Lauren Coleman-Lochner New York
WAL-MART Stores named another member of the founding Walton clan as its next chairman, renewing concerns that the world’s largest retailer is still run like a family business.
Greg Penner, the grandson-in-law of Wal-Mart creator Sam Walton, will become only the third chairman in the company’s 53-year history. He replaces Rob Walton, the oldest son of the founder, who has held the role since 1992.
While Wal-Mart had telegraphed the move last year when it made Penner vice-chairman, the change sparked fresh criticism about nepotism. Investors might worry that the board would emphasise the family’s interests over those of other shareholders, Charles Elson, a law professor who runs the University of Delaware’s corporate governance centre, said.
“Turning it over to a relative doesn’t give the rest of the shareholders the same confidence than if you’d picked someone who was completely unconnected to the family.”
Wal-Mart had taken steps over the years to add outsiders to the board, Randy Hargrove, a spokesman for the company, said. Ten of the company’s 15 directors were independent and only three were family members, he said.
Wal-Mart had separated the chief executive and chairman roles in 1988 and was adopting other measures, including having most outside directors serve on more than one committee, he said.
American attitude
Americans tend to be particularly sceptical about family-run businesses, according to Peter Jaskiewicz, a business professor at Concordia University in Montreal. That contrasted with investors overseas, who expected founding families to continue running large companies, said Jaskiewicz, who studies family businesses and nepotism.
In Penner’s case, he comes to the chairman role with years of industry experience – both inside and outside of the retailer. Jaskiewicz said: “This is somebody who’s really qualified.”
Still, some investors have pushed Wal-Mart to appoint an independent chairman. A proposal to require an outside chairman was voted down at Wal-Mart’s shareholder meeting on Friday. – Bloomberg
