Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Thursday, June 06, 2013

Always Low Wages: Meet the Billionaires Who Run Walmart

This week Walmart shareholders will gather in the retail giant’s Arkansas backyard and re-elect a board of directors charged with guiding the company over the coming years. Walmart’s board—rife with billionaires and industry titans—has recently become a lightning rod for company critics. During their lengthy and high-profile business careers, several board members have faced allegations—from worker exploitation to financial malfeasance—that parallel those facing Walmart itself.

Over the past year, labor activists have targeted board members with dossiers on the Internet and protests around the country, from a hunger strike and vigil by guest workers outside Michele Burns’s New York mansion, to demonstrators placed along the route of a Bay Area marathon to shout messages at Greg Penner as he ran towards the finish line. Over the past week, striking retail workers from the union-backed group OUR Walmart have staged a series of board-focused protests, including one at Yahoo! CEO Marissa Mayer’s Palo Alto mansion, and another outside her penthouse atop the San Francisco Four Seasons hotel.

While Walmart’s shareholder meeting won’t kick off until Friday, strikers are already in town. This week they’ll try to win over some of the workers flown to Arkansas by management, and to draw shareholders’ and reporters’ attention to OUR Walmart’s allegations of illegal retaliation and their demands regarding Walmart’s working conditions. They’ll also work to shine light on recent company controversies regarding reported bribery in Mexico and factory deaths in Bangladesh.

Friday’s meeting also follows a quarterly earnings report that drew some less-than-glowing headlines in major outlets (New York Times: “Wal-Mart Sales Go Cold, and Its Shares Feel the Chill”; USA Today: Wal-Mart 1Q profits, revenue disappoint”; Los Angeles Times: “Wal-Mart reports weak 1st-quarter sales, blames weather, tax issues”). The United Food & Commercial Workers union seized on the earnings report as the latest sign of trouble at Walmart, along with New York Times and Bloomberg articles suggesting understaffing is driving away customers, and the announced departures of three board members and two executive vice presidents.

Meanwhile, Walmart has recently touted the launch of its plan to hire 100,000 veterans over five years; the expansion of a conservation partnership with the National Fish and Wildlife Foundation; and a tally of over $1 billion in charitable donations (counting cash and in-kind contributions) in the previous fiscal year. The company did not respond to requests for comment for this story.

In a May 27 e-mail to The Nation, spokesperson Brooke Buchanan called the shareholder meeting “a celebration of our 2.2 million associates who work hard every day so people around the world can live better.” Buchanan said OUR Walmart “is comprised of a few number of people, most of whom aren’t even associates and don’t represent the views of our associates.”

I’ll be reporting from Arkansas this week—watch this space for updates starting Thursday. But first, here’s The Nation’s guide to the seventeen current members of Walmart’s board, and some of the controversies they’ve encountered.

The Waltons
Jim Walton: chairman and CEO of Arvest Bank Group


S. Robson (“Rob”) Walton: Walmart Board chairman


Gregory Penner: founder and general partner at Madrone Capital Partners, a firm investing Walton money



Three members of the Walmart Board are members of the Walton family—relatives of Sam Walton, the company’s late, iconic founder, whose business philosophy is often touted by the company’s defenders and critics alike. Sam’s son Rob Walton is the board’s chairman.

Members of the family together control just over half of the company’s stock, and they take up four of the top ten slots on Forbes’s list of the wealthiest Americans. Forbes pegged the family’s net worth at $120 billion last October. Based on Federal Reserve data, the Economic Policy Institute’s Josh Bivens found that the Walton family has as much wealth as the bottom 41.5 percent of US families combined. (That figure factors in the negative net worth of close to 13 million families—no doubt including some of Walmart’s 1.4 million US employees.)

The Waltons aren’t just sitting on that cash. As individuals and through their Walton Family Foundation, they’ve given generously to a range of causes. That includes long-standing support for individuals and organizations out, in the words of the foundation, to “infuse competitive pressure into America’s K-12 education system.” Last year, Alice Walton put $1.7 million behind the successful effort to pass a pro–charter school bill in Washington state. In April, three weeks after the release of a confidential memo renewed scrutiny over cheating during Michelle Rhee’s tenure as DC schools chancellor, the Waltons’ foundation announced an $8 million grant to her advocacy group StudentsFirst.

There’s more where that came from. In an e-mail to supporters reported by the Arkansas Times in January, the Walton Family Foundation’s executive director Buddy Philpot wrote, “Our board and staff are proud of how we’ve helped cultivate today’s education reform movement by investing more than $1 billion in initiatives that expand parental choice and equal opportunity in education.” (Yes, that’s billion with a “b.”) The same message pledged that the foundation’s board would “expand its leadership role in education reform” in 2013. Philpot wrote that “several Walton family members are increasing their individual engagement in both philanthropic and political endeavors related to improving K-12 education,” and thus “the family will be expanding its staff capacity to guide and manage its increasing role in education reform.”

(Meanwhile, Walmart itself sponsored a CBS concert promoting the film Won’t Back Down, which celebrates the anti-union law known as “parent trigger.”)

Walton cash backs other conservative causes. Board member Jim Walton provided the majority of the financial support ($75,000) for an Arkansas ballot initiative banning couples who lived together and were not legally married from becoming adoptive or foster parents, according to the National Institute on Money in State Politics. (The initiative, which a prominent supporter called an effort to “blunt the gay agenda,” was passed by voters but overturned in court.)

Last October, the UFCW’s Making Change at Walmart campaign slammed Jim Walton on its website for donating $500 to the campaign of Arkansas State Representative Loy Mauch, a member of the League of the South, which advocates secession. Jim Walton then wrote to Mauch to request his money back, saying that he had donated “because of your support for education reform in Arkansas” but that he had since “learned about some of your views on other issues with which I disagree.” In response, Making Change at Walmart noted that Mauch’s past statements on education included letters to the editor in 2006 saying that “Public education is one of the 10 planks of the Communist Manifesto” and that “Public education was forced upon the South during Reconstruction to complete the aim of the radical socialists, which was to destroy Southern conservatism.”

Meanwhile, the Wisconsin Center for Investigative Journalism found that in the state’s 2010 legislative elections, which swept in the majorities that passed a raft of right-wing bills, Walton family members made up six out of the top fifteen individual donors to the winning candidates (that includes board members Jim Walton and Greg Penner, Sam Walton’s son-in-law). And the Walton Family Foundation was listed, along with Walmart, as a “Chairman”-level sponsor of a 2011 meeting of the conservative American Legislative Exchange Council (ALEC). While Walmart announced that it was cutting ties to ALEC following pressure from activists in 2012, the Walton Family Foundation has announced no such move.

In 2011, Greg Penner and two other finance professionals created a PAC called Govern for California, whose declared priorities include changes to public employee pensions and prison sentencing. Govern for California backed former Teach for America official Brian Johnson’s unsuccessful campaign for a California assembly seat “as an education reformer”; Greg’s wife Carrie Penner also donated to Johnson, and gave $222,000 between 2011 and 2012 to the independent expenditure committee of a California education reform group that supported him. Although GFC calls for “raising revenues if and when needed,” Penner donated $250,000 in 2006 to oppose a ballot initiative that would have raised taxes on the wealthy in order to fund universal preschool for California’s 4-year-olds.

While Walmart is the Waltons’ biggest business, it’s not their only venture to court controversy. Greg Penner is a founder and managing director of Madrone Capital Partners, a firm investing Walton money. (According to an investor summary by the financial research company PrivCo, Madrone “primarily manages the Walton Family’s investments in growth private companies”; the private equity firm DT Capital touts its ties to “Madrone Capital in the US, the investment entity for members of the Walton family.”) Madrone has invested in—and Penner is one of five board members of—Baidu, China’s top domestic search engine, which was started with money invested by the firm Peninsula Capital while Penner was a general partner there.

A 2006 Human Rights Watch report found that Baidu results for several politically sensitive terms “were heavily censored in comparison to other search engine results, without a notice that censorship had taken place.” In a 2011 letter, Dick Durbin, the Senate’s second-ranking Democrat, wrote to Baidu’s CEO “to express my serious concerns about your company’s censorship of the internet”; he noted that the company “reportedly received the ‘China Internet Self-Discipline Award’ from the Chinese government.”

Madrone is also invested in DMB Pacific Ventures, a real estate company whose Redwood City Saltworks project—originally planned to build homes on 1,400 acres of Bay Area salt ponds—sparked local controversy. Following opposition from environmentalists, and uncertainty regarding whether the federal government would subject the plan to Clean Water Act and Rivers and Harbors Act restrictions, DMB withdrew its proposal last year. The project’s website now says that the company is “working on a revised and ‘scaled-back’ project.”

In addition to Walmart’s board, where he chairs the Technology and eCommerce committee, Penner sits on the boards of Teach for America, the (opposite-sex only) online dating service eHarmony, Hyatt Hotels and The Charter Growth Fund, a nonprofit that invests in charter schools. Hyatt has faced coordinated strikes and a national boycott by the hotel union UNITE HERE (my former employer) over allegations of union-busting and unsafe conditions for housekeepers. Reached by e-mail, a Hyatt spokesperson touted the company’s “great workplace environment” and “outstanding safety record,” and accused the union of attempting “to pressure Hyatt into imposing unionization on its non-union associates.” (Hyatt heir and former board member Penny Pritzker was recently nominated to serve in President Obama’s cabinet, where she’d join former Walmart Foundation President Sylvia Mathews Burwell.)

Walmart, the Walton Family Foundation, Baidu and Greg Penner (contacted via voicemail at his Madrone Capital Partners office) did not respond to requests for comment.

The CEOs

James Breyer: Breyer Capital CEO and Accel Partners partner (departing)


M. Michele Burns: CEO and executive director of the Retirement Policy Center (departing)


Roger Corbett: former CEO of Woolworths Limited


Douglas Daft: former Coca-Cola CEO


Mike Duke: Walmart president and CEO


Marissa Mayer: Yahoo! CEO and president


Steven Reinemund: former PepsiCo CEO; dean of business at Wake Forest University


H. Lee Scott Jr.: former Walmart CEO


Arne Sorenson: Marriott President and CEO (departing)


Christopher Williams: Williams Capital Group CEO


Linda Wolf: former Leo Burnett chairman and CEO



Two-thirds of Walmart’s current board members—twelve out of seventeen—are current or former CEOs (that includes Arvest Bank’s Jim Walton) . Between them, the CEOs on the board helm or helmed five name-brand US companies (Coke, Pepsi, Yahoo!, Marriott and of course Walmart), an ad agency, an investment fund, an investment bank, the top retailer in Australia and a consulting firm’s retirement think tank.

The board includes former Walmart CEO H. Lee Scott, who helmed the company during the comparatively weak labor protests of the 2000’s, and current CEO Mike Duke, who succeeded him in 2009 (after stepping down at Walmart, Scott became an operating partner at Solamere Capital, Tagg Romney’s private equity firm). Last year, The New York Times reported that, despite "a wealth of evidence," "Wal-Mart's leaders shut down" an internal investigation of the allegations, and "authorities were not notified." In response, the Justice Department and congressional Democrats launched investigations into the company, and in January, congressional Democrats released e-mails showing Duke being personally informed of bribery allegations involving Walmart de Mexico as early as 2005, while he was serving as a Walmart vice chairman responsible for Walmart International.

It’s unclear how long Duke will stay in his post—citing “a person close to the situation,” Bloomberg Businessweek reported May 7 that Walmart could name a successor “in the coming months.” Walmart’s proxy statement pegs Duke’s total compensation for the last fiscal year at $20,693,545.

Board member Douglas Daft served as CEO of Coca-Cola from 2000 to 2004. Like Walmart today, Coca-Cola on Daft’s watch faced protests over labor conditions in its international supply chain: students and labor activists targeted Daft over alleged complicity in the violent repression of organizing by workers in bottling plants in Colombia. Following a 2004 fact-finding trip to Colombia, a delegation led by New York City Councilman Hiram Monserrate issued a harsh assessment: “The company denies any involvement in the threats, assassinations, kidnappings and other terror tactics, but its failure to protect its workers even on company property, its refusal to investigate persistent allegations of payoffs to paramilitary leaders by plant managers, and its unwillingness to share documentation that might demonstrate otherwise leads the delegation to the conclusion that Coca-Cola is complicit in the human rights abuses of its workers in Colombia.”

Reached by e-mail, a Coca-Cola spokesperson said, “The allegations by the anti-Coke campaign activists are simply not true” and that “two different judicial inquiries in Colombia…found no evidence to support the allegations that bottler management conspired to intimidate or threaten trade unionists.” She noted that “these allegations were the thrust of a lawsuit filed in 2001 against The Coca-Cola company in a U.S. District Court in Miami; the company was dismissed as a defendant in 2003.”

Like some of the controversies facing Walmart, the most serious allegation against Board Member Linda Wolf involved the limits of subcontracting. In 2004, one year before Wolf departed as CEO of the ad agency Leo Burnett, the US Army sued the company for allegedly overbilling the government by $20 million. The suit alleged that the company defrauded the government by claiming wholly owned subsidiaries of the company were in fact subcontractors. CBS reported that then–Chief Financial Officer Eric Martinez ordered an audit, but—according to the lawsuit—was fired by Wolf before he could conduct it. Leo Burnett settled the lawsuit for $15.5 million in 2009. Wolf chairs the Walmart board’s Compensation, Nominating and Governance Committee.

Christopher Williams’ Williams Capital Group was one of several firms to which, The New York Times noted in 1998, then–New York Comptroller Carl McCall directed state pension fund contracts after receiving campaign donations from executives. Last October, Williams Capital Group announced the opening of a new Sacramento office as part of plans to “build upon and further expand our valuable services to municipal enterprises.” In April, Making Change at Walmart wrote to Williams’s potential clients to suggest that Williams’s service as chair of the Walmart board’s auditing committee should give them pause given the company’s Mexico bribery scandal.

Perhaps the most famous CEO on Walmart’s board is Yahoo! executive Marissa Mayer, who took over the tech company last summer. Mayer has drawn a series of headlines over the past year: for her swift return to work after giving birth; for eschewing the label “feminist”; for eliminating the company’s work-from-home options; and most recently, following criticism, for increasing Yahoo!’s maternity leave.

As with the controversy over fellow tech exec Sheryl Sandberg’s book Lean In, labor activists have seized on the conversation around Mayer in an effort to draw attention to challenges facing lower-wage women in the workforce. Reached by e-mail, a Yahoo! spokesperson said the company has been “very focused on making Yahoo! the absolute best place to work,” and declined to comment on Mayer’s role on Walmart’s board, or the allegations against Walmart.

Labor-backed pressure could help explain why the Walmart board—currently seventeen members—appears about to shrink. Three of the current CEOs on the board are leaving, and Walmart’s pre-convention federal filing doesn’t list any replacements. All three of the departing members—Marriott CEO Arne Sorenson, Breyer Capital CEO James Breyer and Retirement Policy Center CEO Michele Burns—were among those targeted by labor activists for their involvement with Walmart.

In a message to shareholders in Walmart's 2013 annual report, board chairman Rob Walton noted that Marissa Mayer and Tim Flynn had joined the board over the past year, that Breyer and Burns had served on the board for over a decade and that Sorenson had recently been promoted to Marriott CEO.

In a letter to Linda Wolf and other board members prior to Walmart’s 2011 shareholder meeting, the Change to Win Investment Group (a group tied to unions currently backing organizing at Walmart) questioned Breyer’s and Burns’s listing as “independent directors” on the board. The CTW letter noted that Michele Burns then served as CEO of Mercer LLC, which Walmart had retained to consult on the company’s executive compensation; and that Jim Breyer was a partner in the venture capital firm Accel, a part owner of the social media company Kosmix, which had recently been purchased by Walmart.

When Burns was appointed as CEO of Mercer in 2006, The New York Times noted that she had “left a number of shareholders, creditors and employees at her previous employer, the Mirant Corporation, disgruntled over the amount she was paid while the company was in bankruptcy reorganization.” That included $3.6 million in severance following a year and a half in the job. Burns is currently chairing the Walmart Board’s Strategic Planning and Finance Committee; she previously chaired its Compensation, Nominating and Governance Committee.

Like Walmart, Marriott CEO Arne Sorenson has been a steadfast opponent of organized labor, telling The Economist in 2009 that he opposed the (since failed) Employee Free Choice Act in part because non-union hotels are about 10 percent more profitable than those with unions. The same article reported that if the labor law reform passed, “Sorenson of Marriott predicts that his typical employee, a diminutive Hispanic housekeeper with shaky English, will find it hard to say no to the tall, articulate union man who turns up and asks her to sign a card.”

A spokesperson for Marsh & McLennan Companies—parent of the Retirement Policy Center and of Mercer—declined a request for comment. Breyer Capital, Leo Burnett, Williams Capital Group and Marriott did not respond to inquiries.

The Rest

James Cash Jr.: consultant and retired Harvard Business School professor


Timothy Flynn: retired KPMG International chairman


Aída Álvarez: former US Small Business Administration administrator




Of the final three board members, one is a consultant and former business school professor, one chaired an auditing company and the last, Aída Álvarez, is the chair of the Latino Community Foundation of San Francisco and the former administrator of the US Small Business Administration under Bill Clinton. Álvarez also sits on the board of Progreso Financiero, a financial services company whose investors include Madrone Capital. (The Clintons’ ties to Walmart go back decades. Hillary Clinton sat on the company’s board while Bill was governor; more recently, journalist Charles Fishman reported that ex-President Clinton held confidential meetings with then-CEO Lee Scott regarding how to make amends with the company’s critics.)

Progreso Financiero’s website touts its commitment to “achieving social good” and offering “unsecured credit to under-banked Hispanic families,” offering the chance for them to “prove that they are, in fact, ‘pre-prime’, and also very loyal, long term customers.” The LA Times reported in 2010 that “Progreso’s typical 26% interest rate, plus its $50 origination fee for loans, works out to an average annual percentage rate of 36%.” In a 2010 press release announcing Progreso’s new financing from Madrone, Madrone praised Progreso’s “innovative and socially responsible solution”; Progreso touted its new backers as “world-class investors.”

Progreso Financiero did not respond to a request for comment.

Original Article
Source: thenation.com
Author: Josh Eidelson 

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