, 2019. Under our Bylaws, if the date of the 2020 Annual Shareholders’ Meeting is more than 30 days before, or more than 60 days after June 5, 2020, then notice must be delivered to or mailed and received at Walmart’s principal executive offices not more than 150 days prior to the date of the 2020 Annual Shareholders’ Meeting nor less than the later of: (i) 120 days prior to the date of the 2020 Annual Shareholders’ Meeting; or (ii) the tenth day following the day on which a public announcement of the 2020 Annual Shareholders’ Meeting is made.
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Other business or nominations to be considered at our
2020 Annual Shareholders’ Meeting*
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Must be delivered to or mailed and received at the
company’s principal executive offices:
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Any other nomination or other business submitted for consideration at our 2020 Annual Shareholders’ Meeting but not submitted for inclusion in our proxy materials under our Bylaws or applicable SEC rules
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no earlier than February 6, 2020**
and
no later than close of business on March 7, 2020**
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*
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Each such submission or nomination must comply with the requirements of the applicable provisions of our Bylaws.
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**
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Assumes the 2019 Annual Shareholders’ Meeting is held on June 5, 2019. Under our Bylaws, if the date of the 2020 Annual Shareholders’ Meeting is held more than 30 days before, or more than 60 days after June 5, 2020, then notice must be delivered to or mailed and received at Walmart’s principal executive offices not more than 120 days prior to the date of the 2020 Annual Shareholders’ Meeting nor less than the later of: (i) 90 days prior to the date of the 2020 Annual Shareholders’ Meeting; or (ii) the tenth day following the day on which a public announcement of the 2020 Annual Shareholders’ Meeting is made.
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To review the applicable notice requirements contained in our Bylaws, visit our corporate website at
http://stock.walmart.com/investors/corporate-governance/governance-documents
. The Board periodically reviews the Bylaws and approves amendments as it deems appropriate. Any amendments to the Bylaws will be reported in a filing with the SEC, as required by Form 8-K, and the amended Bylaws will be filed as an exhibit to an SEC filing and posted on our corporate website at the web address above.
There are no other matters the Board intends to present for action at the 2019 Annual Shareholders’ Meeting. However, the company has been notified that a shareholder intends to present a proposal at the 2019 Annual Shareholders’ Meeting concerning the consideration of hourly associates as potential director candidates. If this proposal is properly presented at the 2019 Annual Shareholders’ Meeting, the persons named as proxies in the accompanying form of proxy have informed the company that they intend to exercise their discretionary authority to vote against the proposal.
If any other matter is properly presented at the 2019 Annual Shareholders’ Meeting, the persons named in the form of proxy will vote on such matters in accordance in their discretion. The proxies also have discretionary authority to vote to adjourn the 2019 Annual Shareholders’ Meeting, including for the purpose of soliciting votes in accordance with our Board’s recommendations.
Table of Contents
Table of Abbreviations
The following abbreviations are used for certain terms that appear in this proxy statement:
401(k) Plan
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the Walmart 401(k) Plan
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Annual Report to Shareholders
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Walmart’s Annual Report to Shareholders for fiscal 2019
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Associate or associate
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an employee of Walmart or one of its consolidated subsidiaries
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Associate Stock Purchase Plan
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the Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018
|
Audit Committee
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the Audit Committee of the Board
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Board
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the Board of Directors of Walmart
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Board committees
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the Audit Committee, the CMDC, the Executive Committee, the Global Compensation Committee, the NGC, the SPFC, and the TeCC
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Broadridge
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Broadridge Financial Solutions, Inc., representatives of which will serve as the inspectors of election at the 2019 Annual Shareholders’ Meeting
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Bylaws
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the amended and restated Bylaws of Walmart, effective as of February 1, 2018
|
CD&A
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|
the Compensation Discussion and Analysis included in this proxy statement
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CEO
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the Chief Executive Officer of a company
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CFO
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|
the Chief Financial Officer of a company
|
CMDC
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|
the Compensation and Management Development Committee of the Board
|
Deferred Compensation Matching Plan or DCMP
|
|
the Walmart Inc. Deferred Compensation Matching Plan, as amended effective as of February 1, 2019, and which replaced the Officer Deferred Compensation Plan
|
Director Compensation Deferral Plan
|
|
the Walmart Inc. Director Compensation Deferral Plan, as amended effective as of February 1, 2018
|
EPS
|
|
Diluted earnings per share from continuing operations attributable to Walmart
|
Exchange Act
|
|
the Securities Exchange Act of 1934, as amended
|
Executive Committee
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|
the Executive Committee of the Board
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Executive Officers
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|
those senior officers of our company determined by the Board to be executive officers (as defined by Rule 3b-7 under the Exchange Act) as to whom Walmart has certain disclosure obligations and who must report certain transactions in equity securities of our company under Section 16
|
EY
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|
Ernst & Young LLP, an independent registered public accounting firm
|
Fiscal or fiscal [year]
|
|
Walmart’s fiscal year ending January 31
st
|
GAAP
|
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generally accepted accounting principles in effect in the United States
|
Global Compensation Committee or GCC
|
|
the Global Compensation Committee of the Board
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Independent Directors
|
|
this applies to Walmart directors whom the Board has affirmatively determined have no material relationships with our company pursuant to NYSE Listed Company Rules. This also applies to Audit Committee members who meet the requirements of Section 10A of the Exchange Act and Rule 10A-3 under the Exchange Act. Additionally, CMDC members who meet the requirements of Section 10C of the Exchange Act, Rule 10C-1 under the Exchange Act and the heightened independence requirements under the NYSE Listed Company Rules for compensation committee members are considered independent.
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Internal Revenue Code
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|
the Internal Revenue Code of 1986, as amended
|
Jet.com
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Jet.com, Inc., which was acquired by the company on September 19, 2016
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Management Incentive Plan or MIP
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the Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018
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Named Executive Officer or NEO
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Walmart’s President and CEO, CFO, and the next three most highly compensated Executive Officers other than our CEO and CFO
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NGC
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the Nominating and Governance Committee of the Board
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NYSE
|
|
the New York Stock Exchange
|
104
|
|
2019 Proxy Statement
|
Table of Contents
Table of Abbreviations
NYSE Listed Company Rules
|
|
the NYSE’s rules for companies with securities listed for trading on the NYSE, including the continual listing requirements and rules and policies on matters such as corporate governance, shareholder communication, and shareholder approval
|
Officer Deferred Compensation Plan or ODCP
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the Wal-Mart Stores, Inc. Officer Deferred Compensation Plan, amended and restated effective January 1, 2009, and which was replaced by the Deferred Compensation Matching Plan, effective on February 1, 2012
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Outside Directors or Non-Management Directors
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the members of the Board who are not employed by Walmart or a consolidated subsidiary of Walmart
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Return on Investment or ROI
|
|
our return on investment, calculated as described in Annex A to this proxy statement
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SEC
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|
the United States Securities and Exchange Commission
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Section 16
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Section 16 of the Exchange Act
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SERP
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|
the Wal-Mart Stores, Inc. Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2009, which was replaced by the Deferred Compensation Matching Plan, effective February 1, 2012
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Share or Shares
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|
a share or shares of Walmart common stock, $0.10 par value per share
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SOX
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|
the Sarbanes-Oxley Act of 2002
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SPFC
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the Strategic Planning and Finance Committee of the Board
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Stock Incentive Plan
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the Walmart Inc. Stock Incentive Plan of 2015, as amended effective as of February 1, 2018
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TeCC
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the Technology and eCommerce Committee of the Board
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TSR
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|
total shareholder return
|
Walmart, our company, the company, we, our, or us
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|
Walmart Inc., a Delaware corporation (formerly Wal-Mart Stores, Inc.) and, where the context requires, its consolidated subsidiaries
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Table of Contents
Annex A
Non-GAAP Financial Measures
|
Certain financial measures discussed under the caption
Fiscal 2019 Highlights—Strategy and Performance
and under the caption
Executive Compensation—Compensation Discussion and Analysis
elsewhere in this proxy statement are considered non-GAAP financial measures under the SEC’s rules because they are calculated by excluding or including amounts that are included or excluded in the calculation of comparable measures calculated and presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
Below (except as otherwise noted), we identify:
●
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those non-GAAP financial measures (the “Non-GAAP Measures”) and tell you briefly how we calculate them;
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●
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the financial measure calculated and presented in accordance with GAAP or using only measures calculated and presented in accordance with GAAP that we believe is most directly comparable to each Non-GAAP Measure (each, a “Comparable GAAP Measure”);
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●
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the reasons why we think the Non-GAAP Measures provide our shareholders with useful information about our financial condition and results of operations; and
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●
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a reconciliation of each Non-GAAP Measure with its Comparable GAAP Measure.
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When we refer below to a financial measure as being a “reported” financial measure, we are referring to a financial measure calculated in accordance with GAAP and reflected in our consolidated statement of income for fiscal 2019.
Adjusted EPS
Our diluted earnings per share attributable to Walmart (which we refer to as “EPS”) is calculated and presented in accordance with GAAP and is based on our consolidated net income attributable to Walmart as reflected in our consolidated statement of income.
Non-GAAP Measure
: The company’s adjusted EPS (which we refer to as “adjusted EPS”) for fiscal 2019 was calculated by adjusting the EPS for fiscal 2019 by the amount of the per share net impact on our EPS for fiscal 2019 of: (1) the loss on the sale of the majority stake in Walmart Brazil; (2) unrealized gains and losses on the company’s investment in JD.com; and (3) the adjustments we recorded to the provisional amount we had recorded in a prior period for the U.S. tax reform under the Tax Cut and Jobs Act of 2017 (“Tax Reform”).
Comparable GAAP Measure
: The company’s reported EPS for fiscal 2019.
Why the Non-GAAP Measure is Useful Information
: Management believes that the Adjusted EPS for fiscal 2019, which adjusts EPS for the items described above, is a meaningful metric to share with shareholders because that metric, which adjusts our EPS for fiscal 2019 for the items described above, affords investors a view of what management considers the company’s core earnings performance for fiscal 2019 and also affords investors the ability to make a more informed assessment of such core earnings performance and to compare core earnings performance for fiscal 2019 with our earnings performance for prior comparable periods.
Table of Contents
Annex A
Reconciliation
: Reconciliation of the company’s EPS for fiscal 2019 to the company’s adjusted EPS for fiscal 2019.
Adjusted EPS - Fiscal 2019
|
|
Fiscal Year Ended January 31, 2019
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EPS for Fiscal 2019
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$
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2.26
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Adjustments:
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Pre-Tax Impact
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Tax Impact
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(1)
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Net Impact
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Loss on sale of majority stake in Walmart Brazil
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$
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1.64
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$
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(0.10
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)
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$
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1.54
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Unrealized (gains) and losses on JD.com investment
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1.20
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(0.25
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)
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0.95
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Adjustment to provisional amount for Tax Reform
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—
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0.16
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0.16
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Net Adjustments
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$
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2.65
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Adjusted EPS for Fiscal 2019
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$
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4.91
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(1)
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Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdiction.
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Growth of Total Company Sales on a Constant Currency Basis
The growth of total company sales on a constant currency basis in fiscal 2019 over fiscal 2018 reflects growth in our total net sales for fiscal 2019 calculated by translating into U.S. dollars the net sales of the countries in which the functional currency is not the U.S. dollar or for countries experiencing hyperinflation. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months.
Non-GAAP Measures
: The percentage growth in total company sales for fiscal 2019 calculated and presented on a constant currency basis for fiscal 2019 over total company sales for fiscal 2018 (calculated and presented in accordance with GAAP).
Comparable GAAP Measures
: The percentage growth in total company sales for fiscal 2019 over total company sales for fiscal 2018, in each case, calculated and presented in accordance with GAAP.
Why the Non-GAAP Measure Is Useful Information
: Management believes that the percentage growth in total company sales on a constant currency basis for fiscal 2019 over fiscal 2018 calculated and presented in accordance with GAAP allows shareholders to better understand Walmart’s underlying year-over-year sales growth without the effects of currency exchange rate fluctuations.
Reconciliation
: Reconciliation of the percentage increase in our consolidated net sales for fiscal 2019 (as reported) from our fiscal 2018 consolidated net sales (as reported) to our constant currency consolidated net sales for fiscal 2019 from our fiscal 2018 consolidated net sales (as reported).
|
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For the 52 Weeks Ended
January 26, 2019
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Percent Change
|
1
|
Consolidated net sales (as reported – in millions)
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$
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510,329
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2.9
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%
|
Currency exchange rate fluctuations (in millions)
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$708
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|
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Constant currency consolidated net sales (in millions)
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$
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511,037
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3.1
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%
|
1
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Calculated versus fiscal 2018 consolidated net sales (as reported)
|
A-2
|
|
2019 Proxy Statement
|
Table of Contents
Annex A
Other Non-GAAP Financial Measures
The company used the following performance metrics to determine whether it will make payments under the awards outstanding under its annual cash incentive plan and the amount of any such payments and whether payouts will be made under the outstanding long-term performance equity held by our NEOs and the amount of any such payouts to our NEOs. The following performance metrics, in each case as calculated for incentive plan purposes, are considered non-GAAP financial measures:
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adjusted constant currency total company operating income;
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●
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adjusted operating income of our Walmart U.S. segment;
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adjusted operating income of our Sam’s Club segment;
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adjusted constant currency operating income of our Walmart International segment;
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●
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constant currency total company sales (excluding certain items);
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●
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sales of our Walmart U.S. segment (excluding certain items);
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●
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sales of our Sam’s Club segment (excluding certain items);
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●
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constant currency sales of our Walmart International segment (excluding certain items);
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●
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our adjusted ROI;
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●
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percentage change in fiscal 2019 total company operating income,excluding certain items, from fiscal 2019 total company operating income, excluding certain items, (“fiscal 2019 total company operating income change”); and
|
●
|
percentage change in fiscal 2019 total company sales, excluding certain items, from fiscal 2019 total company sales, excluding certain items, (“fiscal 2019 total company sales change”);
|
Each of these non-GAAP financial measures is adjusted by excluding certain items from the calculation of those non-GAAP financial measures as described under the caption “
Executive Compensation—Compensation Discussion and Analysis—Fiscal 2019 Performance Goals and Performance
” elsewhere in the proxy statement (the “Excluded Items”). As permitted by the SEC’s rules and guidance, we do not disclose:
●
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the financial measures calculated and presented in accordance with GAAP that are most directly comparable to such non-GAAP financial measures; or
|
●
|
why we believe those non-GAAP financial measures are important information for our shareholders to have, or provide a reconciliation of each of those non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP. However, we believe it is important for our shareholders to understand how we calculated the non-GAAP measures described above.
|
We calculated
adjusted constant currency total company operating income
for incentive plan purposes by translating the as reported operating income for fiscal 2019 of the countries in which the functional currency is not the U.S. dollar or countries experiencing hyperinflation by using the currency exchange rates we had used to translate our fiscal 2018 operating income in those countries into U.S. dollars for financial reporting purposes rather than by using the current period’s currency exchange rates to make that translation and adjusting such operating income by excluding the Excluded Items.
We calculated
adjusted constant currency operating income of our Walmart International segment
for incentive plan purposes by translating the operating income for fiscal 2019 of the countries within our Walmart International segment in which the functional currency is not the U.S. dollar or countries experiencing hyperinflation by using the currency exchange rates we had used to translate our fiscal 2018 operating income in those countries into U.S. dollars for financial reporting purposes rather than by using the current period’s currency exchange rates to make that translation and adjusting such operating income by excluding the Excluded Items.
We calculated
constant currency total company sales
for incentive plan purposes by adding our Walmart U.S. net sales and Sam’s Club net sales to the constant currency net sales of our Walmart International segment, in each case for fiscal 2019, and adjusting the total of those net sales by excluding the Excluded Items.
We calculated
constant currency Walmart International net sales
by translating the net sales for fiscal 2019 of those countries within our Walmart International segment in which the functional currency is not the U.S. dollar or countries experiencing hyperinflation by using the currency exchange rates we had used to translate our fiscal 2018 net sales in those countries into U.S. dollars for financial reporting purposes rather than by using the current period’s currency exchange rates to make that translation and adjusting such net sales by excluding the Excluded Items.
Table of Contents
Annex A
We calculated
our adjusted ROI for fiscal 2019
as our operating income for fiscal 2019 plus our interest income, depreciation and amortization, and rent expense for fiscal 2019 divided by average invested capital for fiscal 2019. We considered average invested capital for fiscal 2019 to be the average of our beginning and ending total assets for fiscal 2019, plus average accumulated depreciation and average accumulated amortization, less average accounts payable and average accrued liabilities for fiscal 2019, plus a rent factor equal to rent expense for fiscal 2019 multiplied by a factor of eight. In computing the adjusted operating income component of ROI, we adjusted by excluding from such components the Excluded Items. We also made certain minor adjustments to our average invested capital as described under
Executive CompensationCompensation Discussion and Analysis
elsewhere in this Proxy Statement. Although return on investment is a standard financial measure, our calculation of ROI may differ from other companies calculations of their return on investment.
We calculated the
adjusted operating income
and the
sales (excluding certain items)
of each of our Walmart U.S. segment and our Sams Club segment by excluding the Excluded Items.
We calculated
fiscal 2019 total company operating income change
by dividing our consolidated operating income for fiscal 2019 (excluding the Excluded Items) by our consolidated operating income for fiscal 2018 (excluding the Excluded Items) and subtracting 1 from the result of that division, with the remainder expressed as a percentage.
We calculated
fiscal 2019 total company sales change
by dividing our consolidated net sales for fiscal 2019 (excluding the Excluded Items) by our consolidated net sales for fiscal 2018 (excluding the Excluded Items) and subtracting 1 from the result of that division, with the remainder expressed as a percentage.
A-4
|
|
2019 Proxy Statement
|
Table of Contents
Directions for 2019 Annual Shareholders’ Meeting and
Associate/Shareholder Celebration
|
Annual Shareholders’ Meeting
Place:
John Q. Hammons Convention Center
3303 S. Pinnacle Hills Parkway
Rogers, Arkansas 72758
Date and Time:
Wednesday, June 5, 2019 at 10:30 a.m. Central Time
1. John Q. Hammons Convention Center
2. Parking
Parking may be limited at both locations on the respective dates. The use of cameras, camcorders, videotaping equipment, and other recording devices will not be permitted in the 2019 Annual Shareholders’ Meeting or in the Associate/Shareholder Celebration. Attendees may not bring large packages or other materials that could pose a safety or disruption hazard (e.g., fireworks, banners, signs, noisemakers, horns, confetti, etc.). Walmart may take photographs at the 2019 Annual Shareholders’ Meeting and the Associate/Shareholder Celebration. By attending, you waive any claim or rights to these photographs and their use by Walmart.
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Associate/Shareholder Celebration
Place:
Bud Walton Arena University of Arkansas Campus
1240 Leroy Pond Drive
Fayetteville, Arkansas 72701
Date and Time:
Friday, June 7, 2019, at 8:00 a.m., Central Time
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1. Bud Walton Arena
2. Disabled Parking* (Lot No. 55)
3. NW Arkansas Regional Airport (XNA)
4. Parking Lots No. 56, 72 & 73
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5. Razorback Stadium
6. Track
7. Indoor Tennis Center (overflow seating)
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* Due to anticipated significant construction on campus, this lot may be changed. Attendees requiring access to disabled parking are encouraged to confirm the disabled parking lot location by contacting Global Investor Relations (see page 32) before traveling to Bud Walton Arena.
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In order to be admitted to either event, you must present photo ID and proof of share ownership. Please see page 96 of this proxy statement for more information regarding admission requirements.
Table of Contents
|
As Walmart continues its exciting transformation, we’re changing the way we work, the way we do business and it made sense to change how we approach our Annual Shareholders Meeting and Celebration. In 2018, after careful consideration, we came to the conclusion that our shareholders and associates would be better served by separating these events and focusing each meeting on their primary agendas. We are continuing that approach for this year.
2019 Annual Shareholders’ Meeting
Wednesday, June 5, 2019
10:30 a.m. Central Time
John Q. Hammons Center
3303 S. Pinnacle Hills Parkway
Rogers, Arkansas 72758
Like last year, this year’s formal Annual Shareholders’ Meeting will be held at a separate date and location in order to conduct the formal business of our annual shareholders’ meeting.
We will follow a traditional annual meeting agenda, conduct voting on proxy proposals and consider any procedural, regulatory or other matters that are properly presented at the meeting. There will not be any entertainment or other activities at the formal Annual Shareholders’ Meeting.
Please see pages 96-97 of this proxy statement for more information regarding admission requirements and voting procedures.
2019 Associate/Shareholder Celebration
Friday, June 7, 2019
8:00 a.m. Central Time
Bud Walton Arena
University of Arkansas Campus
Fayetteville, Arkansas 72701
This is our traditional event to recognize and celebrate Walmart’s associates from around the world as well as shareholders.
This event is your chance to connect with other Walmart shareholders and associates from around the globe and around the corner. To enjoy new inspirational stories, hear from Walmart’s leaders about our progress, and enjoy the exciting entertainment that has become a hallmark of this event.
There will be no formal business items presented for a vote at the June 7 event. The event will include a brief recap of the voting results from the June 5 formal business meeting.
Please see page 96 of this proxy statement for more information regarding admission requirements for this exciting event.
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Table of Contents
WALMART INC.
C/O PROXY SERVICES
P.O. BOX 9163
FARMINGDALE, NY 11735
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SCAN TO
VIEW MATERIALS &VOTE
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to vote by proxy up until 11:59 P.M. Eastern Time on June 4, 2019. If you participate in the Walmart 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan, you must vote these shares no later than 11:59 P.M. Eastern Time on May 30, 2019. Have your proxy card in hand when you access the website and then follow the instructions to obtain your records and to create an electronic proxy.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. You may also agree to receive or access proxy materials electronically in future years on Walmart's corporate website at
http://stock.walmart.com/annual-reports
.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 4, 2019. If you participate in the Walmart 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan, you must vote these shares no later than 11:59 P.M. Eastern Time on May 30, 2019. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign, and date this proxy card and promptly return it in the postage-paid envelope we have provided to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717
.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
E70567-P18324-Z74232
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|
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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WALMART INC.
The Board of Directors recommends a vote "FOR" each of the nominees listed in Proposal 1,
"FOR" Proposals 2 and 3, and "AGAINST" Proposals 4 and 5
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1.
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Election of Directors
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Nominees:
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For
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Against
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Abstain
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1a.
|
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Cesar Conde
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☐
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☐
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☐
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1b.
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Stephen J. Easterbrook
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☐
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☐
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☐
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1c.
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Timothy P. Flynn
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☐
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☐
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☐
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1d.
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Sarah J. Friar
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☐
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☐
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☐
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1e.
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Carla A. Harris
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☐
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☐
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☐
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1f.
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Thomas W. Horton
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☐
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☐
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☐
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1g.
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Marissa A. Mayer
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☐
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☐
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☐
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1h.
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C. Douglas McMillon
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☐
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☐
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☐
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1i.
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Gregory B. Penner
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☐
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☐
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☐
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1j.
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Steven S Reinemund
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☐
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☐
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☐
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1k.
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S. Robson Walton
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☐
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☐
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☐
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1l.
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Steuart L. Walton
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☐
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☐
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☐
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Company Proposals:
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For
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Against
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Abstain
|
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2.
|
|
Advisory Vote to Approve Named Executive Officer Compensation
|
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☐
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☐
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☐
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3.
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Ratification of Ernst & Young LLP as Independent Accountants
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☐
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☐
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☐
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Shareholder Proposals
|
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4.
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Request to Strengthen Prevention of Workplace Sexual Harassment
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☐
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☐
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☐
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5.
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Request to Adopt Cumulative Voting
|
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☐
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☐
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☐
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NOTE:
Such other business as may properly come before the meeting or any adjournment thereof will be voted on by the proxy holders in their discretion.
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If this proxy is signed, dated, and promptly returned, it will be voted in accordance with your instructions shown above. Please sign exactly as your name appears hereon. Joint owners should each sign. If signing as attorney-in-fact, executor, administrator, trustee, guardian, fiduciary or in another capacity, please indicate full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer(s), and specify the title(s) of such officer(s).
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
Date
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Signature (Joint Owners)
|
Date
|
Table of Contents
Annual Shareholders' Meeting
June 5, 2019 at 10:30 A.M., Central Time
John Q. Hammons Center
3303 S. Pinnacle Hills Parkway
Rogers, Arkansas 72758
Important Notice Regarding the Availability of Proxy Materials for the Annual Shareholders' Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
WALMART INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL SHAREHOLDERS’ MEETING OF WALMART INC.
TO BE HELD ON June 5, 2019
I have received the Notice of 2019 Annual Shareholders' Meeting (the "Meeting") to be held on June 5, 2019, and the related Proxy Statement furnished by Walmart Inc.'s ("Walmart") Board of Directors. I appoint GREGORY B. PENNER and C. DOUGLAS MCMILLON, and each of them, as my proxies and attorneys-in-fact, with full power of substitution, to represent me and to vote all shares of Walmart common stock that I am entitled to vote at the Meeting or any adjournments or postponements thereof in the manner shown on this form as to the matters shown on the reverse side of this form and in their discretion on any other matters that properly come before the Meeting or any adjournments or postponements thereof. If I participate in the Walmart 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan and I have a portion of my interest invested in Walmart stock, I also direct the Retirement Plans Committee of the respective plan to take such actions necessary to vote the stock which is attributable to my interest in the manner shown on this form as to the matters shown on the reverse side of this form at the Meeting, and in its discretion on any other matters that properly come before the Meeting or any adjournments or postponements thereof.
You are encouraged to specify your choices by marking the appropriate boxes on the reverse side. If this proxy is signed, dated, and promptly returned, it will be voted in accordance with your instructions shown on the reverse side; however, if you do not provide instructions, this proxy will be voted "FOR" each director nominee listed in Proposal 1, "FOR" Proposals 2 and 3, "AGAINST" Proposals 4 and 5, and in their discretion on any other matters that are properly presented at the Meeting or any adjournments or postponements thereof.
Please sign exactly as your name appears hereon. Joint owners should each sign. If signing as attorney-in-fact, executor, administrator, trustee, guardian, fiduciary or in another capacity, please indicate full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer(s), and specify the title(s) of such officer(s).