Walmart names another founding family member as chairman

New York

WALMART Stores Inc 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 Walmart 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 Walmart telegraphed the move last year when it made Mr Penner vice-chairman, the change sparked fresh criticism about nepotism. Investors may worry that the board will emphasise the family's interests over those of other shareholders, said Charles Elson, a law professor who runs the University of Delaware's corporate-governance centre. "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," he said.

Walmart has taken steps over the years to add outsiders to the board, said Randy Hargrove, a spokesman for the Bentonville, Arkansas-based company. Ten of the company's 15 directors are independent and only three are family members, Mr Hargrove said. Walmart separated the CEO and chairman roles in 1988 and is adopting other measures, including having most outside directors serve on more than one committee, he said.

Americans tend to be particularly sceptical about family-run businesses, according to Peter Jaskiewicz, a business professor at Concordia University in Montreal. That contrasts with investors overseas, who expect founding families to continue running large companies, said Prof Jaskiewicz, who studies family businesses and nepotism.

In Mr Penner's case, he comes to the chairman role with years of industry experience - both inside and outside of the retailer. He served as chief financial officer of Walmart Japan and the senior vice president of finance and strategy for Walmart.com, the company's e-commerce arm. In 2005, he started Madrone Capital Partners, a firm backed by money from the Walton family.

"He climbed the ranks within Walmart," Mr Jaskiewicz said. "This is somebody who's really qualified." Mr Penner was elected unanimously by the board, "a show of confidence in what Greg is going to bring to that role", Walmart's Mr Hargrove said.

A proposal to require an outside chairman was voted down at Walmart's shareholder meeting on Friday. Activists also criticised the Penner announcement.

"Instead of listening to and respecting Walmart worker shareholders who have been calling on Walmart and the Waltons - heirs to the Walmart empire - to a implement a new policy establishing an independent chairperson, Walmart and the Waltons have once again decided to elevate family members to powerful positions," labour groups Making Change at Walmart and OUR Walmart said in a statement on Friday. BLOOMBERG