Recently, the SEC formed the Investor Advisory Committee (IAC) to address how environmental, climate change, and sustainability issues should be addressed from a regulatory standpoint. Headed by SEC Commissioner Luis A. Aguilar, the IAC provides the SEC with investors’ viewpoints on regulatory and disclosure issues. Current SEC regulations require companies to disclose any information pertaining to how their operations might cause harm to the environment. In order to accurately estimate the amount of environmental damage a company’s operations might have on the environment, firms must invest both manpower and financial capital to fund extensive research projects. For most companies, providing such figures is difficult and often significantly underestimates the true toll a corporation’s operations will have on the environment.

“It’s the board’s responsibility to oversee what the company is doing—it’s a growing trend for companies to have a structure to deal with [environmental disclosure].” – Timothy Smith, vice president of Walden Asset Management

More companies are designating specific committees for environmental issues to help inform the board of potential problems. “It’s the board’s responsibility to oversee what the company is doing—it’s a growing trend for companies to have a structure to deal with [environmental disclosure],” says Timothy Smith, vice president of the environmental, social, and governance group at Walden Asset Management. “The pressure is growing globally, and boards need to be both aware of the trend and ensure their company is being responsive.” Investors are pushing companies to reveal how they assess risk so that they can better evaluate their own ventures, putting additional pressure on directors. “It’s like walking a tightrope,” says Smith.

Ultimately, boards need to ask their audit committees or environmental committees more questions, including requesting forecasts and inquiring as to how the company’s operations will impact the environment—but there are risks. “It can be difficult to file financial disclosures because of the time and effort needed to provide auditable estimates of what needs to be disclosed,” notes Gayle Koch, principal at The Brattle Group, which provides environmental policy and litigation consulting to corporate boards and management teams. Koch believes that there will be more enforcement from the SEC under the Obama administration, leading to more research and, ultimately, more transparency. “The SEC needs to provide more guidance, giving companies a consistent process, or companies can use voluntary consensus standards, such as the ASTM International Standards on cost estimation and disclosure.”

Once directors have forecast trend information, they are under an obligation to report it if it is material. “Do you risk Sarbanes-Oxley, SEC enforcement, or investor action?” asks Koch. “Some companies don’t ask so they don’t have to report them and that needs to change.” Drawing from her own experience as a consultant, Koch said a firm she worked with was reluctant to provide an estimate report that would be open to investor scrutiny. “They could afford it, but they would only consider [submitting an environmental disclosure report] as long as it didn’t hurt their bottom line for that quarter.” Koch notes that despite the board’s concerns, she believes companies that report their forecast trend information do not suffer a lower stock price.

Ceres, a national network of investors, environmental organizations, and other public interest groups, ignited the process to seek greater environmental disclosure and played a large part in the SEC’s decision to form their advisory group. “[Ceres] really spearheaded efforts to look at the laws to make sure [companies] are doing what they should,” notes Betty Huber, counsel at Davis Polk & Wardwell. Today, companies often refer to Ceres’ global reporting initiative (GRI), which provides customizable guidelines that serve as a template for companies to disclose their environmental support efforts.

Today, boards and management teams are realizing that they can appropriate environmental disclosure to boost their bottom line. Andrew L. Shapiro, founder and president of GreenOrder, a strategy and management consulting firm specializing in sustainable business, perceives a general shift in attitude in the business world regarding environmental sustainability efforts. “Sustainability is going to be a source of competitive advantage,” says Shapiro. “Directors need to ask themselves, ‘Where do the opportunities lie?’ not just, ‘How do I avoid problems?’”

In many cases, directors are unaware of how their competitors are approaching environmental disclosure. “Bring in some outside experts to bring up general trends or top five concerns in their company’s industry affecting environmental issues; let management and the board hear the buzz because they will definitely get interested,” insists Ivy Wafford Duke, deputy general counsel and chief compliance officer at Calvert Group. Boards that actively monitor how their company is affecting climate change, or what kind of carbon footprint their operations are imposing, can use this knowledge to propel business and improve their public image.

“Education—boards need to see it more often, hear it more often, and they should communicate with management.” – Ivy Wafford Duke, general counsel and COO at Calvert Group

Some companies are making efforts to provide more information now, not later. “There’s a great variability among companies,” says Koch. “There are some good actors trying to get good estimates, but you have to consider what is disclosed compared to what is being held back because of attorney-client privilege; either focusing on reporting only the ‘known minimum’ or a ‘don’t ask, don’t tell’ approach.” Companies are often reluctant to produce reports that may expose sensitive information to competitors.

Audit committees are advised to engage their colleagues in charge of environmental affairs and corporate responsibility, by conducting meetings and having conversations to become better educated. “Education—boards need to see it more often, hear it more often, and they should communicate with management,” adds Duke.

Boards that recognize the need to address environmental concerns will find themselves appeasing investor concerns, meeting legal requirements, and improving their overall image. “It’s quite likely that disclosure will come as the legislation landscape develops,” says Shapiro. “Boards are finding that all aspects of their business can benefit from awareness, from the final product they produce, to their supply chains, which often times span multiple countries.”

Shapiro adds that proactive boards that promote environmental awareness can reap the fiscal rewards of an earth-friendly reputation from their consumers. “Acquiring a compliance mindset could lead to an opportunistic mindset—resulting in getting brand loyalty,” he says.

Many global firms are already disclosing their environmental impact. Wal-Mart, PepsiCo, Coca-Cola, Intel, HP, and even Ford Motor Company, recognize that their impact on the environment is not mutually exclusive to their bottom lines. Says Smith: “The winds are all blowing in the right direction—boards need to be aware of the trend, see how their company is being responsive, and create meaningful oversight.”

Former Michael’s Stores, Inc. CEO Brian Cornell has been named the new CEO of Wal-Mart Stores, Inc.’s Sam’s Club warehouse chain, according to The Wall Street Journal.

Before holding the CEO position at Michael’s, Cornell was executive vice president and chief marketing officer at Safeway, Inc., where he is credited with introducing higher-margin private-label and prepared foods and experimenting with new store formats.

Cornell replaces Doug McMillon, who is now the head of Wal-Mart’s international division. To replace Cornell, Michael’s has named former Wal-Mart chief administrative officer John Menzer CEO. Menzer was also previously vice chairman and CFO at Wal-Mart.

Wal-Mart will be giving Cornell a $1 million signing bonus, an annual salary of $800,000 and $2 million in restricted Wal-Mart stock. As with many of the club-stores in the early days of the recession, Sam’s Club saw an increase in sales in fiscal year 2009, with sales of $46.8 billion, an increase of 5.6% from the previous year.

Duke, like his predecessor H. Lee Scott Jr., has made clear that efforts such as cutting waste and energy use and requiring suppliers to do the same will continue — even as the company keeps prices low. Meanwhile, the Wall Street Journal reports today that Duke is likely to look abroad to keep the world’s largest retailer growing. Scott becomes chairman of the board’s executive committee.

Duke, a retail veteran who recently led Wal-Mart through a period of rapid international expansion, isn’t expected to by industry observers to take Wal-Mart far from the path established by Scott.

“He’s a good communicator, a hard worker, and his track record at international was very impressive,” said Allen Questrom, the former chief executive of J.C. Penney Corp. and Federated Department Stores Inc., who serves on Wal-Mart’s board of directors. “He is highly regarded by those who have worked for him, not just recently, but years ago. It was not difficult for the board to choose Mike Duke as Lee’s successor.”

CEO H. Lee Scott Jr. is retiring and will be succeeded by Mike Duke, who heads the company’s growing international operations, according to The Wall Street Journal.

Duke joins Walmart’s board immediately and will take over as CEO February 1. Scott will continue on as Walmart’s chairman of the executive committee and will become a company advisor.

The change in leadership is only the fourth in the company’s 46-uear history, and third since founder Sam Walton ceded power of the company in 1988.

Duke has 13 years of experience at Walmart, including tenures as head of its enormous logistics operation as well as stints running its U.S. and foreign operations, according to WSJ.

The search for Scott’s replacement began two years ago and was formalized during a November 2007 meeting. Scott and Eduardo Castro-Wright, the 53-year-old head of Walmart’s U.S. operations, were in the front-running for the position. Castro-Wright was passed over and was given an expanded role as vice chairman and head of the company’s global procurement operation. He is the former CEO of a division of Honeywell International, Honeywell Transportation, and Power Systems Worldwide.

In the last three years, Scott led a turnoaround of Walmart’s U.S. operations, bringing in executives from outside the company. Scott reached out to critics and launched an environmental initiative to reduce company waste and increase fuel efficiency.

“We hope with the change of leadership Walmart will turn over a new leaf and allow workers to choose freely whether or not to organize a labor union, rather than continue its coercive antiunion campaigning,” said Carol Pier, labor rights and trade senior researcher at Human Rights Watch, a nonprofit organization.

Walmart has been expanding its global operations and expected to see success in the U.K. as well as in Japan. Walmart did not indicate who will succeed Duke as head of the international division, which for the first nine months of this year posted sales of $74 billion versus $184 billion for the U.S., according to WSJ.

In a risk-averse world, transparency is the thing, and the business models of choice will be either Big Tents or Boutiques. The former are named for their flexible boundaries, which permit risk to move on or off the balance sheet according to market conditions. Just don’t call them conglomerates (GE and Berkshire Hathaway), although they are similarly inspired: wonderfully efficient capital allocators; M&A machines with product, geographic, and customer diversity; and, most important, consistent earners. Boutiques will demonstrate pricing power and near monopolistic control due to technology, innovation, or branding and “buzz” (think: Lululemon, American Superconductor, Tiffany & Co., and Whole Foods). In a circular logic only a Wall Street analyst could love, the Big Tents buy the Boutiques and also spin them off.

Where Credit is Due

Until this year, anyone could play the credit game, but it turns out what we really needed was a banker wearing green eyeshades. Chastened mightily, banks will be the recognized gatekeepers for all manner of commerce, as their Wall Street brethren and the hedgies shut their credit windows. Those who “own” their markets include Wells Fargo, Century Bank, Bank of America, Northern Trust, and JPMorgan.

www.business.gov?

Remember that great business of doctoring? After the government took it over, medicine changed its name to healthcare. Be prepared for a similar encroachment in other sectors, only this time globally. First, the U.S. government will demand penance in the form of increased regulation in return for the credit rescue. Secondly, the world found an effective defense against unfettered U.S. capitalism, and it looks ironically like Chinese communism. Governments across the globe are fast so we are seeing a movement Eisenhower would have warned us about: “the governmental-industrial complex.” Boards must learn how to compete or collaborate with governments, government-owned businesses, government-funded businesses, Safes, and government-friendly businesses. If you can’t beat ’em…Winners include Boeing, Lockheed Martin, OTC, BE Aerospace, Occidental Petroleum, Accentuate, and all major private equity players.

Re-unionization

Unions, activists, and their friends at the plaintiffs’ bar have spent a few decades on the backbenchers of policy and lawmaking. Payback is around the corner in the form of a Democratic sweep this November. They will, not surprisingly, be pushing vastly increased agendas and more activist judicial appointments. The end result? Growth in unionization due to friendly legislative action and a significant increase in litigation. Worrisome for Wall-Mart and UPS; levels the playing field for GM.

Sleeping Bears Wake

Russia’s “Shareholder in Chief,” Vladimir Putin, continues to prove that “if it’s on my soil, I can soil it.” Companies that gorged on off-shoring in China and India may also find that, either from a regulatory perspective (China and India tightening up antitrust) or in light of transportation costs, the currency exchange disadvantage, or local talent shortage—not to mention outright Russo-nationalization— their bets are going to be longer term than planned. Benefits legacy global players with clout; newbies beware. Good for Arcelor Mittal, Sinopec, Gazprom, and Siemens.

But executives said they prefer to do it their way. “Your Wal-Mart can help promote an economically friendly environment” and also address diversity in the employee base, said Wal-Mart CEO H. Lee Scott.

That also goes for the future, Scott said, pledging that Wal-Mart plans to be sensitive to an aging global population that in many cases will live on a fixed income.

The increased demand for energy and globalization are also matters to contend with, Scott said. “And I am confident that Wal-Mart will continue to transform and succeed.”Wal-Mart shares are up 24 percent since the year began and the best performers on the 30-member Dow Jones Industrial Average.

Elected to Wal-Mart’s board were Gregory B. Penner, the 38-year-old son-in-law of Wal-Mart Chairman S. Robson Walton who has served on the board for 30 years, 16 of those as chairman, which could portends a changing of the guard at the world’s largest retailer, The Wall Street Journal reported last week.

Also expected elected was Arne Sorenson, chief financial officer of Marriott International.

]]> http://www.directorship.com/wal-mart-shareholders-just-say-no/feed/ 0 http://www.directorship.com/postings-june--july-2008/ http://www.directorship.com/postings-june--july-2008/#comments Thu, 01 Jan 1970 00:00:00 +0000 Robert Dilenschneider http://www.directorship.com/?p=4105

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General Motors has nominated Coca-Cola CEO E. Neville Isdell to its board. His appointment would be the third addition to the GM board in the past year and will bring the total number of directors to 14. Isdell is expected to retire this summer as CEO of Coca-Cola.

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Actel appointed John McGrath, former CFO of Network Equipment Technologies, to its board. He also serves on the board of Endwave.

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Karl Steiner AG, a Swiss real estate group, named Peter Wuffli to its board of directors. Wuffli is the former chief executive of UBS.

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Wal-Mart nominated Gregory B. Penner, a general partner at investment management firm Madrone Capital Partners, and Arne M. Sorenson, CFO of Marriott International, to its board. Penner previously served as Wal-Mart’s CFO in Japan. Current Wal-Mart board members Jack Shewmaker and Roland Hernandez will not stand for re-election at the company’s annual meeting in June.

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Sunoco appointed Gary W. Edwards to its board. Edwards became an energy consultant once he retired from Conoco in 2001, after a 38-year career. He is also a director at Entergy and Sunoco Partners.

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Starwood Hotels & Resorts Worldwide named Thomas E. Clarke to its board of directors. Clarke, president of new-business ventures for Nike, was also appointed to the company’s audit committee and capital committee.

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Erik Blachford, former CEO and president of Expedia and IAC/ InterActiveCorp’s travel division, IAC Travel, joined the board of PickPackGo, a San Franciscobased online search site. Blachford, currently CEO of TerraPass, also serves on the boards of TerraPass, Zillow, and Surfparks.

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The Associated Press elected three new members to its board: Samuel Zell, chairman and CEO of the Tribune Co.; Donna J. Barrett, president and CEO of Community Newspaper Holdings; and Craig A. Dubow, chairman, president and CEO of Gannett Co. Also, Douglas H. McCorkindale and Jay Smith will both retire. News Corp. CEO Rupert Murdoch will fill the vacancy created by Smith’s retirement until the next election of directors.

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E*Trade Financial Corp. elected Frederick W. Kanner, a partner at the law firm of Dewey & LeBoeuf in New York City, to its board. Kanner will serve on the board’s finance and risk oversight committee as well as the nominating and corporate governance committee.

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CA named Arthur F. Weinbach to its board and to serve on its compensation and human resources committee. Weinbach currently serves as executive chairman of Broadridge Financial Solutions. Previously, he was with Automatic Data Processing for 28 years.

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Appointed to the board of Harrah’s Entertainment were Charles Atwood, Christopher Williams, Jeanne Jackson, and Lynn Swann. Atwood has been vice chairman of the Las Vegasbased casino operator since 2006. Williams is chairman and chief executive of Williams Capital Group and Williams Capital Management. Jackson, founder and CEO of MSP Capital, is a former CEO of Walmart.com. Pro football Hall-of-Famer Swann runs a marketing and consulting firm and is the managing director of Diamond Edge Capital Partners.

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Former Quebec Premier Daniel Johnson was appointed to the Bank of Canada’s board. Johnson, a lawyer with McCarthy Tetrault in Montreal, also is a director of Bombardier and IGM Financial. The Bank of Canada’s 12 directors, appointed from outside the federal government, serve three-year terms.

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Michael Sheehan, CEO of Boston-based Hill, Holliday, Connors, Cosmopulos, owned by the Interpublic Group of Companies, was named to the board of directors of BJ’s Wholesale Club.

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Choice Hotels International named Stephen P. Joyce to its board and to the dual roles of president and COO. Joyce spent his career at Marriott International, where he most recently served as executive vice president, global development/ owner and franchise services.

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Monsanto elected Janice L. Fields, chief operating officer of McDonald’s USA, to its now 10- member board.

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NCR Corp. appointed Richard L. Clemmer and Robert P. DeRodes to its board of directors. Clemmer is a senior adviser to Kohlberg Kravis Roberts & Co. and member of the i2 Technologies board. DeRodes is CIO of Home Depot and previously served as president and CEO of Delta Technology and CIO of Delta Air Lines.

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XETA Technologies named Rick Devenuti, former Microsoft senior vice president and CIO, to its board. Devenuti served in several senior executive positions during almost 20 years at Microsoft, retiring in 2007 as senior vice president of worldwide operations. In addition to his board position, Devenuti will serve as chairman of XETA’s newly formed strategic advisory committee. He is also on the boards of Azaleos and St. Jude Medical.

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Paradigm Management named Roger Jenkins, Frederick M. Hudson, and Jay Himmelstein to its board. Jenkins, who will serve on the compensation committee, is dean of the Farmer School of Business at Miami University of Ohio. Hudson retired from KPMG where he was formerly partner in charge of the healthcare audit practice in its Washington-Baltimore business unit. Himmelstein is assistant chancellor for health policy at the University of Massachusetts Medical School.

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Applied Materials named James E. Rogers to serve on its board and as a member of the human resources and compensation committee, as well as the strategy committee. Rogers is chairman of the board and CEO of Duke Energy. D Frederick W. Kanner Michael Sheehan James E. Rogers Janice L. Fields

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Exxon Mobil was second and oil group Chevron third on the list. The other top ten companies in order were Conoco Phillips, General Electric, Ford Motor, Citi Group, Bank of America, and AT&T.

While Wal-Mart is the biggest, Exxon Mobil stood as the most profitable company for the fifth year on the Fortune list, good news for its shareholders. GE came in as the second most profitable corporation on the list.

The biggest mover on the list was the new ranking of AT&T. The company was ranked 27 on the list last year, but jumped to the 10th spot this year.Size isn’t always a plus however. As Directorship found, sometimes size can make companies vulnerable to concerted attacks by activists, regulators, and the media. (See “The Perils of Being Number One.”)

A deferred compensation program designed to retain top talent and reward longevity means the outgoing CEO of Target has accumulated more than $140 million in deferred benefits over his four decades at the discount retailer, according to a filing with U.S. securities regulators.

Robert Ulrich, who began working at what is now the second largest discount retailer after Wal-Mart 41 years ago, will reach Target’s mandatory retirement age of 65 this month, is slated to retire as chief executive on May 1.

Ulrich will remain chairman of the board. Gregg Steinhafel, who joined Target in 1979 and is now its president, will succeed him as CEO.

In a regulatory filing, Target said Ulrich received much of his compensation in the mid-1980s and into the 1990s, amassing $140.79 million in accumulated savings, earnings and supplemental pension benefits, it said. The total represents money held in a combination of two plans. One of the plans was frozen to new deferrals in 1996.