Wal-Mart DEF 14A 2015
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
WAL-MART STORES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Notice of 2015
Bud Walton Arena, University of Arkansas,
Dear Fellow Shareholders:
We hope you will review the information provided in this proxy statement and attend Walmart’s 2015 Annual Shareholders’ Meeting, which will be held on Friday, June 5, 2015, at 7:30 a.m. Central Time at Bud Walton Arena on the University of Arkansas campus in Fayetteville, Arkansas. See page 102 for admission requirements if you plan to attend the meeting in person. The meeting will also be webcast on our website at http://stock.walmart.com/annual-reports. Regardless of whether or not you attend the meeting in person, your vote is important to us and we encourage you to cast your votes. See pages 99-100 for instructions regarding voting your shares.
As you will see, we continue to make enhancements to the format and content of our proxy statement to provide a clear and detailed overview of the topics that we will address at the meeting. Many of these changes were influenced by feedback from you, our shareholders. For example, in the Corporate Governance section beginning on page 12, we now include additional information regarding the skills, experiences, and qualifications of our Board of Directors, our Board evaluation process, and Board succession planning. The Compensation Discussion and Analysis section, beginning on page 43, describes how our executive compensation program is designed to support our company’s enterprise strategy, align with shareholder interest, and pay for performance.
Thank you for being a Walmart shareholder. We look forward to seeing you at the 2015 Annual Shareholders’ Meeting.
Wal-Mart Stores, Inc.
Friday, June 5, 2015
7:30 a.m., Central time
Bud Walton Arena, University of Arkansas Campus, Fayetteville, Arkansas 72701
Please join our Board of Directors, senior leadership, and other shareholders for the 2015 Annual Shareholders’ Meeting of Wal-Mart Stores, Inc. The meeting will be held on Friday, June 5, 2015, at 7:30 a.m., Central time in Bud Walton Arena on the campus of the University of Arkansas, Fayetteville, Arkansas 72701. The purposes of the meeting are:
The Board of Directors set April 10, 2015 as the record date for the meeting. This means that only shareholders of record of Walmart as of the close of business on that date are entitled to:
Attending the meeting in person. If you plan to attend the meeting in person, please see page 102 for information regarding what you must bring with you to gain admittance to the 2015 Annual Shareholders’ Meeting.
Your vote is important to us. Regardless of whether you plan to attend, we urge all shareholders to vote on the matters described in the accompanying proxy statement. Please see pages 99-100 for information about voting by mail, telephone, the internet, mobile device, or in person at the 2015 Annual Shareholders’ Meeting. Voting in advance of the meeting in any of the ways described will not prevent you from attending the 2015 Annual Shareholders’ Meeting.
The proxy statement and our Annual Report to Shareholders for the fiscal year ended January 31, 2015 are available in the “Investors” section of our corporate website at http://stock.walmart.com/annual-reports.
April 22, 2015
By Order of the Board of Directors
Jeffrey J. Gearhart
Table of Contents
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You are voting on a proposal to elect each of the nominees named below as a director of the company for a one-year term. If you return your proxy, your proxy holder will vote your Shares FOR the election of each of the Board’s nominees named below unless you instruct otherwise. If the shareholders elect all of the director nominees named in this proxy statement at the 2015 Annual Shareholders’ Meeting, Walmart will have 15 directors. Each director nominee named in this proxy statement has consented to act as a director of Walmart if elected. If a nominee becomes unwilling or unable to serve as a director, your proxy holder will have the authority to vote your Shares for any substitute candidate nominated by the Board, or the Board may decrease the size of the Board.
An effective Board should be comprised of individuals who collectively provide an appropriate balance of distinguished leadership, diverse perspectives, strategic skill sets, and professional experience relevant to our company’s business and strategic objectives. In fulfilling its responsibility for identifying and evaluating director candidates, in accordance with Walmart’s Corporate Governance Guidelines, the CNGC selects potential candidates on the basis of: outstanding achievement in their professional careers; broad experience and wisdom; personal and professional integrity; ability to make independent, analytical inquiries; experience with and understanding of the business environment; willingness and ability to devote adequate time to Board duties; and such other experience, attributes, and skills that the CNGC determines qualify candidates for service on the Board. The CNGC also considers whether a potential candidate satisfies the independence and other requirements for service on the Board and its committees, as set forth in the NYSE Listed Company Rules and the SEC’s rules. Additional information regarding qualifications for service on the Board and the nomination process for director candidates is set forth in the CNGC’s charter and our Corporate Governance Guidelines, which are available on the Corporate Governance page of our website at http://stock.walmart.com.
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Depending on the current composition of the Board and Board committees and Walmart’s current needs and business priorities, the CNGC generally seeks director candidates who possess experience, skills, or background in one or more of the following areas:
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Below we identify the balance of skills and qualifications each director nominee brings to the Board. The fact that a particular skill or qualification is not designated does not mean the director nominee does not possess that particular attribute. Rather, what is noted represents the skills and qualifications reviewed by the CNGC and the Board in their consideration for re-nominating each candidate. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well-positioned to provide effective oversight and strategic advice to management of the Company.
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Based on the recommendation of the CNGC, the Board has nominated the following candidates for election as directors at the 2015 Annual Shareholders’ Meeting. Each nominee is a highly-qualified, recognized leader in his or her respective industry, and the information set forth below includes, with respect to each nominee, his or her age, principal occupation and employment during the past five years, the year in which he or she first became a director of Walmart, each Board committee on which he or she currently serves, whether he or she is independent, and directorships of other public companies held by each nominee during the past five years.
The Board recommends that shareholders vote FOR each of the nominees named below for election to the Board.
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Yes. Douglas N. Daft, who currently serves on the Board, will rotate off the Board at the conclusion of his current term and will not stand for reelection at the 2015 Annual Shareholders’ Meeting.
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A majority of our directors must be independent in accordance with the independence requirements set forth in the NYSE Listed Company Rules. In addition, the Audit Committee and the CNGC must be composed solely of directors who meet additional, heightened independence standards applicable to members of audit committees and compensation committees under the NYSE Listed Company Rules and the SEC’s rules.
In making independence determinations, the Board complies with all NYSE and SEC criteria and considers all relevant facts and circumstances. Under the NYSE Listed Company Rules, to be considered independent:
In April 2015, the Board and the CNGC conducted their annual review of directors’ responses to a questionnaire soliciting information regarding their direct and indirect relationships with the company (and the directors’ immediate family members’ direct and indirect relationships with the company) and other relationships that may be relevant to independence, as well as due diligence performed by management regarding any transactions, relationships, or arrangements between the company and the directors or parties related to the directors. As a result of this review, the Board has determined that the following director nominees are Independent Directors under the independence standards set forth in the NYSE Listed Company Rules: Aida M. Alvarez; James I. Cash, Jr.; Roger C. Corbett; Pamela J. Craig; Timothy P. Flynn; Thomas W. Horton; Marissa A. Mayer; Steven S Reinemund; Kevin Y. Systrom; and Linda S. Wolf. The Board has also determined that Douglas N. Daft, who is not standing for reelection at the 2015 Annual Shareholders’ Meeting, is an Independent Director. In addition, the Board determined that the currently serving members of the Audit Committee and the CNGC meet the heightened independence standards for membership on those Board committees. The Board also determined that Christopher J. Williams, who did not stand for reelection at the 2014 Annual Shareholders’ Meeting and, therefore, ceased to be a director of Walmart on June 6, 2014, was independent during the portion of fiscal 2015 during which he served on the Board.
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In making its determination as to the independence of our Independent Directors, the Board considered whether any relationship between a director and Walmart is a material relationship based on the materiality guidelines discussed above, the facts and circumstances of the relationship, the amounts involved in the relationship, the director’s interest in such relationship, if any, and such other factors as the Board, in its judgment, deemed appropriate. In each case, the Board found the relationship with our Independent Directors to be immaterial to the director’s independence. The types of relationships considered by the Board are noted below:
The aggregate amounts involved in each of the relationships and transactions described in the preceding table were less than $1 million or, if greater, 1% of the consolidated gross revenues for the entity’s last fiscal year, with the exception of certain relationships involving Ms. Mayer and immediate family members of Ms. Craig, Mr. Corbett, and Mr. Reinemund. Ms. Mayer served as a member of the board of directors of a Walmart vendor that received payments from Walmart during the entity’s last fiscal year that account for more than 1% but less than 2% of that entity’s consolidated gross revenues for the entity’s last fiscal year. In each of the other instances, an immediate family member of one of our directors is or was employed by or had a less than 5% indirect ownership interest in (but is not an executive officer of) a Walmart supplier or vendor that received payments from Walmart during the entity’s last fiscal year that account for more than 1% of the entity’s consolidated gross revenues for that entity’s last fiscal year. The Board determined these relationships were immaterial to each director’s independence because in each case neither the director nor the immediate family member: (i) is or was not an executive officer of the entity; (ii) is or was not involved in the negotiation of transactions or the business relationship between Walmart and the entity; (iii) does or did not receive compensation from the entity based on the marketing or sale of the entity’s goods or services to Walmart; and (iv) did not have his or her advancement within such entity based on the marketing or sale of the entity’s goods or services to Walmart. Further, the payments made by Walmart to the entities, or by the entities to Walmart, were for various products and services in the ordinary course of business, and Walmart has had a relationship with these entities for many years prior to the directors’ immediate family members’ employment with these entities.
In their determination of Ms. Mayer’s independence, the Board and the CNGC considered Ms. Mayer’s positions as the chief executive officer, president, and a member of the board of directors of Yahoo!. During fiscal 2015, Walmart paid Yahoo! for advertising space on Yahoo!’s websites and Yahoo! made ordinary course purchases from Walmart in amounts that account for less than 1% of Yahoo!’s 2014 revenues and Walmart’s fiscal 2015 revenues. Walmart anticipates that it will purchase advertising space on Yahoo!’s websites and will sell goods in the ordinary course to Yahoo! in fiscal 2016. Ms. Mayer was not involved in any transaction between Walmart and Yahoo! and did not have a direct or indirect material interest in any transaction between Walmart and Yahoo!. Based on the Board’s consideration of Ms. Mayer’s positions at Yahoo! and the other factors relating to the transactions between Walmart and Yahoo!, the Board determined that Ms. Mayer’s interest in Yahoo! did not give rise to a material relationship that would impair Ms. Mayer’s independence.
The Board and the CNGC concluded that the Independent Directors do not currently have, and have not had during any pertinent period, relationships that: (i) constitute disqualifying relationships under the NYSE Listed Company Rules; (ii) otherwise compromise the independence of the named directors; or (iii) otherwise constitute a material relationship between Walmart and the directors.
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Walmart’s compensation program for Outside Directors is intended to:
At least annually, the CNGC reviews our compensation program for Outside Directors and makes recommendations to the Board, which approves Outside Director compensation. In developing its recommendations, the CNGC considers, among other information, data regarding director compensation at peer group companies.
Components of Director Compensation
Our Outside Director compensation program consists of the following primary components:
Outside Directors receive the stock grant annually upon election to the Board at our Annual Shareholders’ Meeting. Each Outside Director may elect to defer the receipt of this stock grant in the form of stock units. The other components of Outside Director compensation listed above are paid quarterly in arrears. Each Outside Director can elect to receive these other components in the form of cash, Shares (with the number of Shares determined based on the closing price of Shares on the NYSE on the payment date), deferred in stock units, or deferred into an interest-credited cash account.
In addition, each Outside Director who attends in person a Board meeting held at a location that requires intercontinental travel from his or her residence is paid an additional $4,000 meeting attendance fee. Finally, each member of the Audit Committee received an additional fee during fiscal 2015. Since 2011, the Audit Committee has been conducting an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other alleged crimes or misconduct in connection with certain foreign subsidiaries, and whether prior allegations of such violations and/or misconduct were appropriately handled by Walmart. The Audit Committee and Walmart have engaged outside counsel from a number of law firms and other advisors who are assisting in the ongoing investigation of these matters. This investigation continues to result in a significant increase in the workload of the Audit Committee members, and during fiscal 2015, the Audit Committee conducted seven additional meetings primarily related to the investigation. Audit Committee members also received frequent updates regarding the investigation via conference calls and other means of communication with outside counsel and other advisors. In light of this continuing significant additional time commitment, in November 2014, the CNGC and Board approved an additional fee of $37,500 payable to each Audit Committee member other than the Audit Committee Chair, and an additional fee of $50,000 payable to the Audit Committee Chair. These additional fees may be received in the form of cash, Shares (with the number of Shares determined based on the closing price of Shares on the NYSE on the payment date), deferred in stock units, or deferred into an interest-credited cash account.
Director Stock Ownership Guidelines
Pursuant to stock ownership guidelines adopted by the Board, each Outside Director is required to own, within five years of his or her initial election to the Board, Shares or deferred stock units with a value equal to five times the annual retainer portion of the Outside Director compensation established by the Board in the year the director was initially elected. All Outside Directors who have reached the five-year compliance date own sufficient Shares or deferred stock units to satisfy this requirement.
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Director Compensation for Fiscal 2015
Explanation of information in the columns of the table:
Name (column (a))
Michael T. Duke and C. Douglas McMillon are omitted from this table because they received compensation only as Associates of our company during fiscal 2015 and did not receive any additional compensation for their duties as directors. H. Lee Scott, Jr. and Christopher J. Williams did not stand for reelection and retired from the Board as of the 2014 Annual Shareholders’ Meeting.
Fees Earned or Paid in Cash (column (b))
This column reflects the annual retainer, committee chair retainers, the Lead Independent Director retainer, retainers for service on multiple Board committees, additional payments to certain directors for attendance at Board meetings that required intercontinental travel, and the additional Audit Committee fees described above. Mr. Daft elected to defer the receipt of these fees into an interest-credited account. Certain other Outside Directors elected to either receive Shares in lieu of these amounts or defer these amounts in the form of deferred stock units, as shown below:
Stock Awards (column (c))
In accordance with SEC rules, the amounts in this column are the aggregate grant date fair value of stock awards granted during fiscal 2015, computed in accordance with the stock-based accounting rules that are part of GAAP (as set forth in Financial Accounting Standards Board’s Accounting Standards Codification Topic 718). Each Outside Director that was elected to the Board at the 2014 Annual Shareholders’ Meeting received a stock award of 2,267 Shares ($175,000 divided by $77.21, the closing price of a Share on the NYSE on the grant date, and rounded to the nearest Share). Dr. Cash, Mr. Daft, Mr. Flynn, Ms. Mayer, Mr. Penner, Mr. Jim Walton, and Ms. Wolf elected to defer these Shares in the form of deferred stock units. Mr. Scott and Mr. Williams did not stand for reelection at the 2014 Annual Shareholders’ Meeting and, therefore, did not receive a stock grant during fiscal 2015. Mr. S. Robson Walton ceased to be an Associate and became an Outside Director on July 1, 2014. Mr. Systrom and Mr. Horton were appointed to the Board on September 26, 2014 and November 21, 2014, respectively. In connection with these events, Mr. S. Robson Walton, Mr. Systrom, and Mr. Horton each received a prorated portion of the $175,000 annual stock award, rounded to the nearest Share, as shown on the table below. Mr. S. Robson Walton elected to defer these Shares in the form of deferred stock units.
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Option Awards and Non-Equity Incentive Plan Compensation (columns (d) and (e))
We do not issue stock options to our Outside Directors and do not provide our Outside Directors with any non-equity incentive plan compensation. Therefore, we have omitted these columns from the table. As of the end of fiscal 2015, Mr. Duke held options to purchase 243,292 Shares. Mr. McMillon also held options to purchase Shares as of the end of fiscal 2015, as disclosed on the Outstanding Equity Awards at Fiscal 2015 Year-End table on page 71. The options held by Mr. Duke and Mr. McMillon were granted to them in prior years as part of their compensation for service as Associates and not as compensation for serving as a director of our company.
Change in Pension Value and Non-Qualified Deferred Compensation Earnings (column (f))
This column represents above-market interest earned on director compensation deferred to an interest-credited account under the Director Compensation Deferral Plan, as elected by the director. The interest rate on the interest-credited account is set pursuant to the terms of the Director Compensation Deferral Plan based on the ten-year United States Treasury note yield on the first day of January plus 2.70%. This rate was 5.70% for the calendar year ended December 31, 2014, and decreased to 4.82% for the calendar year ending December 31, 2015.
All Other Compensation (column (g))
The amounts in this column include tax gross-up payments paid during fiscal 2015 relating to imputed income attributable to spousal travel expenses, meals, and related activities in connection with certain Board meetings during fiscal 2015. For Mr. Corbett, this column also includes the aggregate cost of such spousal travel expenses, meals, and related activities in the amount of $31,527, primarily related to spousal travel from his residence in Australia to our Board and Board committee meetings. The cost of any such spousal travel expenses, meals, and related activities for each of the other Outside Directors is omitted from this column because the total incremental cost for such benefits for each other director was less than $10,000.
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Board Leadership Structure
As part of its annual evaluation process described below, the Board reviews its leadership structure to ensure that it is designed to provide robust oversight and promote overall Board effectiveness. Our current Board leadership structure consists of:
Separation of Chairman and CEO Roles. As stated in our Corporate Governance Guidelines, the Board’s policy is to separate the roles of Chairman and CEO, and we have separated these roles since 1988. We separate these roles in recognition of the differences between the two roles and the value to our company of having the distinct and different perspectives and experiences of a separate Chairman and CEO.
By separating the roles of Chairman and CEO, our CEO is able to focus his time and energy on managing Walmart’s complex daily operations, while our Chairman, who is an Outside Director, can devote his time and attention to matters of Board oversight. Our CEO and Chairman have an excellent working relationship, and, with more than 40 years of experience with Walmart, our Chairman is well positioned to provide our CEO with guidance, advice, and counsel regarding our company’s business, operations, and strategy. Moreover, we believe that having a separate Chairman focused on oversight and governance matters allows the Board to more effectively perform its risk oversight role as described on page 32.
Lead Independent Director. Walmart is committed to independent Board oversight. Pursuant to the company’s Corporate Governance Guidelines, the Independent Directors, upon recommendation of the CNGC, annually appoint a Lead Independent Director who presides over executive sessions of the Outside Directors and Independent Directors. Our Board has had an Independent Director in this role since 2004. James I. Cash, Jr. was first appointed to this role in 2013, when James W. Breyer, the Independent Director who previously served in this capacity, retired from the Board. In this role, Dr. Cash:
Vice Chairman of the Board. As a result of the Board’s ongoing efforts around Board effectiveness and Board succession planning, in 2014, the Board appointed Gregory B. Penner to the newly created position of Vice Chairman of the Board. In this role, Mr. Penner presides over Board meetings in the event that the Chairman is not present. Mr. Penner also actively participates in the Board and committee agenda review process, as well as in the Board’s efforts regarding overall Board effectiveness and Board succession planning.
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As part of its annual Board and committee evaluation process, the Board reviews its committee structure and committee responsibilities to ensure that the Board has an appropriate committee structure focused on matters of strategic and governance importance to Walmart, and to ensure the effectiveness of the Board’s risk oversight function. Currently, the Board has six standing committees: the Audit Committee; the Compensation, Nominating and Governance Committee; the Strategic Planning and Finance Committee; the Technology and eCommerce Committee; the Global Compensation Committee; and the Executive Committee. The Board has adopted a written charter for each of these committees, which are available on Walmart’s website at http://stock.walmart.com in the “Corporate Governance” section.
Information about each of these committees is provided below.
= Committee Chair
= Determined by the Board to be an audit committee financial expert as defined under applicable SEC rules
I = Determined by the Board to be independent under the NYSE Listed Company Rules, the Exchange Act, and the SEC’s rules
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= Committee Chair
I = Determined by the Board to be independent under the NYSE Listed Company Rules and applicable SEC rules
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The Board’s Role in Risk Oversight
Taking reasonable and responsible risks is an inherent part of Walmart’s business, just as it is with any business, and is critical to our continued innovation, growth, and achievement of our strategic objectives. In order to ensure the long-term success and financial strength of our company, the Board and the Board committees play an active role in overseeing the management of the most significant risks that could impact the company’s operations. Such risks include operational, legal, regulatory, financial, reputational, strategic, and other risks.
The Board does not view risk in isolation, but instead considers risk in conjunction with its oversight of the company’s strategy and operations. The company’s internal processes and internal control environment facilitate the identification and management of risk by the company’s management, the Board, and the Board committees.
The Board carries out its risk oversight function both as a whole and through delegation of certain risk management oversight responsibilities to the Board committees, which report regularly to the Board. The Audit Committee has responsibility for overseeing the company’s overall risk identification, monitoring, and mitigation processes and policies.
When a Board committee receives an update on a risk-related matter, the chair of the relevant Board committee reports on the discussion to the full Board during the Board committee reports portion of the next Board meeting. Additional information regarding the roles and responsibilities of our Board committees can be found under “Board Committees” beginning on page 30.
The Board’s risk oversight role builds upon Walmart management’s enterprise risk assessment. Management identifies key enterprise risks using internal and external information and analyses. The identified risks, and the actions required to mitigate them, are reviewed by executive management and incorporated into the company’s strategic plans.
As shown in the chart below, the open communication between the company’s management and the Board and the Board committees, and between the Board and the chairs and the other members of the Board committees, enables the Board, Board committees, and management to coordinate the risk oversight role in a manner that serves the long-term interests of the company and our shareholders.
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Annual Board and Board committee evaluations are an important tool for promoting Board and Board committee effectiveness. The CNGC oversees the Board and committee evaluation process, and the CNGC Chair and Lead Independent Director work together to develop and implement the Board and committee evaluations. This evaluation process includes:
At the completion of this process, the Lead Independent Director and CNGC Chair synthesize the results of these evaluations and report to the full Board on an anonymous basis. Time is allotted at a Board meeting to discuss the evaluation results. Similarly, each Board committee chair leads a discussion of the evaluation results for that committee. Following these discussions, the Lead Independent Director and the CNGC Chair, with input from the Chairman, Vice Chairman, and Board committee chairs, develop suggested action plans. These evaluations have consistently found that the Board and Board committees are operating effectively. Over the years, this evaluation process has contributed to various refinements in the way the Board and committees operate, including:
Board Refreshment and Succession Planning
The CNGC is responsible for identifying and evaluating potential director candidates, for reviewing the composition of the Board and Board committees, and for making recommendations to the full Board on these matters. Throughout the year, the CNGC actively engages in Board succession planning, taking into account the following considerations:
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The CNGC and Board believe that a mix of longer-tenured directors and newer directors with fresh perspectives contributes to an effective Board. In order to promote thoughtful Board refreshment, the Board has adopted the following retirement policies for Independent Directors, as set forth in Walmart’s Corporate Governance Guidelines:
The Board may make exceptions to these retirement policies if circumstances warrant. For example, the Board could extend the term limit or retirement age for an individual director with particular skills or qualifications that are valuable to the Board’s effectiveness until a suitable replacement is found. Similarly, an Independent Director may retire before serving 12 years in order to avoid excessive turnover on the Board or a Board committee in a short period of time. The Board believes that these policies have helped to provide discipline to the Board refreshment process, and have resulted in a diverse Board with an effective mix of skills, experiences, and tenures, as shown on page 10.
As a part of the process of identifying potential director candidates, the CNGC may consult with other directors and senior officers and may engage a search firm to assist in the process. Spencer Stuart currently serves as the CNGC’s director candidate search consultant. In this capacity, Spencer Stuart seeks out candidates who have the backgrounds, skills, and experience that the CNGC has identified as desired in director candidates, conducts an extensive search for, and analysis of, potential candidates, and then presents the most qualified candidates to the CNGC and our Chairman. If the CNGC decides to proceed with further consideration of a potential candidate, the Chair of the CNGC and other members of the CNGC, as well as other members of the Board, may interview the candidate. The CNGC then may recommend that the full Board appoint or nominate the candidate for election to the Board. Kevin Y. Systrom and Thomas W. Horton, who were first appointed by the Board as directors during fiscal 2015, were initially identified as potential director candidates by Spencer Stuart, and each of their appointments was a result of the process outlined above.
S. Robson Walton and Jim C. Walton are members of a group that beneficially owns more than 5% of the outstanding Shares. Any participation by either of them in the nomination process is considered to be in their capacities as members of the Board and is not considered to be a recommendation from security holders who beneficially own more than five percent of the outstanding Shares.
Director Onboarding and Engagement with the Business
All of our Board members are expected to invest the time and energy to quickly gain an in-depth understanding of our business and operations in order to enhance their strategic value to our Board. Shortly after joining our Board, each new director is partnered in a mutual mentoring relationship with a member of senior management, and each new director has “learn the business” meetings with the leaders of key operational and corporate support functions. Typically, one Board meeting each year is held at a location away from our home office, usually in an international market in which we operate. In connection with these Board meetings, our directors learn more about the local market and our business in that market through meetings with our business leaders in the markets, visits to our stores and other facilities in the local market, and visits to the stores of our competitors. We also typically hold one Board meeting per year at our Global eCommerce headquarters in San Bruno, California, where our Board members participate in intensive sessions focused on our eCommerce strategies and operations. Our Board members also participate in other company activities and engage directly with our Associates at a variety of events throughout the year. Activities and events that members of our Board participated in since the beginning of fiscal 2015 include:
Management Development and Succession Planning
Our Board places a high priority on senior management development and succession planning. The CNGC has primary responsibility for reviewing and establishing for the full Board’s approval the succession planning and retention practices for our Executive Officers and other senior leaders. Executive Officer succession planning and senior management development is a regular topic on the agendas for the meetings of the CNGC. At these meetings, the members of our CNGC, in consultation with our CEO, our Executive Vice President, Global People, and others as the CNGC may deem appropriate, engage in comprehensive deliberations regarding the development and evaluation of current and potential senior leaders, as well as
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the development of executive succession plans, including succession plans for our CEO position. This process has contributed to two successful CEO transitions since 2009.
The Board, upon recommendation of the CNGC, has also separately developed a CEO succession planning process to address certain unanticipated events and emergency situations.
Oversight of the Company’s Legislative Affairs and Public Policy Engagement Strategy
Walmart participates in the political process when we believe that doing so will serve the best interests of the company and our shareholders. Walmart is committed to engaging in the political process as a good corporate citizen and in a manner that complies with all applicable laws. Over the years, Walmart has provided greater transparency regarding the company’s political engagement. Consistent with our commitment to participating in the political process in a thoughtful and compliant manner, in fiscal 2014, the Board amended the charter of the CNGC, requiring the CNGC to review and advise management regarding the company’s legislative affairs and public policy engagement strategy. Similarly, pursuant to its charter, the CNGC is further responsible for reviewing and advising management regarding the company’s charitable giving strategy and the company’s social, community, and sustainability initiatives.
Shareholder Outreach and Engagement
We recognize the value of listening and taking into account the views of our shareholders because these relationships with Walmart’s shareholders are an integral part of our corporate governance practices. We conduct shareholder outreach throughout the year to ensure that management and the Board understand and consider the issues of importance to our shareholders and are able to address them appropriately. During fiscal 2015, at the direction of the CNGC, senior leaders and subject matter experts from the company met with representatives at many of our top institutional shareholders and well-recognized proxy advisory firms to discuss Walmart’s enterprise strategy, governance practices, executive compensation, our company’s compliance programs, and other environmental, social, and governance (“ESG”) related matters. Management reports regularly to the CNGC about these meetings, including feedback on these diverse topics and concerns raised by our shareholders. We are continuing this program of enhanced shareholder engagement during fiscal 2016, in addition to our customary participation at industry and investment community conferences, investor road shows, and analyst meetings. We also have incorporated into this proxy statement some of the feedback we received during these meetings. We also respond to individual shareholders who provide feedback about our business. We have had success engaging with parties to understand shareholder concerns and reaching resolutions on issues that are in the best interests of our shareholders, and we remain committed to these ongoing initiatives.
Each standing committee of the Board has a written charter, which sets forth the roles and responsibilities of the Board committee. In addition, the Board has adopted Corporate Governance Guidelines, as more specifically described below. The committee charters and the Corporate Governance Guidelines, provide the overall framework for our corporate governance practices. Our Corporate Governance Guidelines address, among other topics:
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The CNGC and the Board review the Corporate Governance Guidelines, and the CNGC, the Board, and each Board committee review the Board committee charters at least annually to determine whether any updates or revisions to these documents may be necessary or appropriate.
In addition to the Corporate Governance Guidelines and the Board committee charters, you may access and review the following additional corporate governance documents on our corporate website at http://stock.walmart.com/corporate-governance/governance-documents:
Walmart’s Code of Ethics for the CEO and Senior Financial Officers supplements Walmart’s Global Statement of Ethics, which is applicable to all directors, Executive Officers, and Associates and is also available at www.walmartethics.com. A description of any substantive amendment or waiver of Walmart’s Code of Ethics for the CEO and Senior Financial Officers or Walmart’s Global Statement of Ethics granted to Executive Officers or directors will be disclosed on our corporate website (http://stock.walmart.com/corporate-governance/governance-documents) for a period of 12 months after the date of the amendment or waiver. There were no substantive amendments to or waivers of Walmart’s Code of Ethics for the CEO and Senior Financial Officers or Walmart’s Global Statement of Ethics granted to Executive Officers or directors during fiscal 2015.
Board Meetings and Director Attendance
The Board held a total of five meetings during fiscal 2015 to review significant developments affecting our company, engage in strategic planning, and act on matters requiring Board approval. During fiscal 2015, each director attended more than 75% of the aggregate number of Board meetings and meetings of Board committees on which he or she served. As a whole, during fiscal 2015, our directors attended approximately 98% of the aggregate number of Board meetings and meetings of Board committees on which they served, and 13 of the 15 director nominees had perfect attendance. The Outside Directors and Independent Directors met regularly in executive sessions, with the Lead Independent Director chairing those sessions.
Board Attendance at Annual Shareholders’ Meetings
The Board has adopted a policy stating that all directors are expected to attend the company’s Annual Shareholders’ Meetings. While the Board understands that there may be situations that prevent a director from attending an Annual Shareholders’ Meeting, the Board encourages all directors to make attendance at all Annual Shareholders’ Meetings a priority. Fifteen Board members attended the 2014 Annual Shareholders’ Meeting, including all director nominees named in this proxy statement who were members of the Board at the time of the 2014 Annual Shareholders’ Meeting.
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Communicating with the Board
The Board welcomes feedback from shareholders and other interested parties. There are a number of ways that you can contact the Board or individual members of the Board.
Our company receives a large volume of correspondence regarding a wide range of subjects each day, including correspondence relating to ordinary store operations and merchandise in our stores. As a result, our individual directors are often not able to respond to all communications directly. Therefore, the Board has established a process for managing communications to the Board and individual directors.
Communications directed to the Board or individual directors are reviewed to determine whether, based on the facts and circumstances of the communication, a response on behalf of the Board or an individual director is appropriate. If a response on behalf of the Board or an individual director is appropriate, Walmart management may assist the Board or individual director in gathering all relevant information and preparing a response. Communications related to day-to-day store operations, merchandise, and similar matters are typically directed to an appropriate member of management for a response. Walmart maintains records of communications directed to the Board and individual directors, and these records are available to our directors at any time upon request.
Shareholders wishing to recommend director candidates for consideration by the Board should do so in writing to the address set forth above. The recommendation should include the candidate’s name and address; a resume or curriculum vitae that demonstrates the candidate’s experience and qualifications; and other relevant information for the Board’s consideration. All director candidates recommended by shareholders will be evaluated by the CNGC on the same basis as any other director candidates.
Although shareholder ratification is not required, the appointment of EY as the company’s independent accountants for fiscal 2016 is being submitted for ratification at the 2015 Annual Shareholders’ Meeting because the Board believes it is a matter of good corporate governance practice. Furthermore, 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 2015 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.
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 2016. EY and its predecessor, Arthur Young & Company, have been Walmart’s independent accountants since prior to the company’s initial offering of securities to the public in 1970. EY served as the company’s independent accountants for fiscal 2015 and reported on the company’s consolidated financial statements for that 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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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 2016.
Representatives of EY will attend the 2015 Annual Shareholders’ Meeting. They will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions.
EY’s fees billed for fiscal 2015 and fiscal 2014 were as follows:
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.
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 permissible advisory services not included in the above categories.
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.
For the above reasons, the Board recommends that the shareholders vote FOR the ratification of EY as the company’s independent accountants for fiscal 2016.
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Audit Committee Report
The Audit Committee consists of four Outside Directors, each of whom has been determined by the Board to meet the heightened independence criteria applicable to Audit Committee members and to satisfy the financial literacy requirements of the NYSE Listed Company Rules and the applicable rules of the SEC. Each member of the Audit Committee has also been determined by the Board to be an “audit committee financial expert” as defined under applicable SEC rules. The members of the Audit Committee are James I. Cash, Jr.; Pamela J. Craig; Timothy P. Flynn, the Chair of the Audit Committee; and Thomas W. Horton. Additional information regarding the members of the Audit Committee and the Audit Committee’s roles and responsibilities is set forth under “Proposal No. 1 – Election of Directors” and “Board Committees” on pages 12-22 and 30-31 of this proxy statement.
The Audit Committee held 15 meetings in fiscal 2015, seven of which related primarily to its ongoing FCPA-related investigation and compliance matters. Additional information about the Audit Committee’s role in the investigation may be found under “Director Compensation” on page 26. During fiscal 2015, at its regularly scheduled in-person meetings, the Audit Committee had separate private sessions with our company’s CEO, CFO, chief audit executive, global chief compliance officer, global chief ethics officer, the independent accountants, and others, during which sessions candid discussions regarding our company’s financial, accounting, auditing, and internal control over financial reporting, compliance, Exchange Act reporting, and ethics matters took place. Throughout the year, the Audit Committee had full access to management, the independent accountants, and internal auditors. The Audit Committee has retained independent legal counsel and met periodically with its legal counsel throughout fiscal 2015 regarding the FCPA-related investigation and ongoing enhancements to our global compliance program.
The Audit Committee’s meeting agendas are established by the Chair of the Audit Committee in consultation with the chief audit executive, the company’s Corporate Secretary, and other members of senior management.
The Audit Committee operates pursuant to a written charter, which may be found in the “Corporate Governance” section of Walmart’s website located at http://stock.walmart.com/corporate-governance/governance-documents. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis.
To fulfill its oversight responsibilities as detailed in its charter, the Audit Committee did, among other things, the following in fiscal 2015 or subsequent to fiscal 2015 for matters related to fiscal 2015:
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The Audit Committee submits this report:
James I. Cash, Jr.
Pamela J. Craig
Audit Committee Financial Experts
The Board has determined that James I. Cash, Jr., Pamela J. Craig, Timothy P. Flynn, and Thomas W. Horton are “audit committee financial experts” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K of the SEC, and that all members of the Audit Committee are “independent” under Section 10A(m)(3) of the Exchange Act, the SEC’s Rule 10A-3, and the requirements set forth in the NYSE Listed Company Rules.
Audit Committee Pre-Approval Policy
To ensure 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. With respect to each such service, the independent accountants provide detailed back-up documentation to the corporate controller.
Pursuant to 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, and this limit 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 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 fees, audit-related fees, tax fees, and all other fees paid to the company’s independent accountants in fiscal 2015.
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Transaction Review Policy
The Board has adopted a written policy (the “Transaction Review Policy”) applicable to: all Executive Officers and all Walmart officers who serve as Executive Vice Presidents or above; all directors and director nominees; all shareholders beneficially owning more than 5% of Walmart’s outstanding Shares; and the immediate family members of each of the preceding persons (collectively, the “Covered Persons”). Any entity in which a Covered Person has a direct or indirect material financial interest or of which a Covered Person is an officer or holds a significant management position (each a “Covered Entity”) is also covered by the policy. The Transaction Review Policy applies to any transaction or series of similar or related transactions in which a Covered Person or Covered Entity has a direct or indirect material financial interest and in which Walmart is a participant (each, a “Covered Transaction”).
Under the Transaction Review Policy, each Covered Person is responsible for reporting to Walmart’s chief audit executive any Covered Transactions of which he or she has knowledge. Walmart’s chief audit executive, with the assistance of other appropriate Walmart personnel, reviews each Covered Transaction and submits the results of such review to the Audit Committee. The Audit Committee reviews each Covered Transaction and either approves or disapproves the transaction. To approve a Covered Transaction, the Audit Committee must find that:
This section discusses certain direct and indirect relationships and transactions involving Walmart and certain of its directors, Executive Officers, the beneficial owners of more than 5% of the Shares outstanding, and certain immediate family members of the foregoing. Walmart believes that the terms of the transactions described below are comparable to terms that would have been reached by unrelated parties in arm’s-length transactions.
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In this section, we describe our executive compensation philosophy and program that we have implemented to achieve our company’s strategic objectives and serve the long-term interests of our shareholders. We also discuss how our CEO, CFO, and certain other Executive Officers (our NEOs) were compensated in fiscal 2015 and describe how their compensation fits within our executive compensation philosophy. For fiscal 2015, our NEOs were:
Disclosure regarding Mr. Ashe’s compensation for fiscal 2015 is not required under SEC rules. Nevertheless, we have included compensation information for Mr. Ashe in this proxy statement on the same basis as our other NEOs. We chose to include this information in the proxy statement for continuity purposes, as we expect that the Executive Officers required to be included as NEOs will vary from year to year among the executives listed above. We also believe it is important to provide shareholders with information regarding how our compensation plans are designed to incentivize and support our Global eCommerce strategies integrated into our operating segments.
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What are the primary components of our NEO compensation packages?
There are three components of our executives’ total direct compensation, or TDC: base salary, annual cash incentive, and long-term equity (consisting of a mix of performance share units and restricted stock/restricted stock units):
Base Salary. We pay base salaries commensurate with each NEO’s position and experience. In keeping with our philosophy that a substantial majority of NEO compensation should be performance-based, the CNGC typically allocates a relatively small percentage of TDC to base salary.
Annual Cash Incentive. Under our Management Incentive Plan, most salaried associates, including our NEOs, are eligible to earn an annual cash incentive payment based on a percentage of base salary. This cash incentive payment can range from 37.5% of target payout opportunity (if threshold performance goals are met) to a maximum of 125% of target payout opportunity.
Long-Term Equity. The largest portion of our NEOs’ TDC consists of two types of long-term equity compensation. We believe that long-term equity helps to align the interests of our NEOs with the long-term interests of our shareholders and also serves as a retention tool.
Performance Share Units. Consistent with our pay-for-performance philosophy, 75% of each NEO’s annual long-term equity award value consists of performance share units. Generally, performance share units granted to our executives have a three-year performance period, with the performance measures and goals set annually by the CNGC. The number of Shares that an NEO receives at the end of the performance period is based on the average performance with respect to these performance goals during each of these three years. Our NEOs can earn from 50% (if threshold performance goals are met) up to a maximum of 150% of the target number of Shares.
Restricted Stock or Restricted Stock Units. The remaining 25% of each NEO’s annual long-term equity award value consists of restricted stock/restricted stock units, which vests on the third anniversary of the grant date, provided that the NEO remains employed by our company through the vesting date.
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How much of our NEOs’ TDC was performance-based in fiscal 2015?
As shown in the chart below, a substantial majority of our NEOs’ fiscal 2015 target TDC was performance-based. Base salary represented less than 7% of our CEO’s target TDC for fiscal 2015, while more than 75% of our CEO’s target TDC was tied to performance goals. For each of our other NEOs, at least 71% of target TDC was performance-based. The percentages may not total 100.00% due to rounding.
What performance measures were used in our executive compensation program for fiscal 2015, and why did the CNGC select these measures?
As in the prior year, our NEOs’ performance-based pay was based on achieving objective goals related to the financial metrics of operating income, sales, and ROI. For some of our NEOs, these goals were based partly on the performance of one of our operating segments or the performance of the NEO’s area of responsibility. In addition, a portion of Mr. Ashe’s performance-based pay was based on Global eCommerce gross merchandise value of our operating segments on a combined basis.
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The following charts show the portion of each of our NEO’s incentive pay opportunity that was subject to each of these measures during fiscal 2015. The percentages may not total 100.00% due to rounding:
During fiscal 2014 and fiscal 2015, at the direction of the CNGC, the company undertook a comprehensive review of the performance metrics used in our executive compensation program, and concluded that the metrics described above are appropriate and effective in driving results tied to shareholder value. In reaching this conclusion, the CNGC considered the following factors:
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increases in incentive pay based on sales should be offset by decreases in incentive pay based on the other metrics. The specific weighting between these metrics reflects a balancing of the overall strategic goals of our company.
In addition to the financial metrics described above, our NEOs’ annual cash incentive pay is also based on performance with respect to diversity goals and compliance goals, described below on page 52.
What were the financial goals under our annual cash incentive plan for fiscal 2015, and how did we perform in comparison to those goals?
As noted above, while our performance improved throughout the course of fiscal 2015, our operating income and sales fell short of our expectations at the time the CNGC established performance goals early in fiscal 2015.
The operating income, sales, and GMV goals for our cash incentive plan are expressed in terms of a percentage increase or decrease as compared to our prior fiscal year performance. For fiscal 2015, the threshold, target, and maximum performance goals under our cash incentive plan, and our actual performance compared to those goals, are shown in the following table:
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As a result of this performance, our fiscal 2015 annual cash incentive payments were significantly below target levels. The following table shows the performance measure weightings for each of our NEOs, as well as each NEO’s actual payout compared to target:
Annual Cash Incentive Plan – Fiscal 2015
What other goals were our NEOs subject to under our annual cash incentive plan for fiscal 2015?
Diversity Goals. Since fiscal 2005, a portion of most officers’ cash incentive payment has also been subject to satisfying diversity objectives, and each NEO’s cash incentive payment can be reduced by up to 15% if he or she does not satisfy these objectives. The CNGC established these diversity goals because it believes that diversity and inclusion contribute to an engaged and effective workforce. For fiscal 2015, these objectives consisted of one or both of two components: good faith efforts and placement objectives. Each of our NEOs is subject to good faith efforts requirements. In order to satisfy the good faith efforts component of this program, each NEO must actively sponsor at least two associates and must also participate in at least two diversity-related events.
Each of our NEOs with responsibility for Walmart U.S. and/ or Sam’s Club field operations is also subject to placement objectives. For fiscal 2015, Mr. McMillon, Mr. Foran, and Ms. Brewer were subject to placement objectives. The determination as to whether an NEO satisfied his or her placement objectives during the prior fiscal year is based on several factors, including the relative number of diverse candidates placed in specified positions within the NEO’s organization; the NEO’s engagement and participation in diversity and inclusion strategies; the NEO’s leadership efforts in implementing these strategies; and the NEO’s efforts in recruiting and developing diverse associates. Applying these factors, at the end of each fiscal year, our chief diversity officer reviews each NEO’s performance under our diversity program and reports the results of this review to the CNGC. Based on the report of our chief diversity officer, the CNGC determined that each NEO satisfied his or her diversity goals for fiscal 2015.
Compliance Goals. Beginning in fiscal 2014 and again in fiscal 2015, our Executive Officers’ cash incentive payments were also subject to achieving adequate progress in implementing enhancements to the company’s global compliance program. Our company is committed to having and maintaining a strong and effective global compliance program in every country in which we operate. Consistent with that commitment, over the past few years, our company has made significant improvements to our compliance programs around the world. To further emphasize our commitment to compliance, in early fiscal 2015,
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our company’s senior leadership again developed a timetable for implementing further enhancements to our global compliance program on a prioritized basis. These objectives covered such subject matters as anti-corruption, anti-money laundering, health and wellness compliance, environmental compliance, health and safety compliance, labor and employment compliance, and licensing and permits. These objectives sought to enhance key elements of a corporate compliance program, including but not limited to developing and implementing enhanced compliance protocols and procedures, hiring and training of key compliance personnel, monitoring and assessment of various elements of the program, internal communications, and access to information.
As disclosed in our 2014 proxy statement, if, in the judgment of the Audit Committee, the company had not achieved adequate progress in implementing these compliance objectives, then the CNGC could have exercised negative discretion to reduce or eliminate the fiscal 2015 cash incentive payments to our Executive Officers. During fiscal 2015, management reported regularly to the Audit Committee regarding ongoing enhancements to our global compliance program and progress in implementing these objectives. At the end of fiscal 2015, the Audit Committee determined that, in its qualitative judgment, adequate progress had been achieved in implementing these objectives and reported its determination to the CNGC. Factors relied on by the Audit Committee in making this determination included the progress achieved on workstreams in a variety of compliance areas and the extent to which that progress reflected sustainable, long-term change in the company’s people, processes, systems, and culture. Based on the qualitative assessment of the Audit Committee, the CNGC determined not to exercise negative discretion to reduce or eliminate the cash incentive payments to any of our Executive Officers for fiscal 2015.
Mr. Foran – Asia and China Performance. Mr. Foran served as President and CEO of Walmart China for a portion of fiscal 2015, and then as President and CEO of Walmart Asia for a portion of fiscal 2015, before being promoted to his current position. As a result, a portion of Mr. Foran’s annual cash incentive for fiscal 2015 is based on the operating income and sales performance of Walmart China and Walmart Asia. Those goals, and performance compared to those goals, are shown in the table below.
Annual Cash Incentive Plan – China
Annual Cash Incentive Plan – Asia
Mr. Foran’s incentive payout for fiscal 2015 shown on page 52 above was determined by a proration based on the amount of time Mr. Foran spent in each position during fiscal 2015 and performance as compared to his incentive goals in each of those positions, as follows:
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What were the goals under our long-term performance share unit program for fiscal 2015, and how did we perform in comparison to those goals?
As noted above, while our performance improved throughout the course of fiscal 2015, our sales and ROI performance fell short of our expectations at the time the CNGC established performance goals early in fiscal 2015.
The sales goals for our performance share unit program are expressed in terms of a percentage increase or decrease as compared to our prior fiscal year performance. For fiscal 2015, the threshold, target, and maximum performance goals under our performance share unit program, and our actual performance, are shown in the following table:
Each of our NEO’s performance share units are weighted 50% to ROI performance and 50% to sales performance, either of the total company or one of its operating segments, as follows:
Long-Term Performance Share Unit Program – Fiscal 2015
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The performance compared to each of the goals shown above is then weighted according to each NEO’s performance measure weightings shown above, and is then averaged with results for the other two years within each three-year performance cycle, as illustrated below: