Walmart investors appear set to vote on a proposal aimed at the company’s wage policies after the SEC declined to give it the green light to exclude the measure from its proxy statement.
The proposal, filed by The Shareholder Commons (TSC) on behalf of Legal & General Investment Management America, requests that Walmart’s board and management ‘exercise their discretion to establish company wage policies that are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings necessary to meet a family’s basic needs, because company compensation practices that fail to provide a living wage are harmful to the economy and therefore to the returns of diversified shareholders.’
The supporting statement notes that Walmart increased the minimum hourly wage for its store associates to $14 per hour in 2023, but adds that while ‘that is good progress, the living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults).’
TSC says wage inequality and disparity harm the economy as a whole. ‘By paying so many of its employees below a living wage, [Walmart] may believe it will increase margins and thus financial performance,’ the proponent writes. ‘But gain in company profit that comes at the expense of society and the economy is a bad trade for company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives.’
The proposal, TSC says, asks Walmart’s board to set a company compensation policy of paying a living wage to prevent contributing to inequality and racial/gender disparity. TSC points to available frameworks on living wages that it says the company should use in a way that allows shareholders to gauge its compliance and progress while giving it discretion on how to achieve the living-wage goal.
Walmart’s no-action request
Walmart asked the SEC for no-action relief if it omitted the proposal from its proxy materials on the grounds that per Rule 14a-8(i)(7) the resolution ‘deals with matters related to the company’s ordinary business operations.’
Walmart wrote in its request: ‘The proposal requests that the company establish a policy of paying workers a living wage. Other than a few references to socioeconomic implications of income inequality, the proposal and the supporting statement concern the level of the company’s pay for its employees (associates).’
The company described its focus on wages and benefits, saying that its websites states: ‘Offering competitive wages by role and market enables us to recruit the talent we need to run our business.’ It said that as of the end of first quarter of fiscal year 2024, ‘the average hourly wage for company associates in the US was [more than] $17.50 per hour, more than double the federal minimum wage.’
The company added: ‘Particularly in the context of [Walmart’s] approximately 2.1 mn associates around the globe, the proposal seeks to address workforce management issues that are not appropriate for shareholder oversight.’
The SEC was not persuaded, writing: ‘We are unable to concur in your view that the company may exclude the proposal under Rule 14a-8(i)(7). In our view, the proposal transcends ordinary business matters.’
A request for comment from Walmart was not returned immediately. The company’s 2023 AGM took place on May 31.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
