Walmart 2003 Annual Report Download - page 7

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The board of directors believes that
equity-based compensation is an
important piece of the overall
compensation of directors and senior
management. The ownership of
Wal-Mart stock and options by directors
and senior management is important
because these individuals represent the
Shareholders and should act in a
manner consistent with the long-term
interests of Shareholders. Making equity
part of their
compensation helps
achieve this
objective. The board
also emphasizes
compensation
policies that place
the cash bonuses of
senior management
at risk. The
performance targets
management must
reach to receive this compensation
further align their interests with the
long-term success of the Company.
The Wal-Mart board meets in person
four times annually at our regularly
scheduled meetings. The board also has
one regularly scheduled telephonic
meeting after the important Christmas
selling season. In addition, we have
frequent telephone meetings to approve
acquisitions, report on developments
between regular board meetings, or to
address other issues. Board members
also communicate on a regular basis
directly with members of management
on issues of importance.
The board actively participates in
succession planning, and the seamless
transition from David Glass to Lee Scott
is attributable in part to the board’s
stewardship of this important process.
A best practice that Wal-Mart
implemented last summer is the
meeting of independent directors. The
independent directors meet separately at
each of our four regularly scheduled
board meetings each year. Director
Stanley Gault presides over these
meetings, and communicates any issues
raised to Lee Scott and me. We then
take appropriate follow-up actions and
report back to the full board.
A significant amount of the board’s
business is first reviewed in detail by one
of the board’s three standing
committees. For example, the audit
committee meets each quarter with
Company management, including Lee
Scott and Tom Schoewe, chief financial
officer, and Ernst & Young, our outside
auditors, to review
and approve the
financial reports for
the Company and
the CEO and CFO
certifications that
now accompany
these reports.
Members of the
audit committee are
free to question any
financial or
operational practice in the Company,
and the committee has the authority to
hire independent outside advisors when
it believes it is appropriate to do so.
Another example would be the strategic
planning and finance committee’s
review of the Company’s derivatives
portfolio, and its broad mandate to
monitor compliance with our guidelines
on other financing matters. In addition
to its traditional role of reviewing
executive compensation programs and
management succession plans, the
compensation, nominating and
governance committee oversees the
board’s nominating and governance
functions, the board’s annual self-
evaluation process, and recently
presented a revised Corporate
Governance Policy and revised
committee charters (which you can view
at www.walmartstores.com) to the full
board for approval.
The three board committees discussed
above consist of outside, non-employee
directors. As there is no overlap in
committee memberships, the
committees meet for an extended period
of time in connection with every
regularly scheduled board meeting, and
at other times throughout the year as
necessary. Our committee chairs take
their responsibilities seriously and are
diligent in their preparation for
committee meetings. We believe that
the quality of the work done at the
committee level contributes significantly
to the quality of our board meetings.
The board and I welcome your
comments, suggestions or concerns.
You may contact us by e-mail using
the full name of the director as listed
on the inside of the front cover of this
Annual Report without punctuation.
For example, mine would be
[email protected].
If you want to send a message to
the full board, address it to
[email protected]. If you
want to reach just the independent
directors, address the message to
[email protected].
Although Wal-Mart has grown large,
we still focus daily on the culture and
values established by my father, Sam
Walton. Our family is proud of the
accomplishments of our Wal-Mart
Associates around the world. Without
their dedication and commitment, there
would be no Wal-Mart. The Company
has many opportunities ahead of it, and
I am proud to serve our Associates and
our Shareholders as we look towards
the future.
Sincerely,
Rob Walton
“Our family is proud of the
accomplishments of our
Wal-Mart Associates around
the world. Without their
dedication and commitment,
there would be no Wal-Mart.”