While it would not normally be news to learn that US retail giant Walmart has paid additional bonuses to its board members, the precise circumstances behind the latest round of awards are quite extraordinary. Instead of being recognised for the firm’s performance, Walmart managers have received salary boosts for investigating their own firm’s liability under the US Foreign Corrupt Practices Act (FCPA), following allegations that its staff had bribed officials in Mexico.
Walmart allegedly stifled an initial probe into its Mexican activities, before a New York Times report – published one year ago – brought it to light. Since then it has opened up extensively to US government investigators, spending $157m last year as the scale of the case widened to Brazil, India and China. The firm also worked to shore up its internal compliance programmes. As a result, the Walmart Audit Committee met 15 times during the 2013 financial year, while the full board met six times. In return, Walmart has paid each member of the Committee an additional $60,000 – with its chairman, Christopher Williams, receiving $85,000. That has made him the highest-paid board member outside of Wal-Mart’s core management team.
The payouts seem at best misguided, and at worst a misuse of company funds. The Committee was simply doing the job that it was hired to do, and the award of bonuses for investigating issues that were ultimately part of their watch in the first place seems hard to believe.
Although the bonus debate continues to rage, there is an overwhelming desire for awards to honour exceptional performance above and beyond the norm rather than standard internal work – even if the work in this case may have been a little more time consuming. The company’s shareholders and the public at large would surely take a dim view of this announcement: yet more food for thought for those in power looking to curb the continued bonus culture that still prevails almost five years after the financial crisis.
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