DEF 14A 1 lwalmart_def14a.htm WAL MART STORES INC - DEF 14A WALMART - DEF 14A


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

  Filed by the Registrant

  Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §.240.14a-12

WAL-MART STORES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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Wal-Mart Stores, Inc.

702 Southwest 8th Street

Bentonville, Arkansas 72716-0215

(479) 273-4000

http://corporate.walmart.com

Notice of 2013 Annual Shareholders’ Meeting

Friday, June 7, 2013

7:00 a.m., Central time

Bud Walton Arena, University of Arkansas Campus, Fayetteville, Arkansas

Please join us for the 2013 Annual Shareholders’ Meeting of Wal-Mart Stores, Inc. to be held on Friday, June 7, 2013, at 7:00 a.m., Central time in Bud Walton Arena on the campus of the University of Arkansas, Fayetteville, Arkansas. The purposes of the meeting are:

1.

to elect as directors the 14 nominees identified in the accompanying proxy statement;

2.

to ratify the appointment of Ernst & Young LLP as the company’s independent accountants for the fiscal year ending January 31, 2014;

3.

to vote on a non-binding advisory resolution to approve the compensation of the company’s named executive officers as disclosed in the accompanying proxy statement;

4.

to vote on the approval of the Wal-Mart Stores, Inc. Management Incentive Plan, as amended;

5.

to vote on the four shareholder proposals described in the accompanying proxy statement, if properly presented at the meeting; and

6.

to transact other business properly brought before the 2013 Annual Shareholders’ Meeting.

Only shareholders of record as of the close of business on April 11, 2013, the record date for the meeting, are entitled to notice of, and to vote at, the 2013 Annual Shareholders’ Meeting. If you plan to attend the meeting, please see page 14 for information regarding what you must bring with you to gain admittance to the 2013 Annual Shareholders’ Meeting.

Regardless of whether you plan to attend, we urge all shareholders to vote on the matters described in the accompanying proxy statement. Please see our questions and answers on page 12 for information about voting by mail, telephone, the internet, mobile device, or in person at the 2013 Annual Shareholders’ Meeting. Voting in any of the ways described will not prevent you from attending the 2013 Annual Shareholders’ Meeting.

The proxy statement and our Annual Report to Shareholders for the fiscal year ended January 31, 2013 are available in the “Investors” section of our corporate website at http://stock.walmart.com/annual-reports.

April 22, 2013

Bentonville, Arkansas

By Order of the Board of Directors

 

Jeffrey J. Gearhart

 

Corporate Secretary

Admittance Requirements on page 14




Table of Contents

NOTICE OF 2013 ANNUAL SHAREHOLDERS’ MEETING

3

PROXY STATEMENT SUMMARY

6

TABLE OF ABBREVIATIONS

9

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

10

INFORMATION ABOUT THE BOARD

15

What is the nomination process for director candidates?

15

Can shareholders recommend director candidates?

15

Proposal No. 1

Election of Directors

16

Compensation of the Directors

26

Director Independence

28

Board Meetings

29

Board Committees

29

CORPORATE GOVERNANCE

32

Corporate Governance Highlights

32

Board and Committee Governing Documents

32

Board Leadership Structure

33

Presiding Director

33

The Board’s Role in Risk Oversight

33

Board Attendance at Annual Shareholders’ Meetings

34

Communications with the Board

34

Shareholder Outreach and Engagement

35

Submission of Shareholder Proposals

35

Compensation Committee Report

35

Compensation Committee Interlocks and Insider Participation

36

Audit Committee Report

36

Audit Committee Financial Experts

36

Audit Committee Pre-Approval Policy

37

Transaction Review Policy

37

Related Person Transactions

38

Proposal No. 2

Ratification of Independent Accountants

39

  2013 Proxy Statement   4



EXECUTIVE COMPENSATION

40

Compensation Discussion and Analysis

40

Summary Compensation

55

Fiscal 2013 Grants of Plan-Based Awards

57

Outstanding Equity Awards at Fiscal 2013 Year-End

58

Fiscal 2013 Option Exercises and Stock Vested

59

Fiscal 2013 Nonqualified Deferred Compensation

60

Walmart’s Deferred Compensation Plans

61

Potential Payments Upon Termination or Change In Control

62

Proposal No. 3

Advisory Vote to Approve Named Executive Officer Compensation

63

Proposal No. 4

Approval of the Management Incentive Plan, as Amended

64

STOCK OWNERSHIP

67

Holdings of Major Shareholders

67

Holdings of Officers and Directors

68

Section 16(a) Beneficial Ownership Reporting Compliance

68

EQUITY COMPENSATION PLAN INFORMATION

69

SHAREHOLDER PROPOSALS

69

Proposal No. 5

Special Shareowner Meeting Right

70

Proposal No. 6

Equity Retention Requirement

71

Proposal No. 7

Independent Chairman

72

Proposal No. 8

Request for Annual Report on Recoupment of Executive Pay

73

OTHER MATTERS

74

APPENDIX A:

WAL-MART STORES, INC. MANAGEMENT INCENTIVE PLAN, AS AMENDED

75

2013 ANNUAL SHAREHOLDERS’ MEETING ADMISSION REQUIREMENTS

Back Cover

  2013 Proxy Statement   5



Proxy Statement Summary

You have received these proxy materials because the Board is soliciting your proxy to vote your Shares at the 2013 Annual Shareholders’ Meeting. This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references (“XX”) are supplied to help you find further information in this proxy statement. Please refer to the Table of Abbreviations on page 9 when reading this proxy summary. This proxy statement and the related proxy materials were first mailed to shareholders and made available on the internet on April 22, 2013.

Annual Shareholders’ Meeting

Time: June 7, 2013, 7:00 a.m., Central time

Place: Bud Walton Arena, University of Arkansas Campus, Fayetteville, Arkansas 72701

Record Date: You can vote if you were a shareholder of record at the close of business on April 11, 2013 (page 10).

Admission: You must have proof of ownership as of the Record Date to attend the Annual Shareholders’ Meeting (page 14).

Voting Matters and Board Recommendations

 

Board Vote

Recommendation

Page Reference

(for more detail)

Election of Directors

FOR each Director Nominee

16

Ratification of E&Y as Independent Accountants

FOR

39

Advisory Vote to Approve Executive Compensation

FOR

63

Approval of the Wal-Mart Stores, Inc. Management Incentive Plan, as Amended

FOR

64

Four Shareholder Proposals

AGAINST

69

The Board is not aware of any matter that will be presented for a vote at the 2013 Annual Shareholders’ Meeting other than those shown above.

How to Cast Your Vote (page 12)

You can vote by any of the following methods:

via the internet (www.proxyvote.com) until 11:59 p.m. Eastern time on June 6, 2013*;

via telephone by calling 1-800-690-6903 until 11:59 p.m. Eastern time on June 6, 2013*;

if you received a proxy card or voting instruction form in the mail, by completing, signing, dating, and returning your proxy card or voting instruction form in the return envelope provided to you in accordance with the instructions provided with the proxy card or voting instruction form;

by scanning the QR code on your proxy card, notice of availability, or voting instruction form with your mobile device; or

in person, at the 2013 Annual Shareholders’ Meeting. You must bring proof of ownership of Shares as of the record date in order to attend the Annual Shareholders’ Meeting. See page 14 for a description of acceptable forms of proof of Share ownership. If your Shares are held in the name of a broker, nominee, or other intermediary, you must also bring a proxy from the record holder of your Shares as of the record date in order to vote your Shares at the meeting.



* If your Shares are held through a Walmart 401(k) plan, earlier voting deadlines apply.

  2013 Proxy Statement   6


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Board Nominees (page 17)

Name

Age

Director

since

Principal Occupation

Independent

Committee

Memberships*

Other Public

Company Boards

Yes

No

Aida M. Alvarez

63

2006

Former Administrator, U.S. Small Business Administration

X

 

Audit

1

James I. Cash, Jr.

65

2006

James E. Robison Emeritus Professor of Business Administration, Harvard Business School

X

 

Audit, TeCC

2

Roger C. Corbett

70

2006

Retired CEO and Group Managing Director, Woolworths Limited

X

 

SPFC

3

Douglas N. Daft

70

2005

Retired Chairman and CEO, The Coca-Cola Company

X

 

CNGC

0

Michael T. Duke

63

2008

President and CEO, Wal-Mart Stores, Inc.

 

X

GCC, EC

0

Timothy P. Flynn

56

2012

Retired Chairman, KPMG International

X

 

Audit

1

Marissa A. Mayer

37

2012

President and CEO, Yahoo! Inc.

X

 

SPFC, TeCC

1

Gregory B. Penner

43

2008

General Partner, Madrone Capital Partners

 

X

GCC, TeCC

2

Steven S Reinemund

65

2010

Dean of Business and Professor of Leadership and Strategy, Wake Forest University

X

 

CNGC

3

H. Lee Scott, Jr.

64

1999

Retired President and CEO, Wal-Mart Stores, Inc.

 

X

SPFC

0

Jim C. Walton

64

2005

Chairman and CEO, Arvest Bank Group, Inc.

 

X

SPFC

0

S. Robson Walton

68

1978

Chairman, Wal-Mart Stores, Inc.

 

X

GCC, EC

0

Christopher J. Williams

55

2004

Chairman and CEO, The Williams Capital Group, L.P.

X

 

Audit, EC

1

Linda S. Wolf

65

2005

Retired Chairman and CEO, Leo Burnett Worldwide, Inc.

X

 

CNGC, TeCC

1

*

Audit = Audit Committee; CNGC = Compensation, Nominating and Governance Committee; SPFC = Strategic Planning and Finance Committee; TeCC = Technology and eCommerce Committee; GCC = Global Compensation Committee; EC = Executive Committee

Information about our Board and Key Board Committees (page 29)

 

Number

of Members

Percent

Independent

Number of

Meetings During

Fiscal 2013

Full Board

17

71%

6

Audit Committee

5

100%

15

Compensation, Nominating and Governance Committee

3

100%

7

Strategic Planning and Finance Committee

6

67%

5

Technology and eCommerce Committee

5

80%

5

During fiscal 2013, our Board members in the aggregate attended approximately 97% of the meetings of the Board and Board committees on which they served.

Governance Facts (page 32)

Size of Board

17

*

Number of Independent Directors

12

*

Audit Committee and CNGC Comprised Entirely of Independent Directors

YES

 

Annual Election of All Directors

YES

 

Independent Presiding Director

YES

 

Separate Chairman and CEO

YES

 

Majority Voting for Directors in Uncontested Elections

YES

 

Annual Advisory Vote on Executive Compensation

YES

 

Annual Board and Committee Self-Evaluations

YES

 

Stock Ownership Guidelines for Directors and Executive Officers

YES

 

CNGC Oversight of Political Engagement

YES

 

Restrictions on Pledging of Company Shares by Directors and Executive Officers

YES

 

Directors and Executive Officers Permitted to Hedge Company Shares

NO

 

Shareholder Rights Plan (Poison Pill)

NO

 

*

If all nominees for director named in this proxy statement are elected, we will have a total of 14 directors, including 9 independent directors.

  2013 Proxy Statement   7


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Fiscal 2013 Business Highlights

Our company had good financial performance in fiscal 2013, particularly with respect to our financial priorities of growth, leverage, and returns. Highlights include:

diluted earnings per share from continuing operations attributable to Walmart (“EPS”) increased 10.6% over the prior fiscal year;

the Walmart U.S. and Sam’s Club segments delivered positive comparable store sales;

we once again leveraged expenses, with sales growing faster than operating expenses;

our stock price increased approximately 14% during fiscal 2013, and we paid $1.59 per share in dividends; and

we announced in February 2013 that our Board approved an 18% increase in our annual dividend for fiscal 2014 to $1.88 per share.

Fiscal 2013 Executive Compensation Highlights (page 40)

Our executive compensation program is intended to: provide fair, competitive compensation based on performance and contributions to the company; provide incentives to attract and retain key executives; instill a long-term commitment to the company; and encourage company ownership and align the interests of our key executives with the interests of our shareholders, with the ultimate goal of driving long-term shareholder value. With these objectives in mind, our executive compensation program includes the following key features:

on average, more than 50% of our NEOs’ target total direct compensation, or TDC, consists of long-term performance shares, and at least 70% of each NEO’s target TDC is tied to performance;

we seek to mitigate risk by using a combination of performance measures, and by capping maximum payouts tied to each performance measure;

we do not have employment contracts with our Executive Officers. All of our Executive Officers are employed on an “at-will” basis; and

we provide only a limited number of perquisites to our Executive Officers.

Primary Components of Our Fiscal 2013 Executive Compensation Program (page 44)

Component

Form

Key Features

Base Salary

Cash

Intended to attract and retain top talent

Generally positioned near the 50th percentile of our peer groups, but varies with individual skills, experience, responsibilities, and individual performance

Represents a relatively small percentage of NEO target TDC

Annual Incentive

Cash

Tied to operating income performance

Performance goals established at the beginning of each fiscal year

Payouts range from 37.5% of target payout to 125% of target payout, depending on performance

Intended to motivate annual performance with respect to a key financial measure

Represents approximately 19% - 23% of each NEO’s target TDC for fiscal 2013

Performance Shares

Equity

Tied to return on investment and sales performance over a three-year period

Performance goals established at the beginning of each fiscal year

Payouts range from 50% of target payout to 150% of target payout, depending on performance

Intended to motivate long-term performance with respect to key financial measures and align our NEOs’ interests with those of our shareholders

Represents 75% of each annual equity grant and approximately 47% - 54% of each NEO’s target TDC for fiscal 2013

Restricted Stock

Equity

Vests on the third anniversary of grant

Intended to align our NEOs’ interests with those of our shareholders and promote retention

Represents 25% of each annual equity grant and approximately 16% - 18% of each NEO’s target TDC for fiscal 2013

  2013 Proxy Statement   8


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TABLE OF ABBREVIATIONS

The following abbreviations are used for certain terms that appear in this proxy statement:

2012 Annual Shareholders’ Meeting: Walmart’s Annual Shareholders’ Meeting held on June 1, 2012

2013 Annual Shareholders’ Meeting: Walmart’s Annual Shareholders’ Meeting to be held on June 7, 2013

401(k) Plan: the Walmart 401(k) Plan

Annual Report to Shareholders: Walmart’s Annual Report to Shareholders for fiscal 2013

Associate: an employee of Walmart or one of its subsidiaries

Audit Committee: the Audit Committee of the Board

Board: the Board of Directors of Walmart

Board committees: the Audit Committee, the CNGC, the Executive Committee, the Global Compensation Committee, the SPFC, and the TeCC

Broadridge: Broadridge Financial Solutions, Inc., representatives of which will serve as the inspectors of election at the 2013 Annual Shareholders’ Meeting

Bylaws: the amended and restated Bylaws of Walmart, effective as of June 2, 2011

CD&A: the Compensation Discussion and Analysis included in this proxy statement

CEO: the Chief Executive Officer of a company

CFO: the Chief Financial Officer of a company

CNGC: the Compensation, Nominating and Governance Committee of the Board

Deferred Compensation Matching Plan: the Wal-Mart Stores, Inc. Deferred Compensation Matching Plan, as adopted effective February 1, 2012, and which replaced the Officer Deferred Compensation Plan

Director Compensation Deferral Plan: the Wal-Mart Stores, Inc. Director Compensation Deferral Plan, effective June 4, 2010, which sets forth terms and procedures with respect to the deferral of cash and equity compensation paid to Non-Management Directors

E&Y: Ernst & Young LLP, an independent registered public accounting firm

Exchange Act: the Securities Exchange Act of 1934, as amended

Executive Committee: the Executive Committee of the Board

Executive Officers: those senior officers of our company designated by the Board as executive officers (as defined by Rule 3b-7 under the Exchange Act) as to whom Walmart has certain disclosure obligations and who must report certain transactions in equity securities of our company under Section 16

Fiscal 2015, fiscal 2014, fiscal 2013, fiscal 2012, fiscal 2011, and fiscal 2010: Walmart’s fiscal years ending January 31, 2015, 2014, 2013, 2012, 2011, and 2010, respectively

GAAP: generally accepted accounting principles in effect in the United States from time to time

Global Compensation Committee or GCC: the Global Compensation Committee of the Board

Independent Directors: the Walmart directors whom the Board has determined have no material relationships with our company pursuant to the standards set forth in the NYSE Listed Company Rules and, as to members of the Audit Committee, who meet the requirements of Section 10A of the Exchange Act and Rule 10A-3 under the Exchange Act and, as to members of the CNGC, who meet the requirements of Section 10C of the Exchange Act and Rule 10C-1 under the Exchange Act

Internal Revenue Code: the Internal Revenue Code of 1986, as amended

Management Incentive Plan or MIP: the Wal-Mart Stores, Inc. Management Incentive Plan, as amended and restated effective February 1, 2008; the MIP is being submitted to shareholders for approval, inclusive of recent amendments, at the 2013 Annual Shareholders’ Meeting (the “Amended MIP”)

Named Executive Officers or NEOs: Walmart’s President and CEO, Walmart’s CFO, and the three most highly compensated Executive Officers other than our CEO and CFO during fiscal 2013

Non-Management Directors: the members of the Board who are not employed by Walmart or a subsidiary of Walmart

NYSE: the New York Stock Exchange

NYSE Listed Company Rules: the NYSE’s rules for companies with securities listed for trading on the NYSE, including the continual listing requirements and rules and policies on matters such as corporate governance, shareholder communication, and shareholder approval

Officer Deferred Compensation Plan: the Wal-Mart Stores, Inc. Officer Deferred Compensation Plan, amended and restated effective January 1, 2009, and which was replaced, effective February 1, 2012, with the Deferred Compensation Matching Plan

SEC: the Securities and Exchange Commission

Section 16: Section 16 of the Exchange Act

SERP: the Wal-Mart Stores, Inc. Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2009, which was replaced, effective February 1, 2012, with the Walmart Deferred Compensation Matching Plan

Share or Shares: a share or shares of Walmart common stock, $0.10 par value per share

SOX: the Sarbanes-Oxley Act of 2002

SPFC: the Strategic Planning and Finance Committee of the Board

Stock Incentive Plan: the Wal-Mart Stores, Inc. Stock Incentive Plan of 2010, as amended

Stock Purchase Plan: the Wal-Mart Stores, Inc. 2004 Associate Stock Purchase Plan, as restated effective February 1, 2004, and subsequently amended

TeCC: the Technology and eCommerce Committee of the Board

Walmart, our company, the company, “we,” “our,” or “us”: Wal-Mart Stores, Inc., a Delaware corporation and, where the context requires, its consolidated subsidiaries

  2013 Proxy Statement   9


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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

1.   What is a proxy statement and what is a proxy?

A proxy statement is a document that SEC rules require us to provide you when we ask you to vote on certain matters yourself or when we ask you to sign a proxy designating certain individuals to vote on those matters on your behalf. A proxy is your legal designation of another person to vote the Shares you own. If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. By signing a proxy card, you will designate our Chairman and our CEO as your proxies to cast your vote at the 2013 Annual Shareholders’ Meeting. Walmart’s Board is soliciting your proxy to vote your Shares at the 2013 Annual Shareholders’ Meeting. Walmart pays the cost of soliciting your proxy and reimburses brokers and others for forwarding to you the proxy statement, proxy card, or voting instruction form, and Annual Report to Shareholders and, for certain shareholders, the notice of internet availability of our proxy materials.

2.   Who may vote at the 2013 Annual Shareholders’ Meeting?

You may vote at the meeting if you were the holder of record of Shares at the close of business on April 11, 2013. You are entitled to one vote on each matter presented at the 2013 Annual Shareholders’ Meeting for each Share you owned at that time. Some shareholders hold shares through a bank, broker, or other nominee, and are often said to hold such shares in “street name.” These shareholders are considered “beneficial owners” of those Shares. If you held Shares as a beneficial owner in “street name” at the close of business on April 11, 2013, you must obtain a legal proxy, executed in your favor, from the holder of record of those Shares as of that time, to be entitled to vote those Shares at the meeting. As of the close of business on April 11, 2013, Walmart had 3,289,831,391 Shares outstanding.

3.   What am I voting on, and what are my voting choices for each of the proposals to be voted on, at the 2013 Annual Shareholders’ Meeting?

You are voting on the following items:

Proposal

Voting Choices and Board Recommendation

Proposal No. 1: Election of 14 Director Nominees

vote in favor of each nominee;

vote in favor of specific nominees;

vote against each nominee;

vote against specific nominees;

abstain from voting with respect to each nominee; or

abstain from voting with respect to specific nominees.

The Board recommends a vote FOR each of the nominees.

Proposal No. 2: Ratification of E&Y as Independent

Accountants for Fiscal 2014

vote in favor of the ratification;

vote against the ratification; or

abstain from voting on the ratification.

The Board recommends a vote FOR the ratification.

Proposal No. 3: Non-Binding Advisory Resolution

to Approve Named Executive Officer Compensation

vote in favor of the advisory resolution;

vote against the advisory resolution; or

abstain from voting on the advisory resolution.

The Board recommends a vote FOR the advisory resolution.

Proposal No. 4: Approval of the Management Incentive Plan, as Amended

vote in favor of the amended plan;

vote against the amended plan; or

abstain from voting on the amended plan.

The Board recommends a vote FOR the amended plan.

Proposal Nos. 5 – 8: Four Shareholder Proposals Appearing in this Proxy Statement

vote in favor of each shareholder proposal;

vote in favor of specific shareholder proposals;

vote against each shareholder proposal;

vote against specific shareholder proposals;

abstain from voting with respect to each shareholder proposal; or

abstain from voting with respect to specific shareholder proposals.

The Board recommends a vote AGAINST each of the four shareholder proposals.

  2013 Proxy Statement   10


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4.   Who counts the votes? Are my votes confidential?

Broadridge will count the votes. The Board has appointed two employees of Broadridge as the inspectors of election. Your proxy card or ballot and voting records will not be disclosed unless the law requires disclosure, you request disclosure, or your vote is cast in a contested election. If you write comments on your proxy card or ballot, your comments will be provided to Walmart by Broadridge, but how you voted will remain confidential.

5.   What is the quorum requirement for holding the 2013 Annual Shareholders’ Meeting?

The holders of a majority of the Shares outstanding as of the record date for the meeting must be present in person or represented by proxy for business to be transacted at the meeting.

6.   What vote is required to elect a director at the 2013 Annual Shareholders’ Meeting?

To be elected in an “uncontested election” of directors, which under our Bylaws is an election in which the number of nominees for director is not greater than the number of directors to be elected, a director nominee must receive affirmative votes representing a majority of the votes cast by the holders of Shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors (a “majority vote”). To be elected in a “contested election” of directors, which our Bylaws define as an election in which the number of nominees for director is greater than the number of directors to be elected, a director nominee must receive a plurality of the votes of the holders of Shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. We expect the election of directors at the 2013 Annual Shareholders’ Meeting to be an uncontested election.

7.   What happens if a director nominee fails to receive a majority vote in an uncontested election at the 2013 Annual Shareholders’ Meeting?

Any incumbent director who is a director nominee and who does not receive a majority vote must promptly tender his or her offer of resignation as a director for consideration by the Board. Each director standing for reelection at the 2013 Annual Shareholders’ Meeting has agreed to resign, effective upon acceptance of such resignation by the Board, if he or she does not receive a majority vote. The Board must accept or reject such resignation within 90 days following certification of the shareholder vote in accordance with the procedures established by the Bylaws. If a director’s resignation offer is not accepted by the Board, that director will continue to serve until our company’s next annual shareholders’ meeting and his or her successor is duly elected and qualified or until the director’s earlier death, resignation, or removal.

Any director nominee who is not an incumbent director and who fails to receive a majority vote in an uncontested election will not be elected as a director, and a vacancy will be left on the Board. The Board, in its sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote pursuant to the Bylaws or decrease the size of the Board to eliminate the vacancy.

8.   What vote is required to pass the other proposals at the 2013 Annual Shareholders’ Meeting?

The affirmative vote of the holders of a majority of the Shares present in person or represented by proxy at the meeting and entitled to vote on the proposal at issue is required for: (i) the ratification of the appointment of E&Y as Walmart’s independent accountants for fiscal 2014; (ii) the adoption of a non-binding advisory resolution to approve the compensation of the company’s NEOs; (iii) the approval of the Management Incentive Plan, as amended; and (iv) the adoption of each of the shareholder proposals.

9.   What is the effect of an “abstain” vote or a “broker non-vote” on the proposals to be voted on at the 2013 Annual Shareholders’ Meeting?

Abstentions. A Share voted “abstain” with respect to any proposal is considered as present and entitled to vote with respect to that proposal, but is not considered a vote cast with respect to that proposal. Therefore, an abstention will not have any effect on the election of directors. Because each of the other proposals requires the affirmative vote of the holders of a majority of the Shares present and entitled to vote on each such proposal in order to pass, an abstention will have the effect of a vote against each of the other proposals.

Broker Non-Votes. A “broker non-vote” occurs if your Shares are not registered in your name (that is, you hold your Shares in “street name”) and you do not provide the record holder of your Shares (usually a bank, broker, or other nominee) with voting instructions on any matter as to which, under the NYSE Listed Company Rules, a broker may not vote without instructions from you, but the broker nevertheless provides a proxy for your Shares. Shares as to which a broker non-vote occurs are considered present for purposes of determining whether a quorum exists, but are not considered “votes cast” or Shares “entitled to vote” with respect to a voting matter.

  2013 Proxy Statement   11


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Under the NYSE Listed Company Rules: (i) the election of directors; (ii) the non-binding advisory vote to approve the compensation of the company’s NEOs; (iii) the approval of the Wal-Mart Stores, Inc. Management Incentive Plan, as amended; and (iv) each of the shareholder proposals described in this proxy statement are not matters on which a broker may vote without your instructions. Therefore, if your Shares are not registered in your name and you do not provide instructions to the record holder of your Shares regarding these proposals, a broker non-vote as to your Shares will result with respect to these proposals. The ratification of the appointment of independent accountants is a routine item under the NYSE Listed Company Rules. As a result, brokers who do not receive instructions from you as to how to vote on that matter generally may vote on that matter in their discretion.

If your Shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your Shares to be voted so you may participate in the shareholder voting on these important matters.

10.   How do I vote?

The process for voting your Shares depends on how your Shares are held. Generally, you may hold Shares as a “record holder” (that is, in your own name) or in “street name” (that is, through a nominee, such as a broker or bank). If you hold Shares in “street name,” you are considered to be the “beneficial owner” of those Shares.

Voting for Record Holders. If you are a record holder, you may vote by proxy or you may vote in person at the 2013 Annual Shareholders’ Meeting. If you are a record holder and would like to vote your Shares by proxy prior to the 2013 Annual Shareholders’ Meeting, you have three ways to vote:

call 1-800-690-6903 using a touch-tone phone (toll charges may apply for calls made from outside the United States) and follow the instructions provided on the call;

go to the website www.proxyvote.com and follow the instructions at that website;

scan the QR code on your proxy card or notice of availability with your mobile device; or

if you received a proxy card in the mail, complete, sign, date, and mail the proxy card in the return envelope provided to you.

Please note that telephone and internet voting will close at 11:59 p.m. Eastern time on June 6, 2013. If you wish to vote by telephone or internet, follow the instructions on your proxy card (if you received a paper copy of the proxy materials) or in the notice of availability of the proxy materials. If you received a proxy card in the mail and wish to vote by completing and returning the proxy card via mail, please note that your completed proxy card must be received by no later than the time the polls close for voting at the 2013 Annual Shareholders’ Meeting.

If you plan to attend the 2013 Annual Shareholders’ Meeting and wish to vote in person, you will be given, upon your request, a ballot at the 2013 Annual Shareholders’ Meeting. Even if you vote by proxy prior to June 7, 2013, you may still attend the 2013 Annual Shareholders’ Meeting.

Voting for Holders in “Street Name.” If your Shares are held in the name of a broker, bank, or other nominee (that is, you hold your Shares in “street name”), you should receive separate instructions from the holder of your Shares describing how to vote. Nonetheless, if your Shares are held in the name of a broker, bank, or other nominee and you want to vote in person, you will need to obtain (and bring with you to the 2013 Annual Shareholders’ Meeting) a legal proxy from the record holder of your Shares (who must have been the record holder of your Shares as of the close of business on April 11, 2013) indicating that you were a beneficial owner of Shares as of the close of business on April 11, 2013, as well as the number of Shares of which you were the beneficial owner on the record date, and appointing you as the record holder’s proxy to vote the Shares covered by that proxy at the 2013 Annual Shareholders’ Meeting.

Voting of Shares Held in the 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan. If your Shares are held through the 401(k) Plan or the Wal-Mart Puerto Rico 401(k) Plan, you must provide instructions on how you wish to vote your Shares held through such plans no later than 11:59 p.m. Eastern time on June 4, 2013. If you do not provide such instructions by that time, your Shares will be voted by the Retirement Plans Committee of the respective plan in accordance with the rules of the applicable plan.

11.   What if I do not specify a choice for a proposal when returning a proxy?

Unless you indicate otherwise, the persons named as proxies on the proxy card will vote your Shares: FOR the election of each of the nominees for director named in this proxy statement; FOR the ratification of E&Y as Walmart’s independent accountants for fiscal 2014; FOR the non-binding advisory resolution to approve the compensation of the company’s NEOs; FOR the approval of the Management Incentive Plan, as amended; and AGAINST each of the shareholder proposals appearing in this proxy statement.

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12.   I completed and returned my proxy card, but I have changed my mind about how I want to vote. Can I revoke my proxy?

Yes, if you are a record holder, you may revoke a previously submitted proxy by:

delivering a written notice of revocation to Walmart’s Corporate Secretary at the address provided in the Notice of 2013 Annual Shareholders’ Meeting included in this proxy statement before the 2013 Annual Shareholders’ Meeting;

signing a proxy bearing a later date than the proxy being revoked and delivering it to Walmart’s Corporate Secretary at the address provided in the Notice of 2013 Annual Shareholders’ Meeting included in this proxy statement before the 2013 Annual Shareholders’ Meeting; or

voting in person at the 2013 Annual Shareholders’ Meeting.

If your Shares are held in street name through a broker, bank, or other nominee, you should contact the record holder of your Shares regarding how to revoke your voting instructions.

13.   Why did I receive a notice regarding the internet availability of the proxy materials instead of a paper copy of the proxy materials?

Important Notice Regarding the Availability of Proxy Materials for the 2013 Annual Shareholders’ Meeting. This year, we are again taking advantage of the rules of the SEC that allow us to furnish our proxy materials over the internet. As a result, we are mailing a notice of availability of the proxy materials on the internet, rather than a full paper set of the proxy materials, to many of our shareholders. This notice of availability includes instructions on how to access our proxy materials on the internet, as well as instructions on how shareholders may obtain a paper copy of the proxy materials by mail or a printable copy electronically. Shareholders who have affirmatively requested electronic delivery of our proxy materials will receive instructions via e-mail regarding how to access these materials electronically. All other shareholders, including shareholders who have previously requested to receive a paper copy of the materials, will receive a full paper set of the proxy materials by mail. This distribution process will contribute to our sustainability efforts and will reduce the costs of printing and distributing our proxy materials.

14.   How can I access the proxy materials over the internet? How can I request a paper copy of the proxy materials?

Accessing the Proxy Materials over the Internet. You can access the proxy statement and the Annual Report to Shareholders in the “Investors” section of Walmart’s corporate website at http://stock.walmart.com/annual-reports. In accordance with the rules of the SEC, we do not use software that identifies visitors accessing our proxy materials on our website. If you wish to join in Walmart’s sustainability efforts, you can instruct Walmart to deliver its proxy materials for future annual shareholders’ meetings to you electronically by e-mail. If you choose to access future proxy materials electronically, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials electronically will remain in effect until you terminate it. You may choose this method of delivery in the “Investors” section of Walmart’s corporate website at http://stock.walmart.com/annual-reports.

Obtaining a Paper Copy of the Proxy Materials. If you received a notice regarding the internet availability of the proxy materials, you will find instructions about how to obtain a paper copy of the proxy materials and the Annual Report to Shareholders in your notice. If you received an e-mail notification as to the availability of the proxy materials, you will find instructions about how to obtain a paper copy of the proxy materials and the Annual Report to Shareholders as part of that e-mail notification. We will mail a paper copy of the proxy materials and the Annual Report to Shareholders to all shareholders to whom we do not send a notice of availability or an e-mail notification regarding the internet availability of the proxy materials.

15.   What should I do if I receive more than one notice or e-mail notification about the internet availability of the proxy materials or more than one paper copy of the proxy materials?

Some shareholders may receive more than one notice of internet availability, more than one e-mail notification, or more than one paper copy of the proxy materials, including multiple proxy cards. For example, if you hold your Shares in more than one brokerage account, you may receive a separate notice of availability, a separate e-mail notification, or a separate voting instruction form for each brokerage account in which you hold Shares. If you are a shareholder of record and your Shares are registered in more than one name, you may receive a separate notice of availability, a separate e-mail notification, or a separate set of paper proxy materials and proxy card for each name in which you hold Shares. To vote all of your Shares, you must complete, sign, date, and return each proxy card you receive or vote the Shares to which each proxy card relates by telephone, internet, or mobile device as described above, or vote in person as described above. If you have Shares held in one or more “street names,” you must complete, sign, date, and return to each bank, broker, or other nominee through which you hold Shares each voting instruction form received from that bank, broker, or other nominee (or obtain a proxy from each such nominee holder if you wish to vote in person at the 2013 Annual Shareholders’ Meeting).

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16.   How can I attend the 2013 Annual Shareholders’ Meeting? What do I need to bring?

Only shareholders who own Shares as of the close of business on April 11, 2013 are entitled to attend the 2013 Annual Shareholders’ Meeting. You will be admitted to the 2013 Annual Shareholders’ Meeting only if you present valid proof of Share ownership as described below and photo identification (such as a valid driver’s license or passport) at an entrance to Bud Walton Arena, the facility at which the 2013 Annual Shareholders’ Meeting is held.

If your Shares are registered in your name and you received your proxy materials by mail, you should bring the proxy statement you received in the mail or the proxy card that you received in the mail (or, if you have already completed and returned your proxy card, the top part of the proxy card marked “keep this portion for your records”) to the 2013 Annual Shareholders’ Meeting.

If your Shares are registered in your name and you received a notice of internet availability of the proxy materials in the mail, you should bring that notice of internet availability with you to the 2013 Annual Shareholders’ Meeting.

If you received an e-mail with instructions containing a link to the website where our proxy materials are available and a link to the proxy voting website, bring that e-mail with you to the 2013 Annual Shareholders’ Meeting.

If you are a beneficial owner of Shares and your Shares are held in street name as described above, you will be admitted to the 2013 Annual Shareholders’ Meeting only if you present either a valid legal proxy from your bank, broker, or other nominee as to your Shares, the notice of internet availability of the proxy materials (if you received one), a voting instruction form that you received from your bank, broker, or other nominee (if you have not already completed and returned the voting instruction form), or a recent bank, brokerage, or other statement showing that you owned Shares as of the close of business on April 11, 2013.

The use of cameras, camcorders, videotaping equipment, and other recording devices will not be permitted in Bud Walton Arena. Attendees may not bring into the arena large packages or other material that could pose a safety or disruption hazard (e.g. fireworks, noisemakers, horns, confetti, etc.). Photographs and videos taken at the 2013 Annual Shareholders’ Meeting may be used by Walmart. By attending the 2013 Annual Shareholders’ Meeting, you will be agreeing to Walmart’s use of those photographs and waive any claim or rights with respect to those photographs and videos and their use.

17.   I am unable to attend the meeting in person. Can I view the meeting via webcast?

Yes. If you are unable to attend the 2013 Annual Shareholders’ Meeting in person, we invite you to view a live webcast of the meeting at http://stock.walmart.com/annual-reports. The webcast of the 2013 Annual Shareholders’ Meeting will be available for viewing on our corporate website for a limited time after the meeting.

18.   When will the company announce the voting results?

We will announce the preliminary voting results at the 2013 Annual Shareholders’ Meeting. We will report the final results in a press release on or before June 10, 2013, which will be available on our corporate website, and in a Current Report on Form 8-K filed with the SEC on or before June 13, 2013.

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INFORMATION ABOUT THE BOARD

What is the nomination process for director candidates?

Pursuant to Walmart’s charter and Corporate Governance Guidelines, both of which are available to shareholders on our corporate website at http://‌stock.‌walmart.com/corporate-governance/governance-documents, the CNGC is responsible for identifying, evaluating, and recommending potential candidates to the Board for nomination for election to the Board. The CNGC’s process for identifying potential candidates for nomination to the Board is an ongoing one. Throughout the year, the CNGC actively engages in director succession planning and regularly evaluates whether the addition of a director or directors with particular attributes, experience, or a particular skill set, would contribute to enhancing the Board’s effectiveness, achieving the company’s business objectives, and serving our company’s and shareholders’ long-term best interests.

As a part of the candidate search process, the CNGC may consult with other directors and senior officers and may hire a search firm to assist in identifying and evaluating potential candidates. SpencerStuart currently serves as our company’s director candidate search consultant. In this capacity, SpencerStuart seeks out candidates who have the experience, skills, and characteristics that the CNGC has identified for potential candidates, conducts an extensive search for, and analysis of, potential candidates, and then presents the most qualified candidates to the CNGC and our Chairman. If the CNGC decides, on the basis of its preliminary review, to proceed with further consideration of a potential candidate, the chair of the CNGC and other members of the CNGC, as well as other members of the Board, as appropriate, may interview the candidate. The CNGC then either makes its recommendation to the Board to fill a vacancy or add an additional member or recommends to the Board a slate of candidates for nomination for election to the Board. Timothy P. Flynn, who was appointed to the Board on July 27, 2012, was initially identified as a potential candidate for the Board by SpencerStuart, and his appointment to the Board and nomination for election at the 2013 Annual Shareholders’ Meeting was a result of the process outlined above.

S. Robson Walton and Jim C. Walton are members of a group that beneficially owns more than five percent of the outstanding Shares. Any participation by them in the nomination process is considered to be in their capacities as members of the Board and is not considered to be recommendations from security holders who beneficially own more than five percent of the outstanding Shares.

Can shareholders recommend director candidates?

Yes. Shareholders may recommend candidates for consideration by the Board by writing to:

Wal-Mart Stores, Inc. Board of Directors

c/o Gordon Y. Allison, Vice President and General Counsel, Corporate Division

702 Southwest 8th Street

Bentonville, Arkansas 72716-0215

The recommendation must include the following information:

the candidate’s name and business address;

a resume or curriculum vitae that demonstrates the candidate’s qualifications to serve as a director as described on page 16 and in our Corporate Governance Guidelines;

a statement as to whether or not, during the past ten years, the candidate has been convicted in a criminal proceeding (other than for minor traffic violations), has been involved in any other legal proceeding or has been the subject of, or a party to, any order, judgment, decree, finding or sanction (including any order, judgment, decree, finding or sanction issued by an entity such as a stock or commodities exchange) relating to an alleged violation of laws or regulations relating to securities, commodities, financial institutions, insurance companies, mail or wire fraud, or fraud in connection with a business entity, in each case giving the date and a brief description of the conviction, order, judgment, decree, finding, or sanction, the name of the proceeding, and the disposition;

a statement from the candidate that he or she consents to serve on the Board if elected; and

a statement from the person submitting the candidate that he or she is the registered holder of Shares, or, if the shareholder is not the registered holder, a written statement from the record holder of the Shares (usually a broker or bank) verifying that at the time the shareholder submitted the candidate that he or she was a beneficial owner of Shares.

All candidates recommended for nomination to the Board by a shareholder pursuant to the requirements above will be submitted to the CNGC for its review. Any candidates recommended by shareholders in accordance with the above requirements will be evaluated by the CNGC on the same basis as all other director candidates.

See “Submission of Shareholder Proposals” on page 35 for information regarding how shareholders may bring business before Walmart’s annual shareholders’ meetings, either through the shareholder proposal process or pursuant to the advance notice provision of Walmart’s Bylaws.

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Proposal No. 1  Election of Directors

What am I voting on?

You are voting on a proposal to elect the nominees named below as directors of the company. Your proxy holder will vote your Shares for the election of each of the Board’s nominees named below unless you instruct otherwise.

How often are directors elected and how many nominees are up for election?

Walmart’s directors are elected at each annual shareholders’ meeting and hold office until the next annual meeting and until their successors are duly elected and qualified or until their earlier resignation, death, or removal. Each of the director nominees currently serves on the Board and was elected by the shareholders at the 2012 Shareholders’ Meeting, with the exception of Timothy P. Flynn, who was appointed to the Board in July 2012. James W. Breyer, M. Michele Burns, and Arne M. Sorenson, who are currently directors of the company, will not stand for reelection at the 2013 Annual Shareholders’ Meeting.

If the shareholders elect all of the director nominees named in this proxy statement at the 2013 Annual Shareholders’ Meeting, Walmart will have 14 directors. The Board has authority under the Bylaws to fill vacancies and to increase or, upon the occurrence of a vacancy, decrease the Board’s size between annual shareholders’ meetings. The Board has established the size of the Board immediately after the 2013 Annual Shareholders’ Meeting to be 14 directors.

What if a nominee is unwilling or unable to serve as a director?

Each director nominee has previously consented to serve on the Board if elected. If a nominee is unable to serve as a director, your proxy holder may vote for any substitute candidate nominated by the Board.

What qualifications does the Compensation, Nominating and Governance Committee consider when selecting candidates?

In fulfilling its responsibility for identifying and evaluating director candidates, in accordance with Walmart’s Corporate Governance Guidelines, the CNGC selects potential candidates on the basis of:

outstanding achievement in their professional careers;

broad experience and wisdom;

personal and professional integrity;

ability to make independent, analytical inquiries;

experience with and understanding of the business environment;

willingness and ability to devote adequate time to Board duties; and

such other experience, attributes, and skills that the CNGC may determine as qualifying candidates for service on the Board.

Depending on the current composition of the Board and Board committees and the company’s current needs and business priorities, the CNGC may also seek director candidates who possess certain experience, skills, or or other attributes, including in the following areas:

leadership;

technology and e-commerce;

global or international business;

finance, accounting, or financial reporting;

retail;

legal;

marketing or brand management; and

public relations or advertising.

The CNGC also considers whether a potential candidate satisfies the independence and other requirements for service on the Board, as set forth in the NYSE Listed Company Rules, the SEC’s rules, and other applicable laws, rules, or regulations. Additional information regarding director qualifications and the nomination process for director candidates is set forth in the CNGC’s charter and our Corporate Governance Guidelines.

Does the Board consider diversity in the nomination process?

Yes. As provided in our company’s Corporate Governance Guidelines, the Board is committed to diversified membership. The Board will not discriminate on the basis of race, color, national origin, gender, sexual orientation, religion, or disability in selecting nominees. Diversity and inclusion are values embedded into Walmart’s culture and fundamental to its business. In keeping with those values, when assessing a candidate, the CNGC and the Board consider the different viewpoints and experiences that a candidate could bring to the Board and how those viewpoints and experiences could enhance the Board’s effectiveness in the execution of its responsibilities. In addition, the Board assesses the diversity of the Board and Board committees as a part of its annual self-evaluation process.

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Who are the 2013 director nominees?

The following candidates for election as directors at the 2013 Annual Shareholders’ Meeting have been nominated by the Board based on the recommendation of the CNGC. The information set forth below includes, with respect to each nominee, his or her age, principal occupation and employment during the past five years, the year in which he or she first became a director of Walmart, and directorships of other public companies held by each nominee during the past five years.

In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes, and skills that led the Board to conclude that he or she should serve as a director, our Board believes that each of our director nominees has demonstrated the qualifications described above under “What qualifications does the Compensation, Nominating and Governance Committee consider when selecting candidates?".

The Board recommends that shareholders vote FOR each of the nominees named below for election to the Board.


Aida M. Alvarez

Joined the Board: 2006

Age: 63

Board Committee: Audit

Other Current Public Company Directorships: UnionBanCal Corporation

Ms. Alvarez is the former Administrator of the U.S. Small Business Administration and was a member of President Clinton’s Cabinet from 1997 to 2001. She was the founding Director of the Office of Federal Housing Enterprise Oversight (the “OFHEO”) from 1993 to 1997. Ms. Alvarez was a vice president in public finance at First Boston Corporation and Bear Stearns & Co., Inc. prior to 1993. She previously served as the Chair of the Latino Community Foundation of San Francisco and has served as a director of UnionBanCal Corporation and Union Bank, N.A. since 2004, and of Progress Financial Corporation since 2011. Ms. Alvarez has been a member of the Board since 2006.

Skills and Qualifications:

Ms. Alvarez’s qualifications to serve on the Board include her expertise in government and executive experience that she gained through her years in President Clinton’s Cabinet and from her executive role at government agencies. As founding Director of the OFHEO, Ms. Alvarez was responsible for leading the agency with financial oversight responsibility for the secondary mortgage market and ensuring the capital adequacy and financial safety and soundness of two government-sponsored enterprises – the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Ms. Alvarez brings to the Board extensive knowledge of the federal government and insight into public policy, as well as leadership experience gained through her directorship of the OFHEO, oversight of the U.S. Small Business Administration and service on boards of directors, including her service on the Board and the Audit Committee. The Board also benefits from Ms. Alvarez’s knowledge of investment banking and finance as a result of her experience as an investment banker.

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James I. Cash, Jr.

Joined the Board: 2006

Age: 65

Board Committees: Audit Commitee; TeCC

Other Current Public Company Directorships: The Chubb Corporation; General Electric Company

Dr. Cash is the James E. Robison Emeritus Professor of Business Administration at Harvard Business School, where he served from July 1976 to October 2003. Dr. Cash served as the Senior Associate Dean and Chairman of HBS Publishing while on the faculty of the Harvard Business School, and also served as Chairman of the MBA Program. While on the faculty of Harvard Business School, Dr. Cash’s research focused on the strategic use of information technology in the service sector, and specifically the development of a performance measurement system for large information technology organizations. Dr. Cash holds an advanced degree in accounting and has been published extensively in accounting and information technology journals. He currently provides management development and consulting services through The Cash Catalyst, LLC, which Dr. Cash formed in 2009. He has served as a director of The Chubb Corporation since 1996 and of General Electric Company since 1997. Dr. Cash has served as a director of a number of other public companies, including Phase Forward Incorporated from October 2003 to May 2009, and Microsoft Corporation from May 2001 to November 2009, and has served on the audit committees of several public companies. He also serves as a director for several private companies. Dr. Cash has been a member of the Board since 2006.

Skills and Qualifications:

Dr. Cash’s qualifications to serve on the Board include his knowledge of management and information technology gained through his years of research, publishing, and teaching on the subject, as well as through his service on the boards of directors of technology companies and his consulting activities. In addition, Dr. Cash provides the Board with financial, accounting, and strategic planning expertise gained through his education, his career in academia, and his service on the boards of directors and audit committees of large multinational public companies in a variety of industries.

Roger C. Corbett

Joined the Board: 2006

Age: 70

Board Committee: SPFC

Other Current Public Company Directorships: Fairfax Media Limited; Mayne Pharma Group Limited; PrimeAg Australia Limited

Mr. Corbett is the retired CEO and Group Managing Director of Woolworths Limited (“Woolworths”), the largest retail company in Australia, where he served from 1990 to 2006. He is a director of The Reserve Bank of Australia and Chairman of PrimeAg Australia Limited (a major Australian farming enterprise). He is the Chairman of Fairfax Media Limited (a major Australian newspaper, magazine, and internet publisher), where he also serves as Chairman of that company’s Nominations Committee and formerly served as Chairman of that company’s Audit and Risk Committee. He also is a director and non-executive Chairman of Mayne Pharma Group Limited, an Australian specialty pharmaceutical company (which recently purchased Metrics, Inc., a pharmaceutical company in North Carolina), and a former member of the Prime Minister’s Community Business Partnership. Mr. Corbett is a Member of the Australian Indigenous Chamber of Commerce Advisory Board and a former founding director of Outback Stores, a commercial venture supported by the government to provide retail facilities for communities in remote Australia. He is a member of the Advisory Council of the Australian Graduate School of Management for the University of New South Wales, and is also the former Chairman of CIES Food Business Forum (France). Mr. Corbett is also Chairman of the Salvation Army Advisory Board, is the former Chairman of the Sydney Children’s Hospitals Network (Randwick & Westmead) Advisory Board, is a member of the Dean’s Advisory Group of the Faculty of Medicine at the University of Sydney, and a member of the University of New South Wales Centre for Healthy Brain Ageing Advisory Board. Mr. Corbett has been a member of the Board since 2006.

Skills and Qualifications:

Mr. Corbett’s qualifications to serve on the Board include his extensive knowledge of the retail industry and his understanding of financial, operational, and strategic issues facing large retail companies gained through his experience as a CEO of a major retail company and his more than 40 years of leadership experience in the retail industry. Mr. Corbett also contributes his demonstrated leadership and strategic planning experience gained as the CEO of a publicly traded retailer and through his service on the boards of directors of various for-profit and non-profit organizations, including his service on the Board and the SPFC. In addition, Mr. Corbett brings to the Board an international perspective and understanding of international markets.

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Douglas N. Daft

Joined the Board: 2005

Age: 70

Board Committee: CNGC

Other Current Public Company Directorships: None

Mr. Daft is the retired Chairman and CEO of The Coca-Cola Company, a beverage manufacturer, where he served in that capacity from February 2000 until May 2004 and in various other capacities, including responsibility for various international markets, since 1969. Mr. Daft served as a director of The McGraw-Hill Companies, Inc. from 2003 to April 2012, Green Mountain Coffee Roasters, Inc. from December 2009 to May 2012, and Sistema-Hals from September 2006 until December 2009. Among additional endeavors, Mr. Daft is a member of the European Advisory Council for N.M. Rothschild & Sons Limited and a member of the advisory boards of Longreach, Inc., Tisbury Capital, and Thomas H. Lee Partners. Mr. Daft has been a member of the Board since 2005.

Skills and Qualifications:

Mr. Daft’s qualifications to serve on the Board include his international business leadership experience gained through his service as Chairman and CEO of a major global public company. Through his service at The Coca-Cola Company, Mr. Daft brings to the Board extensive expertise in brand management, marketing, finance, strategic planning, and overseeing the operations of a global corporation. In addition, through his years of service on the boards of several large companies in a variety of industries, including his service on the Board and the CNGC, Mr. Daft provides diverse and valuable corporate governance, finance, operational, and strategic expertise to the Board.

Michael T. Duke

Joined the Board: 2008

Age: 63

Board Committees: Executive Committee; Global Compensation Committee

Other Current Public Company Directorships: None

Mr. Duke is the President and CEO of Walmart and has served in that position since February 1, 2009. Prior to this appointment, he held other positions with Walmart since joining our company in July 1995, including Vice Chairman with responsibility for Walmart International beginning in September 2005 and Executive Vice President and President and CEO of Walmart U.S. beginning in April 2003. Mr. Duke serves on the board of directors of The Consumer Goods Forum, the executive committee of the Business Roundtable, and the executive board of Conservation International’s Center for Environmental Leadership in Business. He also serves on the board of advisors for the University of Arkansas and the advisory board of the Tsinghua University School of Economics and Management in Beijing, China. Mr. Duke has been a member of the Board since November 2008.

Skills and Qualifications:

Mr. Duke’s qualifications to serve on the Board include his decades of experience in the retail industry, his years of executive leadership experience across multiple operating divisions of our company, his knowledge of international markets and international retailing gained through his oversight of our International division, and his expertise in corporate strategy, development, and execution.

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Timothy P. Flynn

Joined the Board: 2012

Age: 56

Board Committee: Audit Committee

Other Current Public Company Directorships: JPMorgan Chase & Co.

Mr. Flynn is the retired Chairman of KPMG International (“KPMG”), a professional services firm, where he served in that capacity from 2007 to October 2011. He previously served as Chairman from 2005 to 2010 and Chief Executive Officer from 2005 to 2008 of KPMG LLP in the U.S., the largest member firm of KPMG International. Mr. Flynn serves as a member of the board of directors of JPMorgan Chase & Co. and as a member of the board of trustees of the University of St. Thomas, St. Paul, Minnesota. He has previously served as trustee of the Financial Accounting Standards Board, a member of the World Economic Forum’s International Business Council, and was a founding member of The Prince of Wales’ International Integrated Reporting Committee. Mr. Flynn has been a member of the Board since 2012.

Skills and Qualifications:

Mr. Flynn’s qualifications to serve on the Board include his extensive experience in risk management, financial services, financial reporting, and accounting gained from his 32 years at KPMG International and its predecessors. Through his experience at KPMG, Mr. Flynn brings to the Board extensive experience in global business leadership, accounting, auditing, risk management, and regulatory affairs.

Marissa A. Mayer

Joined the Board: 2012

Age: 37

Board Committees: SPFC; TeCC

Other Current Public Company Directorships: Yahoo! Inc.

Ms. Mayer is President and Chief Executive Officer and a member of the board of directors of Yahoo! Inc. (“Yahoo!”), a digital media company, positions she has held since July 2012. Prior to assuming her role at Yahoo!, Ms. Mayer was the Vice President of Local and Maps for Google Inc. (“Google”) beginning in 2010, where she led the product management and engineering efforts of Google’s local, mobile, and location-based products, including Google Maps, Google Maps for Mobile, Local Search, Google Earth, and Street View. Ms. Mayer served in a variety of other capacities after joining Google as its first female engineer in 1999, and was responsible for launching hundreds of products and features during that time. Concurrently with her work at Google, Ms. Mayer taught introductory computer programming classes at Stanford University. Ms. Mayer holds a bachelor’s degree in symbolic systems and a master’s degree in computer science from Stanford University. Ms. Mayer serves on the boards of the San Francisco Museum of Modern Art, the San Francisco Ballet, and the New York City Ballet. Ms. Mayer has served on the Board since 2012.

Skills and Qualifications:

Ms. Mayer’s qualifications to serve on the Board include her extensive expertise and insight into the technology and consumer internet industries. Through her experience at Yahoo! and Google, Ms. Mayer brings to the Board long-term experience in internet product development, engineering, and brand management. In addition, the Board benefits from Ms. Mayer’s expertise in governance and strategic planning gained through her experience in her positions at Yahoo! and the boards of numerous non-profit organizations.

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Gregory B. Penner+

Joined the Board: 2008

Age: 43

Board Committees: TeCC; Global Compensation Committee

Other Current Public Company Directorships: Baidu, Inc.; Hyatt Hotels Corporation

Mr. Penner has been a General Partner of Madrone Capital Partners (“Madrone”), an investment management firm, since 2005. From 2002 to 2005, he served as Walmart’s Senior Vice President and CFO - Japan. Before serving in that role, Mr. Penner held the position of Senior Vice President of Finance and Strategy for Walmart.com. Prior to working for Walmart, Mr. Penner was a General Partner at Peninsula Capital, an early stage venture capital fund, and a financial analyst for Goldman, Sachs & Co. Mr. Penner has been a member of the board of directors of Baidu, Inc. since 2004 and of Hyatt Hotels Corporation since 2007. He also serves on the boards of directors of eHarmony, Inc. and Castleton Commodities International, LLC. Mr. Penner has been a member of the Board since 2008.

Skills and Qualifications:

Mr. Penner’s qualifications to serve on the Board include his knowledge of international business, particularly in Asia, gained through his former service as CFO of Walmart’s operations in Japan and his service on the boards of directors of Baidu, Inc. and 99Bill Corporation (from 2005 to 2012), both of which are based in China. Mr. Penner also brings technology expertise to the Board gained through his service with Walmart.com and as a director of various technology companies, including Baidu, Inc. and 99Bill Corporation. The Board also benefits from Mr. Penner’s expertise in strategic planning, finance, and investment matters gained through his leadership of Madrone, his business leadership experience, and his service on the boards of directors of public and private companies in a variety of industries, including the Board.

Steven S Reinemund

Joined the Board: 2010

Age: 65

Board Committee: CNGC

Other Current Public Company Directorships: Exxon Mobil Corporation; American Express Company; Marriott International, Inc.

Mr. Reinemund is the Dean of Business and Professor of Leadership and Strategy at Wake Forest University, positions he has held since July 2008. Prior to joining the faculty of Wake Forest University, Mr. Reinemund had a distinguished 23-year career with PepsiCo, Inc. (“PepsiCo”), where he served as that company’s Chairman of the Board from October 2006 to May 2007, and Chairman and CEO from May 2001 to October 2006. Prior to becoming Chairman and CEO, Mr. Reinemund was PepsiCo’s President and Chief Operating Officer from 1999 to 2001 and Chairman and CEO of Frito-Lay’s worldwide operations from 1996 to 1999. Mr. Reinemund has served as a director of Exxon Mobil Corporation, American Express Company, and Marriott International, Inc., all since 2007. He previously served as a director of Johnson & Johnson from 2003 to 2008. Mr. Reinemund is also a member of the board of trustees for The Cooper Institute. Mr. Reinemund has been a member of the Board since 2010.

Skills and Qualifications:

Mr. Reinemund’s qualifications to serve on the Board include his international business leadership experience gained through his service as Chairman and CEO of a major global public company. Through his service at PepsiCo, Mr. Reinemund brings to the Board extensive expertise in brand management, marketing, finance, strategic planning, and overseeing the operations of a global corporation. In addition, through his service as dean of a prominent business school and on the boards of several large companies in a variety of industries, including his service on the Board and the CNGC, Mr. Reinemund is able to provide considerable corporate governance, finance, operational, and strategic expertise to the Board.




+ Gregory B. Penner is the son-in-law of S. Robson Walton.

  2013 Proxy Statement   21


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H. Lee Scott, Jr.

Joined the Board: 1999

Age: 64

Board Committee: SPFC

Other Current Public Company Directorships: None

Mr. Scott was Walmart’s President and CEO from January 2000 through his retirement from that position on January 31, 2009. Mr. Scott served as an Executive Officer of Walmart and as the Chairman of the Executive Committee of the Board until January 31, 2011, when he retired from our company. Prior to serving as President and CEO of Walmart, he held other positions with Walmart since joining our company in September 1979, including Vice Chairman and Chief Operating Officer from January 1999 to January 2000, and Executive Vice President and President and CEO, Walmart U.S. from January 1998 to January 1999. Mr. Scott served as a director of The Goldman Sachs Group, Inc. from May 2010 to May 2011. Mr. Scott serves as a director of several privately-held companies and on the advisory board of the Tsinghua University School of Economics and Management in Beijing, China. He has been a member of the Board since 1999.

Skills and Qualifications:

Mr. Scott’s qualifications to serve on the Board include his extensive knowledge of the global retail industry gained through his more than 30 years of leadership experience at Walmart, including nine years as our company’s CEO, as well as his in-depth knowledge of our company, expertise in corporate strategy, and organizational acumen. In addition, through his service on the Board and his service on other boards of directors, Mr. Scott provides considerable operational, strategic planning, and leadership experience to the Board.

Jim C. Walton*

Joined the Board: 2005

Age: 64

Board Committee: SPFC

Other Current Public Company Directorships: None

Mr. Walton is the Chairman and CEO of Arvest Bank Group, Inc., a group of banks operating in the states of Arkansas, Kansas, Missouri, and Oklahoma. Mr. Walton also serves as Chairman of Community Publishers, Inc., which operates newspapers in Arkansas, Missouri, and Oklahoma. Mr. Walton has been a member of the Board since 2005.

Skills and Qualifications:

Mr. Walton’s qualifications to serve on the Board include his banking and investment expertise. Mr. Walton also brings to the Board his executive leadership, strategic planning, and management experience gained through his leadership positions at the companies described above, as well as his knowledge of our company and its operations gained through his service on the Board and the SPFC.




* S. Robson Walton and Jim C. Walton are brothers.

  2013 Proxy Statement   22


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S. Robson Walton*+

Joined the Board: 1978

Age: 68

Board Committees: Executive Committee; Global Compensation Committee

Other Current Public Company Directorships: None

Mr. Walton is the Chairman of Walmart and has been a member of the Board since 1978. He joined our company in 1969 and, prior to becoming Chairman in 1992, held a variety of positions with our company, including Senior Vice President, Corporate Secretary, General Counsel, and Vice Chairman. Before joining Walmart, Mr. Walton was in private law practice as a partner with the law firm of Conner & Winters in Tulsa, Oklahoma. In addition to his duties at Walmart, Mr. Walton is involved with a number of non-profit and educational organizations, including Conservation International, where he serves as Chairman of that organization’s executive committee, and the College of Wooster, where he is an Emeritus Life Trustee for the college.

Skills and Qualifications:

Mr. Walton’s qualifications to serve on the Board include his decades of leadership experience with Walmart, as well as his in-depth knowledge of our company, its history and the retail industry, all gained through 35 years of service on the Board and more than 20 years of service as our company’s Chairman. The Board also benefits from Mr. Walton’s expertise in corporate governance and strategic planning gained through his service on the boards and other governing entities of numerous non-profit organizations, as well as his legal and corporate governance expertise gained as Walmart’s Corporate Secretary and General Counsel and as an attorney in private practice.

Christopher J. Williams

Joined the Board: 2004

Age: 55

Board Committees: Audit Committee; Executive Committee

Other Current Public Company Directorships: Caesars Entertainment Corporation

Mr. Williams is the Chairman and CEO of The Williams Capital Group, L.P., an investment bank. Since 2003, he has also served as the Chairman and CEO of Williams Capital Management, LLC, an investment management firm. Mr. Williams also serves as a trustee of the Williams Capital Management Trust, a registered investment company. He has served as a director of Caesars Entertainment Corporation (formerly Harrah’s Entertainment, Inc.) from November 2003 to January 2008, and from April 2008 to the present. He has also served on the board of directors of Cox Enterprises, Inc. since 2012 and is a member of the boards of several educational institutions and non-profit organizations, including the Lincoln Center for the Performing Arts and the Tuck School of Business at Dartmouth College. Mr. Williams has been a member of the Board since 2004.

Skills and Qualifications:

Mr. Williams’ qualifications to serve on the Board include his experience and expertise in investment banking and corporate finance gained through his years in the investment banking industry. The Board also benefits from Mr. Williams’ executive management and leadership experience as the Chairman and CEO of an investment bank and investment management firm. In addition, through his service on various public company and non-profit boards, including his service on the Board and the Audit Committee, Mr. Williams brings diverse and valuable financial, accounting, management and strategic expertise to the Board.




* S. Robson Walton and Jim C. Walton are brothers.

+ Gregory B. Penner is the son-in-law of S. Robson Walton.

  2013 Proxy Statement   23


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Linda S. Wolf

Joined the Board: 2005

Age: 65

Board Committees: CNGC; TeCC

Other Current Public Company Directorships: Innerworkings, Inc.

Ms. Wolf is the former Chairman and CEO of Leo Burnett Worldwide, Inc. (“Leo Burnett”), a global advertising agency and division of Publicis Groupe S.A. Ms. Wolf served in various positions with Leo Burnett and its predecessors from 1978 to April 2005, including as Chairman and CEO from January 2001 until April 2005. She serves as a trustee for investment funds advised by the Janus Capital Group Inc. and has served on the board of InnerWorkings, Inc., a provider of managed print and promotional procurement solutions, since November 2006, and Wrapports, LLC since 2012. Among other endeavors, Ms. Wolf serves on the boards of the Field Museum, Children’s Memorial Hospital, and The Chicago Council on Global Affairs. Ms. Wolf has been a member of the Board since 2005.

Skills and Qualifications:

Ms. Wolf’s qualifications to serve on the Board include her brand management and marketing experience gained through her years at Leo Burnett. The Board also benefits from her executive leadership and management experience gained as a CEO. Ms. Wolf, through her service on a variety of public company and non-profit boards, including her service on the Board and the CNGC, also provides considerable governance, operational, investment, and strategic planning acumen to the Board.

Are there any directors not standing for reelection?

Yes. James W. Breyer, M. Michele Burns, and Arne M. Sorenson, each of whom currently serve on the Board, will rotate off the Board at the conclusion of their current term in accordance with our Corporate Governance Guidelines and will not stand for reelection at the 2013 Annual Shareholders’ Meeting. Mr. Breyer and Ms. Burns have each served on the Board for more than a decade, and Mr. Sorenson is departing the Board after five years of service to focus on his increased responsibilities as President and CEO of Marriott International, Inc. Included below is information regarding each of Mr. Breyer’s, Ms. Burns’, and Mr. Sorenson’s specific experience, qualifications, attributes, and skills that led the Board to conclude that he or she should serve as a director.

James W. Breyer

Joined the Board: 2001

Age: 51

Board Committees: SPFC; TeCC

Other Current Public Company Directorships: Dell, Inc.; Facebook, Inc.; News Corporation; Model N, Inc.

Mr. Breyer has been a Partner of Accel Partners, a venture capital firm, since 1987. Mr. Breyer is also the founder and has been the Chief Executive Officer of Breyer Capital, an investment firm, since July 2006. Mr. Breyer is also a co-founder and has been co-lead on the strategic investment committee since inception of the IDG-Accel China Funds. In addition to serving on our Board, Mr. Breyer currently serves as a member of the boards of directors of Dell, Inc., Facebook, Inc., News Corporation, and Model N, Inc.. Mr. Breyer previously served as a member of the board of directors of Brightcove Inc. from January 2007 to January 2013, Marvel Entertainment Inc. from June 2006 to December 2009, Prosper Marketplace Inc. from April 2005 to June 2012, and RealNetworks, Inc. from October 1995 to June 2008. Mr. Breyer holds a B.S. in interdisciplinary studies from Stanford University and an M.B.A. from Harvard University. Mr. Breyer has been a member of the Board since 2001.

Skills and Qualifications:

Mr. Breyer’s qualifications to serve on the Board include his experience gained through his venture capital activities, including his partnership in Accel Partners, through which he brings to the Board insight into strategic planning, investment expertise, and entrepreneurship. The Board also benefits from Mr. Breyer’s extensive knowledge of the technology industry and insight into existing and emerging technologies relevant to Walmart’s business. In addition, through his years of service on the boards of public and private companies and other organizations, including his service on the Board and the SPFC, Mr. Breyer provides the Board with diverse and valuable financial, operational, and leadership expertise.

  2013 Proxy Statement   24


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M. Michele Burns

Joined the Board: 2003

Age: 55

Board Committee: SPFC

Other Current Public Company Directorships: The Goldman Sachs Group, Inc.; Cisco, Inc.

Ms. Burns is the Chief Executive Officer of the Retirement Policy Center sponsored by Marsh & McLennan Companies, Inc. (“MMC”), a global professional services and consulting firm, a position she has held since October 2011. Prior to that role, Ms. Burns was the Chairman and CEO of Mercer Inc. (“Mercer”), a subsidiary of MMC, from September 2006 until October 2011. She joined MMC in March 2006 and served as its Executive Vice President and CFO until September 2006. She is the former Executive Vice President, CFO, and Chief Restructuring Officer of Mirant Corporation, an energy company, where she served from May 2004 to January 2006. She served as the Executive Vice President and CFO of Delta Air Lines, Inc. (“Delta”), an air carrier, from August 2000 through April 2004. Prior to joining Delta, Ms. Burns was a partner at Arthur Andersen LLP. She has also served as a director of The Goldman Sachs Group, Inc. since October 2011 and Cisco Systems, Inc. since 2003. Ms. Burns has been a member of the Board since 2003.

Skills and Qualifications:

As the Chief Financial Officer of several global public companies, Ms. Burns brings to the Board substantial experience in accounting and the review and preparation of financial statements. In addition, as the former Chief Executive Officer of Mercer, Ms. Burns brings to our Board her experience in human capital management and strategic consulting, which assists our Board in its oversight of our company’s strategy. Through her service on the boards of directors and board committees of other public companies and not-for-profit entities, Ms. Burns has developed additional leadership and corporate governance expertise.

Arne M. Sorenson

Joined the Board: 2008

Age: 54

Board Committee: Audit Committee

Other Current Public Company Directorships: Marriott International, Inc.

Mr. Sorenson is the President and Chief Executive Officer of Marriott International, Inc. (“Marriott”). Previously, Mr. Sorenson was President and Chief Operating Officer of Marriott from May 2009 to March 2012, and has served as a member of the Marriott board of directors since February 2011. Mr. Sorenson served as Marriott’s Executive Vice President and CFO from 1998 to 2009. He also previously held the additional title of Marriott’s President, Continental European Lodging, in which capacity he was responsible for lodging operations and development in the continental European region. Mr. Sorenson joined Marriott in 1996 as Senior Vice President of Business Development. He also co-chairs Marriott’s Green Council, whose mission is to integrate environmental sustainability into Marriott’s business strategy. Prior to joining Marriott, he was a partner in the law firm of Latham & Watkins in Washington, D.C. Mr. Sorenson also serves as a member of the Board of Regents of Luther College. He has been a member of the Board since 2008.

Skills and Qualifications:

Mr. Sorenson’s qualifications to serve on the Board include his expertise in executive management, strategic planning, and sustainability gained as a senior executive and director of a global corporation. Mr. Sorenson also brings to the Board his expertise in corporate finance, financial reporting, and accounting gained as the CFO of a large public company. The Board also benefits from Mr. Sorenson’s legal and transactional experience as a corporate lawyer, as well as his knowledge of our company and its operations gained through his service on the Board and the Audit Committee.

  2013 Proxy Statement   25


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Compensation of the Directors

As described below, the base compensation for Non-Management Directors upon their election to the Board on June 1, 2012 consisted of a Share award and an annual retainer. During fiscal 2013, Michael T. Duke and S. Robson Walton received compensation only for their services as Executive Officers of our company and not in their capacities as directors.

For service on the Board for the term beginning upon election at the 2012 Annual Shareholders’ Meeting on June 1, 2012, each Non-Management Director received an annual equity award of Shares with a market value of $175,000, rounded to the nearest whole share. These Shares were awarded on June 1, 2012. The number of Shares awarded was determined by dividing the dollar amount of the award by the closing price of the Shares on the NYSE on the date of the grant. This annual equity award was paid directly in Shares or deferred in stock units, as elected by each Non-Management Director. In addition, each Non-Management Director elected to the Board at the 2012 Annual Shareholders’ Meeting was entitled to receive an annual retainer of $60,000, payable in arrears in equal quarterly installments for the Board term that commenced upon election at the 2012 Annual Shareholders’ Meeting. This annual retainer could be received in the form of cash, in Shares (determined by dividing the dollar amount of the quarterly installment by the closing price of the Shares on the NYSE on the payment date of the quarterly installment) rounded to the nearest whole share, deferred in stock units, or deferred into an interest-credited account, as elected by each Non-Management Director.

The Non-Management Directors who serve as the chair of a Board committee receive an additional retainer for the additional time required for Board committee business. For the Board term commencing on the date of the 2012 Annual Shareholders’ Meeting, the retainer for the chairs of the Audit Committee and CNGC was $25,000, and the retainer for the chairs of the SPFC and TeCC was $20,000. In addition, Non-Management Directors who serve on more than one standing Board committee receive an additional $15,000 annually. Further, the director appointed by the Board to serve as the presiding director of executive sessions of the Non-Management Directors and Independent Directors receives an additional $20,000 annually. These additional fees are payable in arrears in equal quarterly installments, and as noted above, may be taken in cash, in Shares (determined by dividing the dollar value of the amount of the additional fees by the closing price of the Shares on the NYSE on the payment date of the quarterly installment to such directors) rounded to the nearest whole share, deferred in stock units, or deferred into an interest-credited account, as elected by each Non-Management Director. Finally, each Non-Management Director who attends in person a Board meeting held at a location that requires intercontinental travel from his or her residence is paid a $4,000 meeting attendance fee. This additional fee is intended to compensate our Non-Management Directors for the additional time required to travel intercontinentally, and may be taken in any of the forms described in the preceding sentence, as elected by each Non-Management Director.

Since November 2011, the Audit Committee has been conducting an internal investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) and other alleged crimes or misconduct in connection with foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V. (“Walmex”), and whether prior allegations of such violations and/or misconduct were appropriately handled by Walmart. The Audit Committee and Walmart have engaged outside counsel from a number of law firms and other advisors who are assisting in the on-going investigation of these matters. This investigation resulted in a significant increase in the workload of the Audit Committee members during fiscal 2013, and during fiscal 2013, the Audit Committee conducted seven additional meetings related to the investigation, and Audit Committee members received frequent updates via conference calls and other means of communication with outside counsel and other advisors related to the investigation. In November 2012, the CNGC and the Board approved an additional fee in the amount of $60,000 payable to each Audit Committee member other than the Audit Committee Chair, and an additional fee in the amount of $85,000 payable to the Audit Committee Chair. These additional fees were determined by calculating the number of hours worked by the Audit Committee members during the regularly scheduled meetings as well as the additional hours required of the committee members due to the investigation. It was determined that during fiscal 2013 the Audit Committee spent approximately twice the amount of time normally required for standard Audit Committee functions. Therefore, the decision was made to double the cash portion of the annual retainer for each Audit Committee member as well as to double the Audit Committee Chair fee for the chair of the Audit Committee. The CNGC and Board approved this additional fee in light of the significant additional time and effort required of the Audit Committee members related to the investigation.

The Board has adopted stock ownership guidelines for the Non-Management Directors. Each Non-Management Director must own, within five years of his or her initial election or appointment to the Board, an amount of Shares, restricted stock, or stock units having a value equal to five times the annual retainer component of the Non-Management Director’s compensation approved by the Board in the year the director was initially elected or appointed. All Non-Management Directors who have reached the five-year compliance date own Shares having a value greater than five times the annual retainer component.

Pursuant to the CNGC’s charter, director compensation for the Non-Management Directors is reviewed at least annually by the CNGC, which recommends to the Board the annual compensation for those directors. The compensation paid to the directors during fiscal 2013 is described in the table below.

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Director Compensation for Fiscal 2013 (1)

Director

Fees Earned or

Paid in Cash

($) (2)

Stock

Awards

($) (3)

Change in Pension Value

and Nonqualified Deferred

Compensation Earnings

($) (4)

All Other

Compensation

($) (5)

Total

($)

Aida M. Alvarez

124,000

175,019

0

22,339

321,358

James W. Breyer

99,000

175,019

0

1,912

275,931

M. Michele Burns

84,000

175,019

11,556

27,885

298,460

James I. Cash, Jr.

139,000

175,019

0

31,048

345,067

Roger C. Corbett

76,000

175,019

0

49,924

300,943

Douglas N. Daft

64,000

175,019

7,505

20,228

266,752

Timothy P. Flynn

85,761

148,146

0

0

233,907

Marissa A. Mayer

43,681

175,019

0

1,294

219,994

Gregory B. Penner

99,000

175,019

0

0

274,019

Steven S Reinemund

64,000

175,019

0

0

239,019

H. Lee Scott, Jr.

60,000

175,019

0

1,468

236,487

Arne M. Sorenson

124,000

175,019

0

0

299,019

Jim C. Walton

64,000

175,019

0

3,380

242,399

Christopher J. Williams

189,000

175,019

0

23,957

387,976

Linda S. Wolf

104,000

175,019

0

0

279,019

(1)

The table omits the columns for “Option Awards” and “Non-Equity Incentive Plan Compensation” because our company neither issues stock options to, nor provides non-equity incentive compensation for, Non-Management Directors. Michael T. Duke and S. Robson Walton are omitted from this table because they received compensation only as Executive Officers of our company during fiscal 2013 and did not receive any additional compensation for their duties as directors. The compensation for Mr. Duke for fiscal 2013 is disclosed in the Summary Compensation table on page 55. Mr. Walton’s annual salary as Chairman of Walmart is equal to the amount of the annual stock and cash retainer paid to Non-Management Directors, and is therefore $235,000. During fiscal 2013, our company also paid health insurance premiums and made 401(k) Plan contributions for Mr. Duke and Mr. Walton on the same basis as for other Associates. Mr. Duke and Mr. Walton are also eligible to participate in our company’s other benefit plans, such as our medical insurance plan and Stock Purchase Plan, on the same basis as all other Associates.

(2)

This column represents the annual retainer paid to directors, the Board committee chair retainers, the additional payment to certain Non-Management Directors for serving on multiple Board committees, the presiding director retainer, the additional payments to certain directors for attendance at Board meetings that required intercontinental travel from his or her residence, and the additional fee paid to members of the Audit Committee described above.

The following directors elected to receive the amounts included in this column in the form of Shares, rounded to the nearest whole share, in lieu of cash:

 

Director

Amount

($)

Number of Shares

Received in Lieu of Cash

 

James W. Breyer

99,000

1,456

Christopher J. Williams

189,000

2,775

 

The following directors elected to defer the receipt of the amounts included in this column, either in the form of cash deposited into an interest-bearing account or in the form of stock units, as shown below:

 

Director

Amount

($)

Form of

Deferral

 

M. Michele Burns

84,000

Cash

Douglas N. Daft

64,000

Cash

Timothy P. Flynn

85,761

Stock Units

Marissa A. Mayer

43,681

Stock Units

Gregory B. Penner

99,000

Stock Units

(3)

Each Non-Management Director elected to the Board at the 2012 Annual Shareholders’ Meeting received a stock award of 2,670 Shares on June 1, 2012. The number of Shares was determined by dividing $175,000 by $65.55, which was the closing price of a Share on the NYSE on the grant date, rounded to the nearest whole share. Upon his appointment to the Board on July 27, 2012, Mr. Flynn received a stock award of 1,988 shares. The number of Shares was determined by dividing $148,151 (a prorated portion of the $175,000 annual stock award value) by $74.52, which was the closing price of a Share on the NYSE on the grant date, rounded to the nearest whole share. Dr. Cash, Mr. Daft, Mr. Flynn, Ms. Mayer, Mr. Penner, Mr. Scott, Mr. Jim C. Walton, and Ms. Wolf deferred the receipt of these Shares until a later date. No current Non-Management Directors held options to purchase Shares as of the end of fiscal 2013. Options held by Mr. Duke at the end of fiscal 2013 are disclosed in the Outstanding Equity Awards at Fiscal 2013 Year-End table below. The options held by Mr. Duke were granted to him in prior years as part of his compensation for service as an Executive Officer of Walmart and not as compensation for serving as a director of our company.

(4)

The amounts in this column represent above-market interest earned on director compensation deferred to an interest-credited account under the Director Compensation Deferral Plan, as elected by the director. The interest rate on the interest-bearing account is set by the Director Compensation Deferral Plan based on the ten-year United States Treasury note rate on the first day of January plus 2.70 percent. This rate was 4.67 percent for the calendar year ended December 31, 2012, and decreased to 4.56 percent for the calendar year ending December 31, 2013.

(5)

The amounts in this column include tax gross-ups paid for fiscal 2013 relating to income attributable to spousal travel expenses, meals, and related activities in connection with certain Board meetings during fiscal 2013. For the following directors, this column also includes the aggregate cost of such spousal travel expenses, meals, and related activities in the following amounts:

 

Director

Amount

($)

 

Aida M. Alvarez

13,962

M. Michele Burns

17,576

James I. Cash, Jr.

19,842

Roger C. Corbett

38,156

Douglas N. Daft

13,978

Christopher J. Williams

14,250

 

The cost of any such spousal travel expenses, meals, and related activities for each of the other directors is omitted from this column because the total incremental cost for such benefits for each director was less than $10,000.

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Director Independence

A majority of our directors must be independent in accordance with the independence requirements set forth in the NYSE Listed Company Rules. In addition, the Audit Committee and the CNGC must be composed solely of independent directors to comply with the NYSE Listed Company Rules and the SEC’s rules. The NYSE Listed Company Rules define specific relationships that disqualify directors from being independent and further require that for a director to qualify as independent, the Board must affirmatively determine that the director has no material relationship with our company. The SEC’s rules provide separate definitions of independence for members of audit committees and compensation committees.

The Board has determined that the following directors are Independent Directors under the independence standards set forth in the NYSE Listed Company Rules: Aida M. Alvarez, James W. Breyer, M. Michele Burns, James I. Cash, Jr., Roger C. Corbett, Douglas N. Daft, Timothy P. Flynn, Marissa A. Mayer, Steven S Reinemund, Arne M. Sorenson, Christopher J. Williams, and Linda S. Wolf. The Board has also determined that the currently serving members of the Audit Committee and the CNGC meet the independence standards for membership on those Board committees set forth in the NYSE Listed Company Rules and the SEC’s rules.

In making these determinations, the Board found that the current Independent Directors do not currently have a material or other disqualifying relationship with Walmart and that the currently serving Independent Directors have not had during the last three years: (i) any of the disqualifying relationships set forth in the NYSE Listed Company Rules referred to above; or (ii) any other material relationship with our company that would compromise his or her independence. The CNGC recommended that the Board make these determinations.

In April 2013, the Board and the CNGC reviewed directors’ responses to a questionnaire asking about their relationships with the company (and their immediate family members’ relationships with the company) and other potential conflicts of interest, as well as material provided by management related to transactions, relationships, or arrangements between the company and the directors or parties related to the directors. The Board made its determination as to whether any relationship between a director and Walmart is a material relationship based on the facts and circumstances of the relationship, the amounts involved in the relationship, the director’s interest in such relationship, if any, and such other factors as the Board, in its judgment, deemed appropriate.

In making its determination as to the independence of our Independent Directors, the Board considered certain types of relationships as noted below:

the Walmart director was an officer of a Walmart vendor or service provider: Mr. Sorenson and Ms. Mayer;

the Walmart director was also a director or trustee of a Walmart vendor or service provider: Mr. Breyer, Dr. Cash, Mr. Daft, Mr. Flynn, Ms. Mayer, Mr. Reinemund, Mr. Sorenson, and Mr. Williams;

the Walmart director held, directly or indirectly, more than a 1 percent equity interest in a Walmart vendor or service provider: Mr. Breyer;

the Walmart director was the member of a board of trustees or advisory board of or held a position in a not-for-profit institution, entity, association or organization to which Walmart made or committed to make donations: Ms. Alvarez, Mr. Breyer, and Mr. Reinemund; and

immediate family members of the Walmart director are employed by Walmart vendors or service providers: Ms. Alvarez and Mr. Reinemund.

Certain of these relationships are further described under “Related Person Transactions” on page 38. In addition, in making their independence determinations, the Board and the CNGC considered that each of the directors, entities with which she or he is affiliated, or one or more members of her or his immediate family, have in the past purchased property or services from Walmart in retail transactions, all of which transactions were on terms no better than those generally available to Associates at the time of the transactions. All of the other relationships and transactions of the types described above were entered into at arm’s length in the normal course of business and, to the extent they are commercial relationships, have standard commercial terms.

In their determination as to Mr. Breyer’s independence, the Board and the CNGC considered that, as a partner in Accel Partners and his position at certain related entities (the “Accel Funds”), Mr. Breyer may be deemed to have an indirect interest in certain companies that engaged in transactions with Walmart in fiscal 2013. In particular, the Board and the CNGC considered Mr. Breyer’s interest in Facebook, Inc. (“Facebook”). As a result of his relationships with certain Accel Funds, Mr. Breyer was attributed beneficial ownership of approximately 11.2% of Facebook prior to May 22, 2012, the date on which Facebook’s initial public offering was consummated, and approximately 1.3% of Facebook immediately after the consummation of that offering. Mr. Breyer’s beneficial ownership of Facebook has decreased significantly since May 22, 2012. At no time has Mr. Breyer’s aggregate direct and indirect economic interests in Facebook stock been 5% or more of the total economic interests in Facebook. Mr. Breyer also serves as a member of the board of directors of Facebook. In fiscal 2013, Walmart paid Facebook for display advertising in amounts that represent less than 1% of Facebook’s 2012 revenues. Walmart anticipates that it will continue to purchase advertising from Facebook during fiscal 2013. Mr. Breyer has not been and is not currently involved in any transaction between Walmart and Facebook. Based on the Board’s consideration of Mr. Breyer’s direct ownership of Facebook stock, the Board’s understanding of Mr. Breyer’s indirect interest in Facebook through the Accel Funds, and the fact that Mr. Breyer is not involved in any transaction between Walmart and Facebook, the Board determined that Mr. Breyer’s interest in Facebook does not give rise to a material relationship with Walmart that would impair Mr. Breyer’s independence.

In their determination of Ms. Mayer’s independence, the Board and the CNGC considered Ms. Mayer’s position as an officer of Google, Inc. (“Google”) through July 17, 2012. During fiscal 2013, Walmart paid Google for advertising space on Google’s websites and those payments represented less than 1% of Google’s 2012 revenues. Walmart anticipates that it will purchase advertising space on Google’s websites during fiscal 2014. Ms. Mayer was not involved in any transaction between Walmart and Google. Based on the Board’s consideration of Ms. Mayer’s position as an officer of Google for a portion of fiscal 2013, the fact that Ms. Mayer was not involved in any transaction between Walmart and Google, and other factors mentioned above, the Board determined that Ms. Mayer’s interest in Google did not give rise to a material relationship that would impair Ms. Mayer’s independence.

In their determination of Ms. Alvarez’s independence, the Board and the CNGC considered Ms. Alvarez’s husband’s position as an officer of Kaiser Permanente (“Kaiser”). In fiscal 2013, Walmart paid Kaiser for health insurance benefits in amounts representing less than 1% of Kaiser’s 2012 revenues. Walmart anticipates that it will continue to make payments to Kaiser for health insurance benefits during fiscal 2014. Ms. Alvarez’s husband has not been and is not currently involved in any transaction between Walmart and Kaiser. Based on the Board’s consideration of Ms. Alvarez’s husband’s position as an officer of Kaiser, the fact that he is not involved in any transaction between Walmart and Kaiser, and certain other factors mentioned above, the Board determined that Ms. Alvarez’s husband’s interest in Kaiser does not give rise to a material relationship with Walmart that would impair Ms. Alvarez’s independence.

The Board and the CNGC concluded that none of the above relationships or transactions (including all transactions disclosed under “Related Person Transactions” on page 38): (i) constitute disqualifying relationships under the NYSE Listed Company Rules; (ii) otherwise compromise the independence of the named directors; or (iii) otherwise constitute a material relationship between Walmart and the directors.

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Board Meetings

The Board held a total of six meetings during fiscal 2013 to review significant developments affecting our company, engage in strategic planning, and act on matters requiring Board approval. During fiscal 2013, each director attended at least 88 percent of the aggregate number of Board meetings and meetings of Board committees on which he or she served. As a whole, during fiscal 2013, our directors attended approximately 97 percent of the aggregate number of Board meetings and meetings of Board committees on which they served. The Non-Management Directors and Independent Directors meet regularly in executive sessions.

Board Committees

The Board has six standing committees: the Audit Committee; the Compensation, Nominating and Governance Committee; the Executive Committee; the Global Compensation Committee; the Strategic Planning and Finance Committee; and the Technology and eCommerce Committee. As described above, the Board has determined that all of the members of the Audit Committee and the Compensation, Nominating and Governance Committee are independent directors within the meaning of the SEC’s rules and regulations and the listing standards of the NYSE. The Board as a whole and each Board committee conducts a self-evaluation of its performance on an annual basis. The charters for each committee may be found on Walmart’s website at www.stock.walmart.com in the “Corporate Governance” section.

The chart below summarizes the membership of each committee during fiscal 2013.

 

Audit

Committee

CNGC

Executive

Committee

Global

Compensation

Committee

SPFC

TeCC

Aida M. Alvarez (I)

M

 

 

 

 

 

James W. Breyer* (I)

 

 

 

 

M

M

M. Michele Burns* (I)

 

 

 

 

C

 

James I. Cash, Jr. (I)

M

 

 

 

 

M

Roger C. Corbett (I)

 

 

 

 

M

 

Douglas N. Daft (I)

 

M

 

 

 

 

Michael T. Duke

 

 

C

C

 

 

Timothy P. Flynn (I)

M

 

 

 

 

 

Marissa A. Mayer (I)

 

 

 

 

M

M

Gregory B. Penner

 

 

 

M

 

C

Steven S Reinemund (I)

 

M

 

 

 

 

H. Lee Scott, Jr.

 

 

 

 

M

 

Arne M. Sorenson* (I)

M

 

 

 

 

 

Jim C. Walton

 

 

 

 

M

 

S. Robson Walton

 

 

M

M

 

 

Christopher J. Williams (I)

C

 

M

 

 

 

Linda S. Wolf (I)

 

C

 

 

 

M

C = Committee Chair

I = Determined by the Board to be independent under the NYSE and applicable SEC rules and regulations

M = Member of the committee

= Chairman of the Board

= Audit Committee Financial Expert as defined under applicable SEC rules and regulations

= Presiding Director

*

Not standing for reelection at the 2013 Annual Shareholders’ Meeting

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Audit Committee

Roles and responsibilities

Reviews financial reporting policies, procedures, and internal controls

Responsible for the appointment, compensation, and oversight of the independent accountants

Pre-approves audit, audit-related, and non-audit services to be performed by Walmart’s independent accountants

Reviews and approves related-party transactions and other transactions subject to our Transaction Review Policy

Reviews Walmart’s risk management policies and procedures, as well as policies, processes, and procedures regarding compliance with applicable laws and regulations, as well as our Statement of Ethics and Code of Ethics for the CEO and Senior Financial Officers

Oversees internal investigatory matters, including Walmart’s internal investigation into alleged violations of the FCPA and other alleged crimes or misconduct in connection with foreign subsidiaries#

Oversees the development and implementation of Walmart’s enhanced global compliance program

Independence and financial literacy

The Board has determined that the members are “independent” as defined by Section 10A(m)(3) of the Exchange Act and the NYSE Listed Company Rules

The Board has determined that the members are “financially literate” as required by Section 303A.07 of the NYSE Listed Company Rules

Committee members

Christopher J. Williams (C, F, I)

Aida M. Alvarez (I)

James I. Cash, Jr. (F, I)

Timothy P. Flynn (F, I)

Arne M. Sorenson* (F, I)

Number of meetings during fiscal 2013: 15

C = Committee Chair

F = Determined by the Board to be a Audit Committee Financial Expert as defined under applicable SEC rules and regulations

I = Determined by the Board to be independent under the NYSE Listed Company Rules and applicable SEC rules and regulations

*

Not standing for reelection at the 2013 Annual Shareholders’ Meeting

#

For more information on the Audit Committee’s role with respect to the company’s internal FCPA investigation, see “Compensation of the Directors” on page 26 and “The Board’s Role in Risk Oversight” beginning on page 33

Compensation, Nominating and Governance Committee

Roles and responsibilities

In consultation with the CEO, approves the compensation of the Executive Officers other than the CEO, and reviews the compensation of certain other senior officers

Reviews and approves the compensation of the CEO and Chairman

Reviews and makes recommendations to the Board regarding the compensation of the Non-Management Directors

Sets performance measures and goals and verifies the attainment of performance goals under performance-based incentive compensation plans

Reviews compensation and benefits issues

Oversees corporate governance issues

Identifies, evaluates, and recommends candidates to the Board for nomination for election or appointment to the Board

Reviews and makes recommendations to the Board regarding director independence

Reviews and advises management on the company’s social, community and sustainability initiatives

Reviews and advises management on the company’s legislative affairs and public policy engagement

May delegate compensation matters that do not impact Executive Officers to the GCC and ministerial duties to the company’s management

Independence

The Board has determined that the members are “independent” as defined by the NYSE Listed Company Rules and under Section 10C of the Exchange Act and Rule 10C-1 of the SEC

Committee members

Linda S. Wolf (C, I)

Douglas N. Daft (I)

Steven S Reinemund (I)

Number of meetings during fiscal 2013: 7

C = Committee Chair

I = Determined by the Board to be independent under the NYSE Listed Company Rules and applicable SEC rules and regulations

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Executive Committee

Roles and responsibilities

Implements policy decisions of the Board

Acts on the Board’s behalf between Board meetings

Committee members

Michael T. Duke (C)

S. Robson Walton

Christopher J. Williams (I)

Number of meetings during fiscal 2013: 0*

C = Committee Chair

I = Determined by the Board to be independent under the NYSE Listed Company Rules

*

The Executive Committee acted by unanimous written consent 8 times during fiscal 2013.

Global Compensation Committee

Roles and responsibilities

Administers Walmart’s equity and cash incentive compensation plans for Associates who are not directors or Executive Officers

Committee members

Michael T. Duke (C)

S. Robson Walton

Gregory B. Penner

Number of meetings during fiscal 2013: 5

C = Committee Chair

Strategic Planning and Finance Committee

Roles and responsibilities

Reviews and analyzes financial matters and acquisitions and divestiture transactions

Oversees long-range strategic planning

Reviews and recommends a dividend policy to the Board

Reviews the preliminary annual financial plan and annual capital plan to be approved by the Board

Committee members

M. Michele Burns* (C, I)

James W. Breyer* (I)

Roger C. Corbett (I)

Marissa A. Mayer (I)

H. Lee Scott, Jr.

Jim C. Walton

Number of meetings during fiscal 2013: 5

C = Committee Chair

I = Determined by the Board to be independent under the NYSE Listed Company Rules

*

Not standing for reelection at the 2013 Annual Shareholders’ Meeting

Technology and eCommerce Committee

Roles and responsibilities

Reviews matters relating to information technology, eCommerce, and innovation and oversees the integration of  Walmart’s information technology, eCommerce, and innovation efforts with Walmart’s overall strategy

Reviews and provides guidance regarding trends in technology and eCommerce and monitors overall industry trends

Committee members

Gregory B. Penner (C)

James W. Breyer* (I)

James I. Cash, Jr. (I)

Marissa A. Mayer (I)

Linda S. Wolf (I)

Number of meetings during fiscal 2013: 4

C = Committee Chair

I = Determined by the Board to be independent under the NYSE Listed Company Rules

*

Not standing for reelection at the 2013 Annual Shareholders’ Meeting

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CORPORATE GOVERNANCE

Corporate Governance Highlights

The Board is responsible for overseeing the management of the business and affairs of the company in a manner that serves the long-term best interests of our shareholders. The Board is committed to the highest standards of corporate governance and has implemented a variety of effective governance processes and practices to assist the Board and management in fulfilling their responsibilities to the company and our shareholders, including the following.

As described below, each of the standing committees of the Board has a written charter, which clearly sets forth the roles and responsibilities of the committee and which, along with the company’s Corporate Governance Guidelines, provides the overall framework for our corporate governance practices.

Our directors are elected annually and serve one-year terms.

We have a majority vote standard in uncontested elections of directors, and any incumbent directors who do not receive a majority vote must offer their resignation.

A majority of our Board is composed of Independent Directors.

Our Audit Committee and CNGC are composed solely of Independent Directors.

We have separated the roles of the Chairman and CEO of our company for 25 years.

We have an independent presiding director who presides over the executive sessions of our Non-Management Directors, which are held at each Board meeting.

We hold an annual shareholder advisory vote on the compensation of our named executive officers.

We have robust stock ownership guidelines applicable to our directors, Executive Officers, and certain other officers of the company.

The Board and Board committees conduct annual self-evaluations to determine whether they are functioning effectively and to identify areas in which their effectiveness can be enhanced.

The Board and each Board committee have the power to hire independent legal, financial, or other advisors, as they deem necessary, without consulting or obtaining the approval of any officer of the company.

Directors have full and free access to officers and other Associates of the company, as well as to the company’s outside advisors.

The Board recently approved an amendment to the CNGC’s charter giving the CNGC oversight of the company’s legislative affairs and public policy engagement strategy.

The Board annually submits the appointment of the company’s independent accountants to our shareholders for ratification.

The company’s Insider Trading Policy prohibits directors and Executive Officers from using Shares as collateral for margin loans and from engaging in any hedging or other transactions that would eliminate or limit the risks and rewards of Share ownership.

Directors and Executive Officers are prohibited from pledging Shares for non-margin loans without the pre-approval of Walmart’s Corporate Secretary, and any pledged Shares are not considered in determining whether directors or Executive Officers have satisfied our stock ownership guidelines.

The Board has not adopted a “poison pill” or similar shareholder rights plan.

Board and Committee Governing Documents

The Board has adopted Corporate Governance Guidelines and charters for each of the standing Board committees. Our Corporate Governance Guidelines address, among other topics:

director qualifications and nomination requirements;

Board size, structure, and composition;

director stock ownership guidelines;

the Board’s commitment to diversified membership;

director duties and responsibilities;

the committees of the Board;

expectations regarding attendance at Board and Board committee meetings;

the process for establishing the agendas of Board and Board committee meetings;

executive sessions of the Non-Management Directors and Independent Directors;

management development and succession planning, diversity initiatives, and long-term strategic planning;

director compensation;

director orientation and continuing education;

annual Board and Board committee self-evaluations; and

expected periods of service for directors.

Our Board and Board committee governance documents, as well as other key corporate governance documents, are available to our shareholders:

on our corporate website at http://stock.walmart.com/corporate-governance/governance-documents; or

in print at no charge to any shareholder who requests a copy by writing to our Investor Relations Department at: Wal-Mart Stores, Inc., Investor Relations Department, 702 Southwest 8th Street, Bentonville, Arkansas 72716-0100.

The CNGC and the Board review the Corporate Governance Guidelines, and the Board and each Board committee review the Board committee charters, at least annually to determine whether any updates or revisions to these documents may be necessary or appropriate.

In addition to the Corporate Governance Guidelines and the Board committee charters, you may access and review the following additional corporate governance documents on our corporate website at http://stock.walmart.‌com/corporate-governance/governance-documents:

the company’s Bylaws;

the company’s Code of Ethics for the CEO and Senior Financial Officers;

the company’s Statement of Ethics;

the company’s Procedures for Accounting and Audit-Related Ethics Complaints;

the company’s Investment Community Communications Policy; and

the company’s Fair Disclosure Procedures.

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Walmart’s Code of Ethics for the CEO and Senior Financial Officers supplements Walmart’s Statement of Ethics, which is applicable to all directors, Executive Officers, and Associates and is also available at www.walmartethics.com. A description of any substantive amendment or waiver of Walmart’s Code of Ethics for the CEO and Senior Financial Officers or Walmart’s Statement of Ethics will be disclosed on our corporate website (http://stock.walmart.com/corporate-governance/governance-documents) for a period of 12 months after the date of the amendment or waiver. There were no substantive amendments or waivers of Walmart’s Code of Ethics for the CEO and Senior Financial Officers or Walmart’s Statement of Ethics during fiscal 2013.

The Corporate Governance Guidelines, Board committee charters, and each of the other documents described above are available in print at no charge to any shareholder who requests a copy by writing to our Investor Relations Department at: Wal-Mart Stores, Inc., Investor Relations Department, 702 Southwest 8th Street, Bentonville, Arkansas 72716-0100.

Board Leadership Structure

Chairman:  S. Robson Walton  – presides over all meetings of the Board and shareholders; provides advice and counsel to the CEO and other officers; focuses on oversight and governance matters

CEO:  Michael T. Duke  – responsible for general management of the business of the company and effectuating directives of the Board

Presiding Director:  James W. Breyer  – Independent Director; presides over the executive sessions of the Non-Management Directors and Independent Directors

Additional information about Mr. Walton, Mr. Duke, and Mr. Breyer may be found on pages 19, 23, and 24.

We have separated the roles of the Chairman and the CEO of our company since 1988. We separate these roles in recognition of the differences between the two roles and the value to our company of having the distinct and different perspectives and experiences of a separate Chairman and CEO. Our CEO is responsible for the day-to-day management and supervision of the business and affairs of our company (such as reviewing performance and allocating resources as the company’s chief operating decision maker) and for ensuring that the directives of the Board are carried into effect. Our Chairman, on the other hand, is charged with presiding over all meetings of the Board and our shareholders, and providing advice and counsel to the CEO and our company’s other officers regarding our business and operations.

By separating the roles of CEO and Chairman, our CEO is able to focus his time and energy on managing Walmart’s complex daily operations, while our Chairman can devote his time and attention to addressing matters relating to the responsibilities of our Board. Our CEO and Chairman have an excellent working relationship, and, with more than 40 years of experience with Walmart, our Chairman is well positioned to provide our CEO with guidance, advice, and counsel regarding our company’s business, operations, and strategy. Moreover, we believe that having a separate Chairman focused on oversight and governance matters allows the Board to more effectively perform its risk oversight role as described below. In connection with the Board’s annual self-evaluation process, as required by our Corporate Governance Guidelines, the Board evaluates its organization and processes to ensure that the Board is functioning effectively. For the foregoing reasons, we believe that our separate CEO/Chairman structure is the most appropriate and effective leadership structure for our company and our shareholders.

Presiding Director

Pursuant to the company’s Corporate Governance Guidelines, the Board, upon recommendation of the CNGC, annually appoints a presiding director who presides over executive sessions of the Non-Management Directors and Independent Directors. James W. Breyer currently serves as the presiding director. Upon the completion of Mr. Breyer’s term at the 2013 Annual Shareholders’ Meeting, the Board will appoint another Independent Director to serve as presiding director.

The Board’s Role in Risk Oversight

The Board oversees the company’s risk management.

The Board committees, which meet regularly and report to the full Board, play active roles in fulfilling the risk oversight function.

The company’s management is responsible for day-to-day management of risk and are guided by robust internal processes and strong internal controls.

In order to ensure the long-term success and financial strength of our company, the Board and the Board committees play an active role in overseeing the management of risks that could potentially impact the company’s operations. Such risks could include operational, legal, regulatory, financial, reputational, and other risks. The Board does not view risk in isolation, but instead considers risk in connection with virtually every business decision and as part of the company’s approach to its business strategy. The company has robust internal processes and a strong internal control environment that facilitate the identification and management of risk by the company’s leadership, the Board, and the Board committees.

The Board carries out its risk oversight function both as a whole and through delegation to the Board committees, which report regularly to the Board. The Audit Committee is responsible for reviewing and discussing with management

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the company’s risk assessment and risk management processes and policies, including the company’s enterprise-wide risk management program, as well as the company’s financial and other risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee is also responsible for discussing with management and advising the Board with respect to the company’s policies, processes, and procedures regarding compliance with applicable laws and regulations, the company’s Statement of Ethics, and the company’s Code of Ethics for the CEO and Senior Financial Officers. The Audit Committee meets regularly with the company’s Global Chief Compliance Officer, Global Chief Ethics Officer, and other appropriate members of management regarding the implementation and effectiveness of the company’s compliance and ethics programs. In addition, the Audit Committee oversees internal investigatory matters, including Walmart’s internal investigation into alleged violations of the FCPA and other alleged crimes or misconduct in connection with foreign subsidiaries, and oversees the development and implementation of Walmart’s enhanced global compliance program.

The other Board committees also play a significant role in the Board’s oversight of risk. For example, the CNGC is charged with developing and recommending to the Board the corporate governance principles applicable to the company; implementing incentive compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation; reviewing and assessing the company’s compliance with the corporate governance requirements established by the NYSE, the requirements established under SOX and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable corporate governance laws and regulations; reviewing and advising the Board and management regarding the company’s reputation with external constituencies, the company’s social, community, sustainability, and charitable giving initiatives and strategies; and reviewing and advising management regarding the company’s legislative affairs and public policy engagement strategy. Furthermore, the SPFC regularly reviews with management the company’s financial status and advises management and the Board regarding financial matters, including the company’s global financial policies and practices, the company’s capital structure and capital expenditures, annual financial plans, and matters pertaining to potential acquisitions and divestitures. The CNGC’s and the SPFC’s review of these matters necessarily includes an analysis of any risks associated with such matters. Additional information regarding the roles and responsibilities of our Board committees can be found under “Board Committees” beginning on page 29.

When a Board committee receives an update on a risk-related matter, the chair of the relevant Board committee reports on the discussion to the full Board during the Board committee reports portion of the next Board meeting. The open communication between the company’s management and the Board and the Board committees, and between the Board and the chairs and the other members of the Board committees, enables the Board, Board committees, and management to coordinate the risk oversight role in a manner that serves the long-term interests of the company and our shareholders.

Board Attendance at Annual Shareholders’ Meetings

The Board has adopted a policy stating that all directors are expected to attend the company’s annual shareholders’ meetings. While the Board understands that there may be situations that prevent a director from attending an annual shareholders’ meeting, the Board encourages all directors to make attendance at all annual shareholders’ meetings a priority. With the exception of Mr. Reinemund, all of our directors who were members of the Board at the time of the 2012 Annual Shareholders’ Meeting attended the meeting.

Communications with the Board

The Board welcomes communications from shareholders and other interested parties and believes that such communications are an important part of our corporate governance practices. Therefore, we provide shareholders and other interested parties with a number of methods for communicating with the Board or individual directors.

Shareholders and other interested parties may write to the Board or individual members of the Board at:

Name of Director(s) or Board of Directors

c/o Gordon Y. Allison, Vice President and General Counsel, Corporate Division

702 Southwest 8th Street

Bentonville, Arkansas 72716-0215

Shareholders and other interested parties also may e-mail the entire Board at directors@wal-mart.com; the Independent Directors at independentdirectors@wal-mart.com; the Non-Management Directors at nonmanagementdirectors@wal-mart.com; and any individual director, at the full name of the director as listed in this proxy statement followed by “@wal-mart.com.” For example, shareholders may e-mail S. Robson Walton, Chairman, at srobsonwalton@wal-mart.com.

Our company receives a large volume of correspondence regarding a wide range of subjects each day. As a result, our individual directors are often not able to respond to all communications directly. Therefore, our Board has established a process for managing communications to the Board and individual directors.

Communications directed to the Board or individual directors are reviewed to determine whether, based on the facts and circumstances of the communication, a response on behalf of the Board or an individual director is appropriate. If a response on behalf of the Board or an individual director is appropriate, Walmart will assist the Board or individual director in gathering all relevant information and preparing a proposed response for the Board’s or the individual director’s review and approval.

Communications related to day-to-day management functions or operations are typically directed to an appropriate member of management for a response. Further, Walmart will typically not distribute to the Board or an individual director communications of a threatening or personal nature, voluminous or mass mailings on the same subject matter, business solicitations or advertisements, surveys, or other communications otherwise inappropriate for the Board’s or an individual director’s consideration. Walmart maintains records of communications directed to the Board and individual directors, and these records are available to our directors at any time upon request.

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Shareholder Outreach and Engagement

The company’s relationship with its shareholders is a critical part of our corporate governance profile, and we recognize the value of taking their views into account. We value comments from shareholders, customers, and others about our business, and we appreciate that we receive input from so many stakeholders on a daily basis. Specifically related to the investment community, we receive regular analysts’ reports about our business and interact from time to time with analysts, banks, and rating agencies. This feedback helps us improve.

Our company’s investor relations (“IR”) department is the key point of contact for shareholder interaction with the company. Shareholders may access information about our company through our website at http://stock.walmart.com. This website features a wide variety of information relevant to shareholders, including our Annual Reports to Shareholders, Global Responsibility Reports, SEC reports, proxy statements, and stock information, among other items. Shareholders can also contact IR through our investor hotline at (479) 273-6463, through email at wmirqa@walmart.com, or through providing feedback via our IR smartphone app. The Walmart IR smartphone app is free and available for iPad, iPhone, and Android devices. IR responds to inquiries from all shareholders – ranging from individuals to institutional shareholders – and conveys the company’s position on a wide range of issues that matter to our shareholders. When appropriate, the IR team partners with subject matter experts from other company departments, such as legal, sustainability, operations, and other areas to provide additional context and insight regarding the company’s response to a shareholder inquiry. We have had success engaging with parties to understand shareholder concerns and reaching resolutions on issues that are in the best interest of our shareholders. Beyond our standard means of communication, in 2012, we also conducted activities and events such as store tours, investor road shows, analyst meetings, investor conferences, and the 2012 Annual Shareholders’ Meeting.

Submission of Shareholder Proposals

If you wish to submit a proposal for possible inclusion in our 2014 proxy statement, send the proposal, by registered, certified, or express mail to:

Gordon Y. Allison, Vice President and General Counsel, Corporate Division

702 Southwest 8th Street

Bentonville, Arkansas 72716-0215

Shareholder proposals intended for inclusion in our proxy statement for the 2014 Annual Shareholders’ Meeting in accordance with the SEC’s Rule 14a-8 under the Exchange Act must be received by our company in the manner described above no later than the close of business on December 23, 2013. Any shareholder proposal received by the company after that date will not be included in the company’s 2014 proxy statement. Further, all proposals submitted for inclusion in the company’s 2014 proxy statement must comply with all of the requirements of Rule 14a-8.

Shareholders who wish to bring business before Walmart’s 2014 Annual Shareholders’ Meeting other than through a shareholder proposal pursuant to the SEC’s rules must notify the Corporate Secretary of our company in writing and provide the information required by the provision of the Bylaws dealing with shareholder proposals. The notice must be delivered to or mailed and received at Walmart’s principal executive offices not less than 75 nor more than 100 days prior to the date of the 2014 Annual Shareholders’ Meeting, unless fewer than 85 days’ notice or public disclosure of that date is given or made, in which case the shareholder’s notice must be received by the close of business on the tenth day after the notice or public disclosure of the date of the 2014 Annual Shareholders’ Meeting is made or given. The requirements for such notice are set forth in the Bylaws, a copy of which can be found on our corporate website at http://stock.walmart.com/corporate-governance/governance-documents. In addition, the Bylaws were filed with the SEC as Exhibit 3(ii) to our company’s Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2011.

Compensation Committee Report

The CNGC has reviewed and discussed with our company’s management the CD&A included in this proxy statement and, based on such review and discussion, the CNGC recommended to the Board that the CD&A be included in this proxy statement.

The CNGC submits this report:

Douglas N. Daft

Steven S Reinemund

Linda S. Wolf, Chair

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Compensation Committee Interlocks and Insider Participation

None of the directors who served on the CNGC at any time during fiscal 2013 were officers or Associates of Walmart or were former officers or Associates of Walmart. Further, none of the members who served on the CNGC at any time during fiscal 2013 had any relationship with our company requiring disclosure under the section of this proxy statement entitled “Related Person Transactions.” Finally, no Executive Officer serves, or in the past fiscal year has served, as a member of the compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on the CNGC.

Audit Committee Report

Information regarding the members of the Audit Committee and the Audit Committee’s roles and responsibilities is set forth under ““Compensation of the Directors” on page 26 and “Board Committees” beginning on page 29.

Walmart’s management is responsible for Walmart’s internal control over financial reporting and the preparation of Walmart’s consolidated financial statements. Walmart’s independent accountants are responsible for auditing Walmart’s annual consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board, and for auditing the effectiveness of Walmart’s internal control over financial reporting. The independent accountants are also responsible for issuing a report on those financial statements and a report on the effectiveness of Walmart’s internal control over financial reporting. The Audit Committee monitors and oversees these processes. The Audit Committee is responsible for selecting, engaging, and overseeing Walmart’s independent accountants.

As part of the oversight process, the Audit Committee regularly meets with management of our company, our company’s independent accountants, and our company’s internal auditors. The Audit Committee often meets with each of these groups separately in closed sessions. Throughout the year, the Audit Committee had full access to management, the independent accountants and internal auditors. To fulfill its responsibilities, the Audit Committee did, among other things, the following:

reviewed and discussed with Walmart’s management and the independent accountants Walmart’s audited consolidated financial statements for fiscal 2013;

reviewed management’s representations that those consolidated financial statements were prepared in accordance with GAAP and fairly present the consolidated results of operations and consolidated financial position of our company for the fiscal years and as of the dates covered by those consolidated financial statements;

discussed with the independent accountants the matters required by Statement on Auditing Standards No. 61, as modified or supplemented, and SEC rules, including matters related to the conduct of the audit of Walmart’s consolidated financial statements;

received written disclosures and the letter from E&Y required by applicable independence standards, rules, and regulations relating to E&Y’s independence from Walmart and discussed with E&Y its independence from Walmart;

based on the review and discussions with management and the independent accountants, the independent accountants’ disclosures and letter to the Audit Committee, the representations of management and the reports of the independent accountants, recommended to the Board that Walmart’s audited consolidated financial statements for fiscal 2013 be included in Walmart’s Annual Report on Form 10-K for fiscal 2013 filed with the SEC;

reviewed all audit and non-audit services performed for Walmart by E&Y and considered whether E&Y’s provision of non-audit services was compatible with maintaining its independence from Walmart;

selected and appointed E&Y as Walmart’s independent accountants to audit and report on the consolidated financial statements of Walmart to be filed with the SEC prior to Walmart’s annual shareholders’ meeting to be held in calendar year 2014;

monitored the progress and results of the testing of internal control over financial reporting pursuant to Section 404 of SOX, reviewed a report from management and the internal auditors of our company regarding the design, operation, and effectiveness of internal control over financial reporting, and reviewed an attestation report from E&Y regarding the effectiveness of internal control over financial reporting; and

received reports from management and third-party advisors regarding our company’s policies, processes, and procedures regarding compliance with applicable laws and regulations and Walmart’s Statement of Ethics, all in accordance with the Audit Committee’s charter.

The Audit Committee submits this report:

Aida M. Alvarez

James I. Cash, Jr.

Timothy P. Flynn

Arne M. Sorenson

Christopher J. Williams, Chair

Audit Committee Financial Experts

The Board has determined that James I. Cash, Jr., Timothy P. Flynn, Arne M. Sorenson, and Christopher J. Williams are “audit committee financial experts” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K of the SEC, and that all members of the Audit Committee are “independent” under Section 10A(m)(3) of the Exchange Act, the SEC’s Rule 10A-3, and the requirements set forth in the NYSE Listed Company Rules.

  2013 Proxy Statement   36


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Audit Committee Pre-Approval Policy

To ensure the independence of our independent accountants and to comply with applicable securities laws, the NYSE Listed Company Rules, and the Audit Committee charter, the Audit Committee is responsible for reviewing, deliberating, and, if appropriate, pre-approving all audit, audit-related, and non-audit services to be performed by the independent accountants. For that purpose, the Audit Committee has established a policy and related procedures regarding the pre-approval of all audit, audit-related, and non-audit services to be performed by our company’s independent accountants (the “Pre-Approval Policy”).

The Pre-Approval Policy provides that our company’s independent accountants may not perform any audit, audit-related, or non-audit service for Walmart, subject to those exceptions that may be permitted by applicable law, unless: (i) the service has been pre-approved by the Audit Committee; or (ii) Walmart engaged the independent accountants to perform the service pursuant to the pre-approval provisions of the Pre-Approval Policy. In addition, the Pre-Approval Policy prohibits the Audit Committee from pre-approving certain non-audit services that are prohibited from being performed by our company’s independent accountants by applicable securities laws. The Pre-Approval Policy also provides that Walmart’s corporate controller will periodically update the Audit Committee as to services provided by the independent accountants. With respect to each such service, the independent accountants provide detailed back-up documentation to the Audit Committee and to the corporate controller.

Pursuant to the Pre-Approval Policy, the Audit Committee has pre-approved certain categories of services to be performed by the independent accountants and a maximum amount of fees for each category. The Audit Committee annually reassesses these service categories and the associated fees. Individual projects within the approved service categories have been pre-approved only to the extent that the fees for each individual project do not exceed a specified dollar limit, which amount is reassessed annually. Projects within a pre-approved service category with fees in excess of the specified fee limit for individual projects may not proceed without the specific prior approval of the Audit Committee (or a member to whom pre-approval authority has been delegated). In addition, no project within a pre-approved service category will be considered to have been pre-approved by the Audit Committee if the project would cause the maximum amount of fees for the service category to be exceeded, and the project may only proceed with the prior approval of the Audit Committee (or a member to whom pre-approval authority has been delegated) to increase the aggregate amount of fees for the service category.

At least annually, the Audit Committee designates a member of the Audit Committee to whom it delegates its pre-approval responsibilities. That member has the authority to approve interim requests as set forth above within the defined, pre-approved service categories, as well as interim requests to engage Walmart’s independent accountants for services outside the Audit Committee’s pre-approved service categories. The member has the authority to pre-approve any audit, audit-related, or non-audit service that falls outside the pre-approved service categories, provided that the member determines that the service would not compromise the independent accountants’ independence and the member informs the Audit Committee of his or her decision at the Audit Committee’s next regular meeting.

Transaction Review Policy

The Board has adopted a written policy (the “Transaction Review Policy”) applicable to: all Walmart officers who serve as Executive Vice Presidents or above; all directors and director nominees; all shareholders beneficially owning more than five percent of Walmart’s outstanding Shares; and the immediate family members of each of the preceding persons (collectively, the “Covered Persons”). Any entity in which a Covered Person has a direct or indirect material financial interest or of which a Covered Person is an officer or holds a significant management position (each a “Covered Entity”) is also covered by the policy. The Transaction Review Policy applies to any transaction or series of similar or related transactions in which a Covered Person or Covered Entity has a direct or indirect material financial interest and in which Walmart is a participant (each a “Covered Transaction”).

Under the Transaction Review Policy, each Covered Person is responsible for reporting to Walmart’s Chief Audit Executive any Covered Transactions of which he or she has knowledge. Walmart’s Chief Audit Executive, with the assistance of other appropriate Walmart personnel, reviews each Covered Transaction and submits the results of such review to the Audit Committee. The Audit Committee reviews each Covered Transaction and either approves or disapproves the transaction. To approve a Covered Transaction, the Audit Committee must find that:

the substantive terms and negotiation of the Covered Transaction are fair to Walmart and its shareholders and the substantive terms are no less favorable to Walmart and its shareholders than those in similar transactions negotiated at an arm’s-length basis; and

if the Covered Person is a director or officer of Walmart, he or she has otherwise complied with the terms of Walmart’s Statement of Ethics as it applies to the Covered Transaction.

The Audit Committee may also ratify a Covered Transaction of which prior approval and review was not sought if the Audit Committee determines that the Covered Transaction meets the criteria above and the failure to obtain pre-approval was unintentional or inadvertent.

The following categories of transactions are exempt from review and approval under the Transaction Review Policy:

transactions that involve a monetary value of less than $120,000;

transactions that result from a competitive bid process;

ordinary banking transactions; and

any series of substantially similar transactions after the Audit Committee has reviewed and approved a single transaction of that type as meeting the requirements of the policy.

  2013 Proxy Statement   37


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Related Person Transactions

This section discusses certain direct and indirect relationships and transactions involving Walmart and certain of its directors, Executive Officers, the beneficial owners of more than five percent of the Shares outstanding, and certain immediate family members of the foregoing. Walmart believes that the terms of the transactions described below are comparable to terms that would have been reached by unrelated parties in arm’s-length transactions.

Dr. G. David Gearhart, the Chancellor of the University of Arkansas at Fayetteville (the “University”), is the brother of Jeffrey J. Gearhart, an Executive Officer. During fiscal 2013, Walmart paid the University approximately $2.3 million, including approximately $962,000 for the use of facilities of the University in connection with Walmart’s 2012 Annual Shareholders’ Meeting, the meetings of Associates held during the week of the 2012 Annual Shareholders’ Meeting, and other meetings and events during fiscal 2013; approximately $523,800 for academic studies and educational services; and approximately $553,000 in contributions and sponsorships. Walmart expects that in fiscal 2014 it will continue to use University facilities for similar events, pay the University for studies and services, and make similar contributions to the University.

Lori Haynie, the sister of C. Douglas McMillon, an Executive Officer, is an executive officer of Mahco, Incorporated (“Mahco”). During fiscal 2013, Walmart paid Mahco and its subsidiaries approximately $13.0 million in connection with Walmart’s purchases of sporting goods and related products. Walmart expects to purchase similar types of products from Mahco during fiscal 2014.

Marissa A. Mayer, a director of Walmart, is the president and chief executive officer and a director of Yahoo! Inc. (“Yahoo!”). During fiscal 2013, Walmart paid Yahoo! and its subsidiaries approximately $12.4 million in connection with Walmart’s purchases of advertising space on Yahoo! websites. Walmart expects to purchase similar amounts of advertising space from Yahoo! during fiscal 2014.

Eric S. Scott, the son of H. Lee Scott, Jr., a director of Walmart, is the chairman, a director, and an indirect equity owner of Cheyenne Industries, Inc. (“Cheyenne”). Walmart paid Cheyenne and its subsidiaries approximately $29.4 million during fiscal 2013 in connection with Walmart’s purchases of home furnishing and related products from Cheyenne and its subsidiaries. Cheyenne and its subsidiaries made promotional payments of approximately $145,000 to Walmart in fiscal 2013. Walmart expects to continue to purchase similar products from Cheyenne and its subsidiaries during fiscal 2014.

Arne M. Sorenson, a director of Walmart, is the president and chief executive officer and a director of Marriott International, Inc. (“Marriott”). During fiscal 2013, Walmart paid or reimbursed payments made to Marriott and its subsidiaries in the amount of approximately $10.2 million for hotel, lodging, and business travel-related services, and Walmart received payments of approximately $2.0 million from Marriott for purchases of merchandise from Walmart. Walmart anticipates that it will continue to purchase hotel, lodging, and other business travel-related services from Marriott, and Marriott will continue to purchase merchandise from Walmart during fiscal 2014.

During fiscal 2013, a banking corporation that is collectively owned by Jim C. Walton, S. Robson Walton, and a trust of which Jim C. Walton is the trustee, and certain of that banking corporation’s bank subsidiaries, made payments to Walmart in the approximate aggregate amount of $996,000 for supercenter and Neighborhood Market banking facility rent pursuant to negotiated arrangements. The banking corporation and its affiliates made other payments to Walmart pursuant to similar arrangements that were awarded by Walmart on a competitive-bid basis. The leases of banking facility space and leases of ATM sites in various stores remain in effect, and it is anticipated that in fiscal 2014 such banking corporation and its affiliates will pay Walmart approximately $1.0 million pursuant to those leases not awarded on a competitive-bid basis, and will pay Walmart approximately $130,000 relating to ATM usage charges.

Stephen P. Weber, a senior manager in Walmart’s Information Systems Division, is the son-in-law of Michael T. Duke, an Executive Officer. For fiscal 2013, Walmart paid Mr. Weber a salary of approximately $127,235, a payment pursuant to the MIP of approximately $24,000, and other benefits totaling approximately $16,100 (including Walmart’s matching contributions to Mr. Weber’s 401(k) Plan account and health insurance premiums). Mr. Weber also received a grant of 504 restricted stock rights in fiscal 2013. Mr. Weber continues to be an Associate, and in fiscal 2014, he may receive compensation and other benefits for his services to Walmart in amounts similar to those received during fiscal 2013.

Nichole R. Bray, a senior manager at Sam’s Club, is the sister-in-law of C. Douglas McMillon, an Executive Officer. For fiscal 2013, Walmart paid Ms. Bray a salary of approximately $122,200, a payment pursuant to the MIP of approximately $22,700, and other benefits totaling approximately $13,900 (including Walmart’s matching contributions to Ms. Bray’s 401(k) Plan account and health insurance premiums). Ms. Bray also received a grant of 504 restricted stock rights in fiscal 2013. Ms. Bray continues to be an Associate, and in fiscal 2014, she may receive compensation and other benefits in amounts similar to those received during fiscal 2013.

Greg T. Bray, a senior director in Walmart’s Finance department, is the brother-in-law of C. Douglas McMillon, an Executive Officer. For fiscal 2013, Walmart paid Mr. Bray a salary of approximately $160,250, a payment pursuant to the MIP of approximately $35,900, and other benefits totaling approximately $15,100 (including Walmart’s matching contributions to Mr. Bray’s 401(k) Plan account and health insurance premiums). Mr. Bray also received a grant of 588 restricted stock rights in fiscal 2013. Mr. Bray continues to be an Associate, and in fiscal 2014, he may receive compensation and other benefits in amounts similar to those received during fiscal 2013.

Timothy K. Togami, a senior director in Walmart’s Human Resources Department, is the brother-in-law of Rollin L. Ford, an Executive Officer. For fiscal 2013, Walmart paid Mr. Togami a salary of approximately $178,600, a payment pursuant to the MIP of approximately $38,375, and other benefits totaling approximately $22,500 (including Walmart’s matching contributions to Mr. Togami’s 401(k) Plan account and health insurance premiums). Mr. Togami also received a grant of 588 restricted stock rights in fiscal 2013. Mr. Togami continues to be an Associate, and in fiscal 2014, he may receive compensation and other benefits for his services to Walmart in amounts similar to those received during fiscal 2013.

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Proposal No. 2  Ratification of Independent Accountants

The Audit Committee has appointed E&Y as the company’s independent accountants to audit the consolidated financial statements of the company for fiscal 2014. E&Y and its predecessor, Arthur Young & Company, have been Walmart’s independent accountants since prior to the company’s initial offering of securities to the public in 1970. E&Y served as the company’s independent accountants for fiscal 2013 and reported on the company’s consolidated financial statements for that year, as well as the effectiveness of the company’s internal control over financial reporting. Representatives of E&Y will attend the 2013 Annual Shareholders’ Meeting. They will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions.

Although shareholder ratification is not required, the appointment of E&Y as the company’s independent accountants for fiscal 2014 is being submitted for ratification at the 2013 Annual Shareholders’ Meeting because the Board believes doing so is a good corporate governance practice. Furthermore, the Audit Committee will take shareholders’ opinions regarding E&Y’s appointment into consideration in future deliberations. If E&Y’s selection is not ratified at the 2013 Annual Shareholders’ Meeting, the Audit Committee will consider the engagement of other independent accountants. The Audit Committee may terminate E&Y’s engagement as the company’s independent accountants without the approval of the company’s shareholders whenever the Audit Committee deems termination appropriate.

E&Y’s fees for fiscal 2013 and fiscal 2012 were as follows:

 

Fiscal 2013

Fiscal 2012

Audit Fees

$

16,618,000

$

13,498,000

Audit-Related Fees

$

900,000

$

480,000

Tax Fees

$

1,165,000

$

1,170,000

All Other Fees

$

0

$

0

TOTAL FEES

$

18,683,000

$

15,148,000

A description of the types of services provided in each category is as follows:

Audit Fees – Includes the audit of the company’s annual financial statements, the audit of the effectiveness of internal control over financial reporting, the review of the company’s quarterly reports on Form 10-Q, statutory audits required internationally, and consents for and review of registration statements filed with the SEC.

Audit-Related Fees – Includes audits of the company’s employee benefit plans, due diligence in connection with acquisitions, accounting consultations related to GAAP, the application of GAAP to proposed transactions, statutory financial statement audits of non-consolidated affiliates, and work related to the company’s compliance with its obligations under SOX.

Tax Fees – Includes tax compliance at international locations, domestic and international tax advice and planning, assistance with tax audits and appeals, and tax planning for acquisitions and restructurings.

None of the services described above were approved pursuant to the de minimis exception provided in Rule 2-01(c)(7)(i)(C) of Regulation S-X promulgated by the SEC.

For the above reasons, the Board recommends that the shareholders vote FOR the ratification of E&Y as the company’s independent accountants for fiscal 2014.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In the following pages, we highlight selected executive compensation practices that we have implemented to help achieve our company’s performance objectives and serve the long-term interests of our shareholders. We also discuss how our CEO, CFO, and certain other Executive Officers (our NEOs) were compensated in fiscal 2013 (February 1, 2012 through January 31, 2013) and describe how this compensation fits within our executive compensation philosophy. For fiscal 2013, our NEOs were:

Michael T. Duke, President and CEO. Mr. Duke joined our company in 1995 and served in a number of positions prior to becoming President and CEO in February 2009.

Charles M. Holley, Jr., Executive Vice President and CFO. Mr. Holley joined our company in 1994 and was promoted to CFO in December 2010.

William S. Simon, Executive Vice President, President and CEO, Walmart U.S. Mr. Simon joined our company in 2006 and was promoted to his present position in June 2010.

C. Douglas McMillon, Executive Vice President, President and CEO, Walmart International. Mr. McMillon joined our company in 1990 and was promoted to his current position in February 2009.

Rosalind G. Brewer, Executive Vice President, President and CEO, Sam’s Club. Ms. Brewer joined our company in 2006 and was promoted to her current position in February 2012.

Fiscal 2013 Financial Performance

Our company had good financial performance in fiscal 2013, particularly with respect to our financial priorities of growth, leverage, and returns. Our diluted earnings per share from continuing operations attributable to Walmart (“EPS”) increased 10.6 percent over the prior fiscal year, with EPS of $5.02 in fiscal 2013 compared to EPS of $4.54 in fiscal 2012. This earnings performance also compared favorably with our original annual EPS guidance for fiscal 2013 of $4.72 to $4.92 provided at the beginning of fiscal 2013, when our fiscal 2013 incentive goals were set. The Walmart U.S. segment delivered strong financial results, with Walmart U.S. comparable store sales increasing 2.0 percent during fiscal 2013. Walmart U.S. also grew sales faster than operating expenses during fiscal 2013. Walmart International had solid overall performance for the year and continues to deliver growth, despite challenging economic environments in several key markets, and, on a constant currency basis, Walmart International grew sales faster than operating expenses in fiscal 2013. Our Sam’s Club segment sustained its positive momentum, increasing comparable club sales by 4.1 percent, including the 0.3 percent impact of fuel sales, and delivering solid operating income. Our company continued to leverage operating expenses, and our return on investment (“ROI”) for fiscal 2013 was slightly less than the prior fiscal year, primarily due to acquisitions and currency exchange rate fluctuations. We again delivered strong returns to our shareholders in fiscal 2013, with our stock price increasing approximately 14 percent during the fiscal year. We also paid dividends of $1.59 per share during the fiscal year, for a total of approximately $5.4 billion in dividends, and returned approximately $7.6 billion to our shareholders in the form of share repurchases. When we released our fiscal 2013 earnings on February 21, 2013, we announced that our Board approved an 18% increase in our annual dividend for fiscal 2014, resulting in an annual dividend of $1.88 per share for fiscal 2014. Information about how we calculate comparable store and club sales can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which appears in Exhibit 13 to our Annual Report on Form 10-K for fiscal 2013 filed with the SEC filed on March 26, 2013.

Our Executive Compensation Philosophy and Pay Mix (pages 44-45)

Our executive compensation program is intended to:

provide fair, competitive compensation based on performance and contributions to the company;

provide incentives to attract, motivate, and retain key executives;

instill a long-term commitment to the company; and

encourage company ownership and align the interests of our key executives with the interests of our shareholders, with the ultimate goal of driving long-term shareholder value.

There are three components of our executives’ total direct compensation, or TDC: base salary, annual cash incentive, and long-term equity (consisting of a mix of performance shares and restricted stock):

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How Our Compensation Program Emphasizes Performance (pages 46-47)

Our NEO compensation packages are heavily weighted towards performance and are aligned with our key financial priorities – growth, leverage, and returns:

Compensation Performance Measure

 

Plan

 

Performance Period

 

Financial Priorities

Sales (total company or divisional)

Performance Shares

3 Year

Growth

Return on Investment (total company)

Performance Shares

3 Year

Returns

Operating Income (total company and/or divisional)

Cash Incentive Plan

1 Year

Returns and Leverage

Consistent with our pay-for-performance philosophy, a significant majority of our NEOs’ target TDC for fiscal 2013 was performance-based, as well as exposed to fluctuations in our Share price. In addition, our TDC packages seek to reward both long-term and annual performance, as shown in the charts below. The percentages do not total 100.0% due to rounding.

How Our Incentive Plans Appropriately Rewarded Performance During Fiscal 2013 (pages 47-48)

The compensation earned by our NEOs for fiscal 2013 shows that our incentive plans are working as designed. As noted above, our operating income performance during fiscal 2013 was good, particularly for our Walmart U.S. and Sam’s Club divisions, which each exceeded the operating income goals established by the CNGC under our cash incentive plan. Despite overall solid performance, our International division fell short of its target fiscal 2013 operating income goals. Our total company slightly exceeded the challenging target operating income goals established by the CNGC, and our operating income performance was stronger during fiscal 2013 than during fiscal 2012. This performance was reflected in our NEOs’ cash incentive awards, which, consistent with our pay-for-performance philosophy, paid out at higher levels for fiscal 2013 than for fiscal 2012:

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Fiscal 2013 Cash Incentive Plan

Name

Performance Measure(s)

% of Target

Payout

Cash Incentive

Payout

Michael T. Duke

100% Total Company Operating Income

103.7%

$

4,373,180

Charles M. Holley, Jr.

100% Total Company Operating Income

103.7%

$

1,246,554

William S. Simon

50% Total Company Operating Income

50% Walmart U.S. Operating Income

114.4%

$

2,058,426

C. Douglas McMillon

50% Total Company Operating Income

50% Walmart International Operating Income

83.7%

$

1,553,986

Rosalind G. Brewer

50% Total Company Operating Income

50% Sam’s Club Operating Income

114.4%

$

1,463,770

Fiscal 2013 Performance Share Program

Our long-term performance share program is based on a mix of sales and ROI goals. As noted above, during fiscal 2013, our ROI decreased slightly, but was slightly above our target performance goal under this program. Our fiscal 2013 ROI goal under the performance share program was slightly lower than our ROI for fiscal 2012 due to the expected impact of acquisition activity and planned capital expenditures. Walmart U.S. and Sam’s Club sales exceeded the target performance goals under this program, while Walmart International sales results fell short of target performance goals. Under our performance share program, fiscal 2013 performance was averaged with the prior two fiscal years’ performance, resulting in the following payouts of performance shares to our NEOs for the three-year performance cycle applicable to those performance shares:

 

Fiscal 2013 Performance

Measures

Performance Share Payout

Percent of Target

Performance Shares For Three-

Year Cycle Ended 1/31/13

Fiscal 2011

Performance

Fiscal 2012

Performance

Fiscal 2013

Performance

Three-Year

Average

Target

Earned

Michael T. Duke

50% ROI

50% Total Company Sales

86.19

%

72.16

%

103.76

%

87.37

%

185,869

162,394

Charles M. Holley, Jr.

50% ROI

50% Total Company Sales

86.19

%

72.16

%

103.76

%

87.37

%

34,004

29,709

William S. Simon

50% ROI

50% Walmart U.S. Sales

85.64

%

69.22

%

115.68

%

90.18

%

61,208

55,198

C. Douglas McMillon

50% ROI

50% International Sales

87.57

%

68.21

%

88.55

%

81.44

%

83,287

67,829

Rosalind G. Brewer*

50% ROI

50% Sam’s Club Sales

85.64

%

69.22

%

113.69

%

89.52

%

42,216

37,792

*

During fiscal 2011 and 2012, Ms. Brewer served as an Executive Vice President in the Walmart U.S. division; therefore, her performance share payout for the three-year performance cycle ending January 31, 2013 was based on Walmart U.S. performance goals during fiscal 2011 and 2012, and Sam’s Club performance goals during fiscal 2013.

Results of Advisory Vote to Approve Executive Compensation

At our last two annual shareholders’ meetings, our shareholders had an opportunity to cast an advisory vote to approve our NEOs’ compensation. At each of these meetings, approximately 99 percent of the votes cast on this matter were voted to approve our NEOs’ compensation. The CNGC believes that the results of these votes affirm our shareholders’ support of our approach to executive compensation. The CNGC considered that support when establishing our NEOs’ compensation opportunities for fiscal 2013. As a result, the CNGC made no material changes in the structure of our executive compensation program or the performance measures used in our executive compensation program for fiscal 2013. At the 2013 Annual Shareholders’ Meeting, we will again hold an annual advisory vote to approve executive compensation (see page 63). The CNGC will consider the results from this year’s and future years’ advisory votes on executive compensation when making decisions about our executive compensation program.

  2013 Proxy Statement   42


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Our Pay Practices

WHAT WE DO

WHAT WE DO NOT DO

Pay for Performance – We heavily link our executive compensation program to the company’s operating performance and our strategic priorities of growth, leverage, and returns. We ensure that a significant majority of our executives’ target compensation is performance-based, with the amount of the payout to our executives contingent on the degree to which the company achieves pre-established performance goals that the CNGC determines are aligned with the company’s short- and long-term operating and financial objectives.

 

No Employment Contracts – All of our NEOs are employed on an at-will basis; however, each NEO has entered into a post-termination and non-competition agreement with the company pursuant to which each NEO has agreed that, in exchange for limited severance benefits provided therein, for a two-year period following termination of employment, he or she will not participate in a business that competes with us and will not solicit our Associates for employment.

Mitigation of Risk – We use a combination of performance measures in determining our executives’ performance-based compensation that motivate our executives to achieve performance that is in line with the best interests of our company and our shareholders. By using a variety of performance measures in our annual cash incentive program and our long-term performance share program, we mitigate the risk that our executives would be motivated to pursue results with respect to one performance measure to the detriment of our company as a whole.

 

No Unapproved Trading Plans – Board members and our Executive Officers are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without the pre-approval of our Corporate Secretary; further, no Board member or any Executive Officer may trade in our stock without the pre-approval of our Corporate Secretary.

Annual Shareholder “Say on Pay” – Because we value our shareholders’ input on our executive compensation programs, our Board has chosen to provide shareholders with the opportunity each year to vote to approve, on a non-binding, advisory basis, the compensation of the NEOs in our proxy statement.

 

No Hedging – Board members and our Executive Officers are prohibited from engaging in hedging transactions, which would eliminate or limit the risks and rewards of Walmart stock ownership.

Modest Perquisites – We provide only a limited number of perquisites and supplemental benefits to attract talented executives to our company and to retain our current executives.

 

No Speculative Trading – Board members and our Executive Officers are prohibited from short-selling Walmart stock, buying or selling puts and calls of Walmart stock, or engaging in any other transaction that reflects speculation about Walmart’s stock price or that might place their financial interests against the financial interests of Walmart.

Compensation Recoupment Policies – Both our annual cash incentive plan and our Stock Incentive Plan provide for recoupment of compensation awards to the extent required by law and permit recoupment of payments to recipients who are found to have committed any act detrimental to the best interests of our company.

 

No Use of Walmart Stock as Collateral for Margin Loans – Board members and our Executive Officers are prohibited from using Walmart stock as collateral for any margin loan.

Stock Ownership Guidelines – To further align the long-term interests of our executives and our shareholders, our Board has established robust stock ownership guidelines applicable to our Board members, CEO, Executive Officers, and certain other officers.

 

No Unapproved Pledging of Walmart Stock – Board members and our Executive Officers are prohibited from pledging Walmart stock without the pre-approval of our Corporate Secretary; further, any Walmart shares pledged will not be counted in determining a Board member’s or Executive Officer’s compliance with our stock ownership guidelines.

Independent Compensation Consultant – The CNGC benefits from its use of an independent compensation consulting firm which provides no other services to the company.

 

No Dividends on Unvested Performance Shares – We do not pay dividends or dividend equivalents on unearned and unvested performance shares.

Rigorous Compensation Benchmarking – The CNGC reviews publicly available information for three different peer groups to evaluate how our NEOs’ compensation compares to that of executives in comparable positions at other companies, and considers that information when establishing TDC.

 

No Pension Plans or Special Retirement Programs for Executive Officers – We do not have a pension plan, and our Executive Officers do not participate in any retirement programs not generally available to our officers.

 

 

 

No “Golden Parachutes” or Other Change in Control Agreements – Other than post-termination and non-competition agreements providing for separation payments equal to two years of base salary in the event their employment is terminated other than for a violation of Walmart policy, we do not have any agreements under which our Executive Officers would receive payments or accelerated stock vestings in the event of a change in control of our company.

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Components of NEO Compensation and Pay Mix

What are the primary components of our NEO compensation packages?

Our NEOs each receive a base salary, annual cash incentive opportunity, long-term performance shares, and service-based restricted stock. These elements comprise each NEO’s total direct compensation, or TDC.

Base Salary. We pay base salaries to attract and retain talented executives and to provide fixed base cash compensation. Our general objective is for our NEO base salaries to be positioned near the 50th percentile of our peer groups, considered as a whole. In keeping with our philosophy that a substantial majority of NEO compensation should be performance-based, the CNGC typically allocates a relatively small percentage of TDC to base salary.

Annual Cash Incentive. Under our Management Incentive Plan, most salaried Associates, including our NEOs, are eligible to earn an annual cash incentive payment. Each NEO’s annual target cash incentive award is based on a percentage of base salary. The cash incentive payout can range from 37.5 percent of the target opportunity at threshold to a maximum of 125 percent of the target opportunity. For example, our CEO’s target opportunity is 320 percent of his base salary, and his actual payout can range from 120 percent of his base salary at threshold, up to a maximum of 400 percent of his base salary. No payout will be made unless threshold performance goals are met. The CNGC sets the performance goals under our Management Incentive Plan during the first quarter of each fiscal year. Our general guideline is to set annual cash incentive opportunities at a level that positions our NEOs’ target TDC near the 75th percentile of our peer groups, considered as a whole; however, individual target TDCs will vary based on the factors described under “How does the CNGC establish TDC?” on pages 49-50.

Long-Term Equity. The balance of TDC – and generally the largest portion – is then allocated between two forms of long-term equity compensation. We believe that long-term equity awards help align the interests of our NEOs with the interests of our shareholders and also serve as a retention tool for our company’s executives. Consistent with our philosophy of tying compensation to performance, 75 percent of our annual long-term equity awards is in the form of performance shares, with the remaining 25 percent granted in the form of restricted stock. Our general guideline is to set annual equity opportunities at a level that positions our NEOs’ target TDC near the 75th percentile of our peer groups, considered as a whole; however, individual target TDCs will vary based on the factors described under “How does the CNGC establish TDC?” on pages 49-50.

Performance Shares. A performance share award gives the recipient the right to receive a number of Shares if we meet certain pre-defined performance goals during a specified performance period. Generally, performance shares granted to our executives have a three-year performance period, with the performance measures and goals set annually by the CNGC. The number of Shares received at the end of the performance period is based on the average performance as compared to these performance goals over three fiscal years. Our NEOs can earn from 50 percent at threshold to a maximum of 150 percent of the target number of Shares at the time of payout. For TDC purposes, performance shares are valued by multiplying the number of shares by the Share price on the date of grant (which differs from the grant date fair value reported on the Summary Compensation table on page 55 due to the fact that performance shares do not recieve dividends prior to vesting).

Restricted Stock. The remaining 25 percent of the long-term equity value is in the form of restricted stock, which vests on the third anniversary of the grant date, provided that the NEO remains employed by our company through the vesting date.

What was the TDC for our NEOs during fiscal 2013?

As shown in the table below, target TDC represents the amounts our NEOs would receive if target performance goals are achieved. Maximum TDC represents the amounts our NEOs would receive if maximum performance goals are achieved, and therefore is intended to reflect the amounts our NEOs would receive only in the event of superior performance. All dollar amounts are rounded to the nearest thousand.

Named Executive Officer

Base

Salary

($000)

Annual Cash Incentive

 

Total Cash

 

Equity

 

 

TDC

Target

Max

 

Target

Max

 

Target

Max

 

 

Target

 

Max

% of

Salary

($000)

% of

Salary

($000)

 

($000)

($000)

 

($000)

($000)

 

 

($000)

 

($000)

Michael T. Duke

$

1,318

320%

$

4,217

400%

$

5,271

 

$

5,534

$

6,588

 

$

13,926

$

19,148

 

$

19,460

$

25,736

Charles M. Holley, Jr.

$

751

160%

$

1,202

200%

$

1,502

 

$

1,953

$

2,254

 

$

3,500

$

4,813

 

$

5,453

$

7,066

William S. Simon

$

900

200%

$

1,800

250%

$

2,250

 

$

2,700

$

3,150

 

$

6,500

$

8,938

 

$

9,200

$

12,088

C. Douglas McMillon

$

929

200%

$

1,858

250%

$

2,322

 

$

2,786

$

3,251

 

$

7,000

$

9,625

 

$

9,786

$

12,876

Rosalind G. Brewer

$

800

160%

$

1,280

200%

$

1,600

 

$

2,080

$

2,400

 

$

3,500

$

4,813

 

$

5,580

$

7,213

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How much of our NEOs’ target TDC was performance-based in fiscal 2013?

As shown in the chart below, a substantial majority of our NEOs’ fiscal 2013 target TDC was performance-based. Base salary represented less than 7 percent of our CEO’s target TDC for fiscal 2013, while more than 75 percent of his target TDC was tied to performance goals. For each of our other NEOs, the percentage of target TDC that was performance-based ranged from approximately 70 percent to approximately 73 percent. The percentages may not total 100.00 percent due to rounding.

Were there any significant changes to our NEOs’ compensation for fiscal 2013?

There were no significant changes to the basic TDC structure for NEOs in fiscal 2013. For fiscal 2013, our NEOs continuing in the same position received base salary increases ranging from approximately 2 percent to approximately 4 percent, which is consistent with annual base salary increases for management Associates generally. The annual cash incentive opportunity for each of our NEOs continuing in the same position, expressed as a percentage of base salary, was unchanged for fiscal 2013. As part of their fiscal 2013 compensation packages approved in January 2012, some of our NEOs received increases in the target value of their annual equity awards (comprised of performance shares and restricted stock), as follows:

Mr. Duke: increase in target equity value from $13.39 million to $13.93 million;

Mr. Simon: increase in target equity value from $4.5 million to $6.5 million;

Mr. McMillon: increase in target equity value from $6.0 million to $7.0 million; and

Mr. Holley: increase in target equity value from $2.5 million to $3.5 million.

These increases were intended to reflect these NEOs’ continued experience in their leadership roles and to align their TDC more closely with external peer groups.

Are there any significant changes to our executive compensation program for fiscal 2014?

For fiscal 2014, our executive incentive compensation programs continue to be based on the financial measures of sales, operating income, and ROI, which are aligned with our priorities of growth, leverage, and returns. In addition to these financial measures, for fiscal 2014 our executive compensation program will also have a compliance component. Our company has made significant improvements to our compliance programs around the world and has taken a number of specific, concrete actions with respect to our processes, procedures, and people. These steps have included aligning our global compliance, ethics, investigations, and legal functions under one organization; creating new senior global compliance and investigations positions and hiring seasoned professionals to fill these positions; and implementing enhancements to how we report and investigate allegations of wrongdoing worldwide.

In order to further emphasize our company’s ongoing commitment to such a program, beginning in fiscal 2014, the annual cash incentive payment of each of our NEOs and certain other Executive Officers will also be subject to achieving certain compliance objectives. During fiscal 2014, our company’s senior leadership will evaluate the company’s key compliance policies, processes, and controls, and prepare a timetable for implementing further enhancements on a prioritized basis (the “Fiscal 2014 Compliance Objectives”). These enhancements will address the key components of a corporate compliance program, including leadership and resources, standards and controls, communication, systems, training, and monitoring, among others. Senior management will provide quarterly reports to the Audit Committee on the progress in implementing the Fiscal 2014 Compliance Objectives. If, in the judgment of the Audit Committee, the company has not achieved adequate progress in implementing the Fiscal 2014 Compliance Objectives, and taking into account such other considerations with respect to compliance matters for fiscal 2014 as the Audit Committee in its judgment may deem appropriate, then the CNGC may reduce or eliminate fiscal 2014 annual cash incentive compensation for the relevant Executive Officers.

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In addition, to demonstrate the importance of accountability with regards to compliance matters, our CEO agreed to an additional compliance component to his fiscal 2013 cash incentive payment. At the conclusion of fiscal 2014, the Audit Committee and CNGC will have the authority to consider compliance matters for both fiscal 2013 and fiscal 2014 in evaluating the annual cash incentive for our CEO at the conclusion of fiscal 2014, and as a result of such evaluation, the CNGC may, in its discretion, elect to recover a portion of the annual cash incentive payment made to our CEO for fiscal 2013.

Fiscal 2013 Performance Measures and Performance Goals

What performance measures were used in our executive compensation program for fiscal 2013?

Each NEO’s performance measures were based on the performance of our total company or a combination of the performance of our total company and the NEO’s respective operating division. This approach is consistent with our objective of compensating officers based on performance within their control or influence, while continuing to align a significant portion of executive compensation to the performance of the overall company, thereby driving the company’s overall business strategies and performance. The performance measures applicable to our NEOs’ fiscal 2013 compensation were:

Element of Compensation

Fiscal 2013 Performance Measures

NEOs Subject to Measures

Performance Period

Annual Cash Incentive

Total Company Operating Income

All NEOs

2/1/2012 – 1/31/2013

Walmart U.S. Operating Income

Mr. Simon

International Operating Income

Mr. McMillon

Sam’s Club Operating Income

Ms. Brewer

Performance Shares

Total Company Return on Investment(1)

All NEOs

2/1/2012 – 1/31/2013

Total Company Sales

Mr. Duke and Mr. Holley

Walmart U.S. Sales

Mr. Simon

International Sales

Mr. McMillon

Sam’s Club Sales

Ms. Brewer

(1)

For purposes of the performance shares award measures, we define “return on investment” (which is a non-GAAP financial measure as defined in the SEC’s rules) as adjusted operating income (operating income plus interest income and depreciation and amortization and rent from continuing operations) for the fiscal year divided by average investment during that period. We consider average investment to be the average of our beginning and ending total assets of continuing operations plus accumulated depreciation and amortization less average accounts payable and average accrued liabilities for that fiscal year, plus a rent factor equal to the rent for the fiscal year multiplied by a factor of eight. Return on Assets is the most comparable GAAP measure to return on investment. Further information may be found in Exhibit 13 to our Annual Report on Form 10-K for fiscal 2013 filed with the SEC on March 26, 2013.

The CNGC chose these performance measures to align with the company’s strategic priorities of growth, leverage, and returns. The CNGC concluded that the combination of these performance measures was likely to motivate our executives to achieve performance that is in line with the best interests of our company and our shareholders. In addition, the CNGC believes that the combination and weighting of these performance measures helps to mitigate the risk that our executives would be motivated to pursue results with respect to one measure to the detriment of our company as a whole. For example, if our management were to seek to increase sales by pursuing strategies that would negatively impact our profitability, resulting increases in performance share payouts should be offset by decreases in annual cash incentive payouts.

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What was the weighting among each of these performance measures for fiscal 2013?

The following charts show the portion of each of our NEO’s target TDC that was subject to each of these measures during fiscal 2013:

What were our specific performance targets for fiscal 2013, and how did we perform in comparison to those targets?

Annual Cash Incentive Payment Goals. The growth goals applicable to our cash incentive payments are expressed in terms of a percentage increase over our prior year performance. For fiscal 2013, the threshold, target, and maximum performance goals under our cash incentive plan, and our actual performance, are shown in the following table:

Goal Applicable To:

Fiscal 2013 Operating Income Goals under Cash Incentive Plan

(percentage increase over fiscal 2012)

Threshold

(37.5% Payout)

Target

(100% Payout)

Maximum

(125% Payout)

Actual
(as adjusted)

Total Company Operating Income

1.1%

5.4%

7.5%

5.7%

Walmart U.S. Operating Income

0.0%

2.8%

4.8%

5.5%

International Operating Income

7.8%

17.2%

19.6%

11.7%

Sam’s Club Operating Income

-3.8%

0.2%

2.2%

4.8%

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The results shown above resulted in the following annual cash incentive payments to our NEOs for fiscal 2013:

 

Performance Measures

Fiscal 2013 Cash Incentive Payout

Target Payout

(% of Salary)

Max Payout

(% of Salary)

Actual Payout

(% of Salary)

Actual Payout

Michael T. Duke

100% Total Company Operating Income

320

%

400

%

331.9

%

$

4.373,180

Charles M. Holley, Jr.

100% Total Company Operating Income

160

%

200

%

165.9

%

$

1,246,554

William S. Simon

50% Walmart U.S. Operating Income

50% Total Company Operating Income

200

%

250

%

228.7

%

$

2,058,426

C. Douglas McMillon

50% International Operating Income

50% Total Company Operating Income

200

%

250

%

167.3

%

$

1,553,986

Rosalind G. Brewer

50% Sam’s Club Operating Income

50% Total Company Operating Income

160

%

200

%

183.0

%

$

1,463,770

A portion of each NEO’s cash incentive payment is also subject to satisfying diversity objectives, and each NEO’s cash incentive payment can be reduced by up to 15 percent if he or she does not satisfy these objectives. For fiscal 2013, these objectives consisted of up to two components: good faith efforts and placement objectives. Each of our NEOs is subject to good faith efforts requirements. In order to satisfy the good faith efforts component of this program, each NEO must actively sponsor at least two associates and must also participate in at least two diversity-related events.

Each of our NEOs with responsibility for our Walmart U.S. and/or Sam’s Club field operations is also subject to placement objectives. For fiscal 2013, Mr. Duke, Mr. Simon, and Ms. Brewer were subject to placement objectives. The determination as to whether an NEO satisfies his or her placement objectives is based on several factors, including the relative number of diverse candidates placed in specified positions within the NEO’s organization; the NEO demonstrating engagement and participation in a diversity and inclusion strategy; the NEO’s leadership efforts in implementing these strategies; and the NEO’s efforts in recruiting and developing diverse associates. Applying these factors, at the end of each fiscal year, our Chief Diversity Officer reviews each NEO’s performance under our diversity program and reports the results of this review to the CNGC prior to the approval of annual cash incentive payouts to our NEOs. Based on the report of our Chief Diversity Officer, the CNGC determined that each NEO satisfied his or her diversity goals for fiscal 2013.

In determining actual performance for purposes of our performance-based plans (i.e., annual cash incentive and performance shares), the CNGC made certain positive and negative adjustments to our reported results, as required by the terms of the applicable plans. These adjustments are intended to enable results for a particular fiscal year to be computed on a comparable basis to the prior fiscal year and to ensure that our incentive plans reward underlying operational performance, disregarding factors that are beyond the control of our executives. For fiscal 2013, the most significant adjustment was to remove the effect of fluctuations in currency exchange rates. Other adjustments included removing the effect of: operating income and expenses related to recent acquisitions; an increase in estimated contingent liabilities related to pending employment claims in Brazil; an accounting change related to the capitalization of certain labor costs for our Global eCommerce division; and property losses due to natural disasters. While these adjustments had the effect of increasing the fiscal 2013 cash incentive payments earned by our NEOs, for fiscal 2012, adjustments had the opposite effect, decreasing the fiscal 2012 cash incentive payments earned by our NEOs.

As a result of these adjustments, fiscal 2013 operating income percentages shown in the tables above are higher than our publicly reported operating results for fiscal 2013 as calculated in accordance with GAAP.

Performance Shares. The following table shows the performance goals set by the CNGC for fiscal 2013 under our performance share program, and our performance as compared to those goals:

Performance Period

Performance Measure

Performance Goals

(% of Performance Shares Vesting on Achievement of Goal)

Actual

Performance

(as adjusted)

Threshold (50%)

Target (100%)

Maximum (150%)

2/1/2012 – 1/31/2013

Return on Investment (Total Company)

17.85

%

18.40

%

18.85

%

18.42

%

Total Company Sales Growth

4.2

%

6.0

%

7.5

%

6.11

%

Walmart U.S. Sales Growth

2.0

%

3.2

%

4.5

%

3.90

%

International Sales Growth (excluding fuel)

9.9

%

12.9

%

15.0

%

11.34

%

Sam’s Club Sales Growth (excluding fuel)

1.8

%

3.8

%

5.3

%

4.56

%

These adjusted results were averaged with the adjusted results for fiscal 2011 and fiscal 2012, the other two fiscal years within the three-year performance period, and compared to the goals established by the CNGC to determine the ultimate performance share payout for the performance shares with a three-year performance cycle ending January 31, 2013 shown on page 42 above.

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Other Compensation

What other types of compensation did our NEOs receive for fiscal 2013?

Our NEOs may from time to time receive special awards. Special awards are typically granted for retention purposes or in recognition of extraordinary performance. Because these awards are not part of an NEO’s annual compensation, the special awards are not included in the TDC amounts shown above.

In January 2012, the CNGC approved a special performance-based cash award opportunity for Mr. Simon in the amount of $3 million. Half of this award was contingent on meeting performance goals for fiscal 2013, and half is contingent on meeting performance goals for fiscal 2014. In order for Mr. Simon to earn the first half of this award, Walmart U.S. total sales had to increase by at least 2.6 percent during fiscal 2013. Because actual Walmart U.S. total sales exceeded this goal, Mr. Simon earned $1.5 million of this award, which is included in Mr. Simon’s compensation shown on the Summary Compensation table on page 55. In March 2013, the CNGC again established total Walmart U.S. sales as the performance measures for fiscal 2014 for the other half of this award. The purpose of this award was for retention purposes and to continue to emphasize the importance of Walmart U.S. sales growth to our company’s overall strategy.

In early 2013, the CNGC approved a $1.5 million special restricted stock award to Ms. Brewer and $2 million in special restricted stock awards to Mr. Holley. These awards were intended primarily for retention purposes. For Ms. Brewer, the award vests in equal part on the second and fourth anniversaries of the grant date. For Mr. Holley, the awards vest on various dates from January 2014 through January 2017. Finally, as is customary with Executive Officer promotions, in February 2012, Ms. Brewer received two additional performance share grants vesting at the conclusion of the performance cycles ending January 31, 2013 and January 31, 2014. These additional performance share awards were intended to increase Ms. Brewer’s target performance share opportunity for each of those cycles to $2,625,000, which is equal to the target value of her annual performance share award granted in February 2012 for the performance cycle ending January 31, 2015.

What perquisites and other benefits do our NEOs receive?

Our NEOs receive a limited number of perquisites and supplemental benefits. We cover the cost of annual physical examinations for our NEOs and provide each NEO with personal use of our aircraft for a limited number of hours each year. Our NEOs also receive company-paid life and accidental death and dismemberment insurance. Additionally, our NEOs are entitled to benefits available to officers generally, such as participation in the Deferred Compensation Matching Plan, and benefits available to Associates generally, including a Walmart discount card, a limited 15 percent match of purchases of Shares through our Stock Purchase Plan, participation in our 401(k) Plan, medical benefits, and foreign business travel insurance. We provide these perquisites and supplemental benefits to attract talented executives to our company and to retain our current executives, and we believe their limited cost is outweighed by these benefits to our company.

Executive Compensation Process and Governance

Who establishes the TDC at Walmart?

The CNGC is the Board committee that is responsible for establishing and approving the compensation of the officers subject to Section 16, including the CEO and other NEOs. All members of the CNGC are independent (see page 30 for more information on the CNGC).

The CNGC met seven times in fiscal 2013. During each of these meetings, the CNGC considered executive compensation matters, including matters such as the review and approval of compensation for our NEOs; the selection of performance measures and performance goals applicable to the NEOs’ performance-based compensation; and the review of performance against those goals.

How does the CNGC establish TDC?

The process of setting TDC is a dynamic one. The CNGC considers, among other things:

the overall financial and operating performance of our company and operating segments, as applicable;

each NEO’s individual performance and contributions to the achievement of financial goals and operational milestones;

each NEO’s job responsibilities, expertise, historical compensation, and years and level of experience;

the importance of retaining each NEO and each NEO’s potential to assume greater responsibilities in the future;

peer group data and analyses (see pages 50-51 for more details); and

the results of recent shareholder advisory votes on executive compensation.

As a general guideline, our NEOs’ target TDC (which would be earned if target performance goals are achieved) should place the NEOs near the 75th percentile of the peer groups for comparable positions. The CNGC believes that it is generally appropriate to position our NEOs’ target TDC at this level because, as the world’s

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largest retailer, the company’s size, extensive international presence, and complex operations result in our NEOs’ jobs having a greater level of complexity than similar jobs at many of our peer group companies. The target TDC opportunity for a particular NEO may be higher or lower than the 75th percentile of the peer groups depending on a number of factors, particularly time and experience in a similar role; expertise; individual performance; historical compensation levels; and retention and succession considerations. In evaluating individual performance, the CNGC relied on annual performance evaluations for each NEO and discussions with the NEO’s supervisor.

The differences in TDC among our NEOs are due to many factors. These factors include: the differences in job scope and responsibilities; the CNGC’s review of peer group compensation information through peer benchmarking; expertise and years of experience; historical compensation levels; retention and succession considerations; and individual and, where relevant, divisional performance. The TDC levels set forth in the chart above on page 44 represent the CNGC’s judgment as to the appropriate fiscal 2013 compensation opportunities for our NEOs in light of these factors.

How does the CNGC set performance goals?

The goals for our performance-based compensation plans are established in light of the operating plans for our company and each of its operating divisions. The company’s operating plans for reaching our strategic goals are reviewed by the Board in light of economic conditions in our industry and in the broader markets in which we operate. The company’s operating plans are generally intended to be challenging, and fiscal 2013 was no exception, particularly given the impact of the overall economic environment on our customers.

Once operating plans are established by the Board, the CNGC then sets performance goals that are intended to be aligned with our operating plans. In order to achieve the target goals in our performance-based plans, our company and operating segments must perform in line with our sales, operating income, and return on investment expectations and operating plans at the time the goals were set. In order to achieve the maximum goals, the performance of our company and operating segments would have to exceed those expectations to a significant degree. Generally, goals for our International division require greater increases in operating income and sales relative to our other divisions. This reflects our strategic growth plans for our international operations in light of market conditions and the level of capital investment required for growth in the international markets in which we operate.

The CNGC generally attempts to set the threshold and maximum performance goals so that a consistent level of expected difficulty in achieving these goals is maintained from year to year. The CNGC generally establishes the maximum performance goals at a level that would represent superior performance for the company and the threshold performance goals at a level that is attainable but below which the company could not justify a payment. The CNGC’s independent compensation consultant evaluates the difficulty of the performance goals and advises the CNGC in this regard.

What is the role of management and compensation consultants with respect to NEO compensation?

When evaluating, establishing, and approving the compensation of our NEOs other than the CEO, the CNGC considers the performance evaluations of these NEOs provided by our CEO and the recommendations provided by our Chairman, our Global People division, and our CEO. As part of this process, our CEO reviews his annual performance evaluations of the other NEOs with the CNGC.

When establishing and approving the compensation of our CEO, our Chairman, with support from our Global People division and the Chair of the CNGC, reviews our CEO’s performance evaluation with the CNGC and makes recommendations to the CNGC regarding our CEO’s compensation.

Since early 2007, the CNGC has engaged an independent consultant on executive compensation matters. Since early 2010, Pay Governance LLC (“Pay Governance”) has been engaged by the CNGC as its independent executive compensation consultant. Under the terms of its engagement, Pay Governance reports directly and exclusively to the CNGC; the CNGC has sole authority to retain, terminate, and approve the fees of Pay Governance; and Pay Governance may not be engaged to provide any additional consulting services to Walmart without the approval of the CNGC. Other than its engagement by the CNGC, Pay Governance does not and has not ever performed any services for Walmart. The CNGC’s independent consultant attends and participates in CNGC meetings at which executive compensation matters are considered, and performs analyses for the CNGC at the CNGC’s request, including benchmarking, realizable pay analyses, analyses of the correlation between performance measures and shareholder return, and assessments of the difficulty of performance goals. The CNGC has reviewed the independence of Pay Governance in light of new SEC rules and NYSE Listed Company Rules regarding compensation consultant independence and has affirmatively concluded that Pay Governance is independent from Walmart and has no conflicts of interest relating to its engagement by the CNGC.

How is peer group data used by the CNGC?

Our company is the world’s largest retailer by a substantial margin and has significantly more extensive international operations than most publicly traded U.S.-based retailers. As a result, the CNGC believes that simply benchmarking NEO compensation against a retail industry index would not provide the CNGC with sufficient information with which to determine the appropriate compensation of our NEOs.

Therefore, the CNGC reviews publicly available information for three peer groups to determine how our NEOs’ compensation compares to the compensation paid to executives in comparable positions at other companies. Since information regarding positions comparable to those of some of our NEOs is not available for many of the companies in our peer groups, using three peer groups results in a larger number of comparable positions against which our NEOs’ compensation can be benchmarked.

The CNGC uses benchmarking data when allocating each NEO’s TDC among the various elements of compensation as a general guide to ensure that the amount of TDC allocated to each element of compensation was set at an appropriately competitive level consistent with our emphasis on performance-based compensation. The CNGC did not attempt to quantify or otherwise assign any relative weightings to any of these peer groups or to any particular members of a peer group when benchmarking against them.

While the benchmarking data is generally used for comparable positions, the CNGC also reviews peer group data for retail CEO positions for our executives

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who lead our operating divisions. These roles have significant responsibilities, and we believe that these positions are often comparable to CEO positions at many of our peer group companies. In addition, from a competitive standpoint, it is more likely that our operating segment leaders would be recruited for a CEO position, rather than a lateral move. Therefore, the CNGC benchmarks these executives’ compensation against that of CEOs within our retail peer groups.

Retail Industry Survey. This survey allows the CNGC to compare our NEO compensation to that of our primary competitors in the retail industry. For fiscal 2013 the Retail Industry Survey included all publicly traded retail companies with significant U.S. operations with annual revenues exceeding approximately $10 billion, which were:

Amazon.com, Inc.

The Home Depot, Inc.

Rite Aid Corporation

AutoNation, Inc.

J. C. Penney Company, Inc.

Safeway Inc.

Best Buy Co., Inc.

Kohl’s Corporation

Sears Holdings Corporation

BJ’s Wholesale Club, Inc.

The Kroger Co.

Staples, Inc.

Costco Wholesale Corporation

Lowe’s Companies, Inc.

SUPERVALU INC.

CVS Caremark Corporation

Macy’s, Inc.

Target Corporation

Dollar General Corporation

Office Depot, Inc.

The TJX Companies, Inc.

The Gap, Inc.

Penske Automotive Group, Inc.

Walgreen Co.

The fiscal 2013 target TDC of our NEOs was in the top quartile of TDC for peer positions within the Retail Industry Survey. When compared to CEO positions within the Retail Industry Survey, the respective TDC of Mr. Simon and Mr. McMillon were between the 50th and 75th percentiles, and Ms. Brewer’s TDC was between the 25th and 50th percentiles.

Select Fortune 100. The CNGC also benchmarks our NEO compensation against a select group of companies within the Fortune 100. This group, which we refer to as the “Select Fortune 100,” was chosen from among the Fortune 100 by our Global People division, with input by the CNGC’s independent consultant. The Select Fortune 100 includes companies whose primary business is not retailing but that are similar to us in one or more ways, such as global operations, business model, and size. We excluded retailers from this group because those companies were already represented in the Retail Industry Survey. We also excluded companies with business models that are broadly divergent from ours, such as financial institutions and energy companies. The companies included in the Select Fortune 100 when setting fiscal 2013 compensation were:

Archer-Daniels-Midland Company

Honeywell International Inc.

PepsiCo, Inc.

AT&T Inc.

Ingram Micro Inc.

Pfizer Inc.

Caterpillar Inc.

Intel Corporation

Philip Morris International Inc.

Cisco Systems, Inc.

International Business Machines Corporation

The Procter & Gamble Company

The Coca-Cola Company

Johnson & Johnson

Sprint Nextel Corporation

Dell Inc.

Johnson Controls, Inc.

Time Warner Inc.

FedEx Corporation

Kraft Foods Group, Inc.

Tyson Foods, Inc.

Ford Motor Company

McKesson Corporation

United Parcel Service, Inc.

General Electric Company

Microsoft Corporation

Verizon Communications Inc.

Hewlett-Packard Company

News Corporation

 

The fiscal 2013 target TDC for Mr. Duke fell between the 50th and 75th percentiles of peer TDC within the Select Fortune 100. The respective target TDC for Mr. Simon and Mr. McMillon was approximately at the 75th percentile when compared to peer positions. The target TDC for Mr. Holley was slightly below the 50th percentile. Ms. Brewer’s target TDC was between the 25th and 50th percentiles when compared to peer positions within this survey group.

Top 50. At the time of our benchmarking for fiscal 2013, we were approximately 15 times larger in terms of annual revenue, and approximately 18 times larger in terms of market capitalization, than the Retail Industry Survey at the median. To take into account this size discrepancy and the corresponding complexity of our NEOs’ job responsibilities, the CNGC also benchmarks our NEOs’ pay against the 50 largest public companies (including selected non-U.S. based companies), excluding Walmart, in terms of market capitalization at the time of the review:

Abbott Laboratories

Google Inc.

The Procter & Gamble Company

Amazon.com, Inc.

The Home Depot, Inc.

QUALCOMM Incorporated

Apple Inc.

HSBC Holdings plc

Rio Tinto plc

AstraZeneca PLC

Intel Corporation

Royal Bank of Canada

AT&T Inc.

International Business Machines Corporation

Royal Dutch Shell plc

Berkshire Hathaway Inc.

Johnson & Johnson

Sanofi

BHP Billiton Limited

Kraft Foods Group, Inc.

SAP AG

BP p.l.c.

McDonald’s Corporation

Schlumberger N.V.

Caterpillar Inc.

Merck & Co., Inc.

The Toronto-Dominion Bank

Chevron Corporation

Microsoft Corporation

TOTAL S.A.

Cisco Systems, Inc.

Novartis AG

United Parcel Service, Inc.

The Coca-Cola Company

Novo Nordisk A/S

United Technologies Corporation

Comcast Corporation

Occidental Petroleum Corporation

Verizon Communications Inc.

ConocoPhillips

Oracle Corporation

Visa Inc.

Exxon Mobil Corporation

PepsiCo, Inc.

Vodafone Group Public Limited Company

General Electric Company

Pfizer Inc.

The Walt Disney Company

GlaxoSmithKline plc

Philip Morris International Inc.

 

The fiscal 2013 target TDC for Mr. Duke fell between the 50th and 75th percentiles of peer TDC within the Top 50. Mr. Holley’s and Ms. Brewer’s respective target TDC was between the 25th and 50th percentiles when compared to peer positions. Mr. Simon’s and Mr. McMillon’s target TDC were in the top quartile for peer positions within this survey group.

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What other information does the CNGC consider when establishing TDC?

The CNGC also reviews other information in the process of setting TDC, although the CNGC generally considers these factors to be less significant than the factors described above.

Realized Compensation. The CNGC reviews an estimate of the realized compensation of each of our NEOs during prior fiscal years, as well as forecasts of the compensation that could be realized by our NEOs in future years. The CNGC reviews this information in order to understand the compensation actually earned by each NEO and to determine whether such realized compensation is consistent with its view of the performance of each NEO, as well as to provide insight into retention considerations.

Tally Sheets. The CNGC also reviews “tally sheets” prepared by our company’s Global People division. These tally sheets summarize the total value of the compensation received by each NEO for the fiscal year and quantify the value of each element of that compensation, including perquisites and other benefits. The tally sheets also quantify the amounts that would be owed to each NEO upon retirement or separation from our company.

Advisory Shareholder Votes on Executive Compensation. As noted above on page 42, our shareholders have expressed strong support for our executive compensation program at the last two Annual Shareholders’ Meetings. The CNGC considered that support when establishing our NEOs’ compensation opportunities for fiscal 2013. The CNGC will continue to consider the outcome of these annual advisory votes when making future compensation decisions for our NEOs.

What are our practices for granting stock options and other equity awards?

Option Exercise Prices. We did not grant any stock options to our NEOs during fiscal 2013, and stock options are not currently a part of our executive compensation program. The CNGC may grant stock options in the future in special circumstances. When we grant stock options, the exercise price is equal to the fair market value of our common stock on the date of grant.

Timing of Equity Awards. The CNGC meets each January to approve and grant annual equity awards to our NEOs for the upcoming fiscal year. Because of the timing of these meetings, equity grants awarded for an upcoming fiscal year are reported in the executive compensation tables appearing in this proxy statement as granted during the prior fiscal year. The CNGC meets again in February and/or March to establish the performance goals applicable to the performance shares and any other performance-based equity granted at the January meeting. Any special equity grants to Executive Officers during the year are approved by the CNGC at a meeting or by unanimous written consent.

Does the CNGC take tax consequences into account when designing executive compensation?

Yes. Section 162(m) of the Internal Revenue Code provides that compensation in excess of $1,000,000 paid to certain of our NEOs is generally not deductible unless it is performance-based. A significant portion of the compensation awarded to our NEOs is designed to satisfy the requirements for deductibility under Section 162(m). Moreover, the terms of equity awards granted to our NEOs generally provide that, upon vesting, the receipt of such equity will be deferred if the payment of such equity would not be dedicutible for federal income tax purposes. When designing NEO compensation, the CNGC considers whether particular elements of that compensation will be deductible for federal income tax purposes. The CNGC retains the ability to pay appropriate compensation, even if our company may not be able to deduct all of that compensation under federal tax laws.

Do we have employment agreements with our NEOs?

We do not have employment agreements with any of our NEOs. All NEOs are employed on an at-will basis.

Do we have severance agreements with our NEOs?

We have entered into a post-termination and non-competition agreement with each NEO. Each agreement provides that, if we terminate the NEO’s employment for any reason other than his or her violation of company policy, we will generally pay the NEO an amount equal to two times the NEO’s base salary, one-fourth of which is paid upon termination of employment and the balance of which is paid in installments commencing six months after separation.

Under these agreements, each NEO has agreed that for a two-year period following his or her termination of employment, he or she will not participate in a business that competes with us and will not solicit our Associates for employment. In this context, a competing business generally means any retail, wholesale, or merchandising business that sells products of the type sold by Walmart with annual revenues in excess of certain thresholds. These agreements reduce the risk that any of our former NEOs would use the skills and knowledge they gained while with us for the benefit of one of our competitors during a reasonable period after leaving our company. We do not have any contracts or other arrangements with our NEOs that provide for payments or other benefits upon a change in control of our company.

See “Potential Payments Upon Termination or Change in Control” on page 62 for more information.

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What types of retirement and other benefits are our NEOs eligible for?

Our NEOs are eligible for the same retirement benefits as our officers generally, such as participation in our Deferred Compensation Matching Plan. They may also take advantage of other benefits available more broadly to our Associates, such as our 401(k) Plan. Our NEOs do not participate in any pension or other defined benefit retirement plan.

Does our compensation program contain any provisions addressing the recovery or non-payment of compensation in the event of misconduct?

Yes. Our MIP and our Stock Incentive Plan both provide that we will recoup awards to the extent required by Walmart policies. Furthermore, our MIP provides that, in order to be eligible to receive an incentive payment, the participant must have complied with our policies, including our Statement of Ethics, at all times. It further provides that if the CNGC determines, within twelve months following the payment of an incentive award, that prior to the payment of the award, a participant has violated any of our policies or otherwise committed acts detrimental to the best interests of our company, the participant must repay the incentive award upon demand. The Amended MIP submitted for aprroval at the 2013 Annual Shareholders’ Meeting includes an expanded clawback provision (see page 66). Similarly, our Stock Incentive Plan provides that if the CNGC determines that an Associate has committed any act detrimental to the best interests of our company, he or she will forfeit all unexercised options and unvested Shares of restricted stock and performance shares.

Are our NEOs subject to any minimum requirements regarding ownership of our stock?

To further align the long-term interests of our executives and our shareholders, the Board has approved the following stock ownership guidelines:

our CEO must maintain beneficial ownership of unrestricted Shares equal in market value to five times his current annual base salary; and

each of our other Executive Officers and certain other officers must, beginning on the fifth anniversary of his or her appointment to a position covered by the stock ownership guidelines, maintain beneficial ownership of unrestricted Shares equal in market value to three times his or her current annual base salary.

If any covered officer is not in compliance with these stock ownership guidelines, he or she may not sell or otherwise dispose of more than 50 percent of any Shares that vest pursuant to any equity award during any period for which he or she is not in compliance with such guidelines until such time as he or she is in compliance with the guidelines and such sale would not cause the covered officer to cease to be in compliance with the guidelines. Further, as noted below, any Shares pledged by a Board member or Executive Officer will not be counted when determining whether the Board member or Executive Officer is in compliance with the guidelines. The Board or the CNGC can modify these guidelines in the event of dramatic and unexpected changes in the market value of our Shares or in other circumstances that the Board or the CNGC deem appropriate. Currently, each of our NEOs is in compliance with our ownership guidelines. The following graph clearly illustrates that all of our NEOs currently subject to the requirements of the stock ownership guidelines well exceed the minimum stock ownership requirements applicable to them:

Ms. Brewer is not included in the graph above because she has not yet reached the required compliance date applicable to the stock ownership guidelines.

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Are there any restrictions on the ability of our NEOs to engage in transactions involving company stock?

Yes. Our Insider Trading Policy contains the following restrictions:

Our directors and Executive Officers may trade in our stock only during open window periods, and only after they have pre-cleared transactions with our Corporate Secretary.

Our directors and Executive Officers may not enter into trading plans pursuant to Rule 10b5-1 without having such plans pre-approved by our Corporate Secretary.

Our directors and Executive Officers may not at any time engage in hedging transactions (such as swaps, collars, and similar financial instruments) that would eliminate or limit the risks and rewards of Walmart stock ownership.

Our directors and Executive Officers may not at any time engage in any short selling, buy or sell options, puts or calls, whether exchange-traded or otherwise, or engage in any other transaction in derivative securities that reflects speculation about the price of our stock or that may place their financial interests against the financial interests of our company.

Our directors and Executive Officers are prohibited from using Walmart stock as collateral for any margin loan.

Before using Walmart stock as collateral for any other borrowing, our directors and Executive Officers must satisfy the following requirements:

The pledging arrangement must be pre-approved by Walmart’s Corporate Secretary; and

Any Walmart Shares pledged will not be counted when determining whether the directors or Executive Officer is in compliance with our stock ownership guidelines.

Currently, none of our Independent Directors or Executive Officers have any pledging arrangements in place involving Walmart stock. One Non-Management Director has pledged shares related to a line of credit, as disclosed on page 68 under “Holdings of Officers and Directors.”

Risk Considerations in our Compensation Program

The CNGC, pursuant to its charter, is responsible for reviewing and overseeing the compensation and benefits structure applicable to our Associates generally. We do not believe that our compensation policies and practices for our Associates give rise to risks that are reasonably likely to have a material adverse effect on our company. In reaching this conclusion, we considered the following factors:

Our compensation program is designed to provide a mix of both fixed and variable incentive compensation.

The performance-based (cash incentive and performance share) portions of compensation are designed to reward both annual performance (under the cash incentive plan) and longer-term performance (under the performance share program). We believe this design mitigates any incentive for short-term risk-taking that could be detrimental to our company’s long-term best interests.

Our performance-based incentive compensation programs generally reward a mix of different performance measures, namely, operating income-based measures; sales-based measures; and return on investment. We believe that this mix of performance measures mitigates any incentive to seek to maximize performance under one measure to the detriment of performance under another measure. For example, if our management were to seek to increase sales by pursuing strategies that would negatively impact our profitability, resulting increases in performance share payouts should be offset by decreases in annual cash incentive payouts.

Maximum payouts under both our annual cash incentive plan and our performance share program are capped at 125 percent and 150 percent of target payouts, respectively. We believe that these limits mitigate excessive risk-taking, since the maximum amount that can be earned in a single cycle is limited.

A significant percentage of our management’s incentive compensation is based on the performance of our total company. This is designed to mitigate any incentive to pursue strategies that might maximize the performance of a single operating division to the detriment of our company as a whole.

Our senior executives are subject to stock ownership guidelines, which we believe motivate our executives to consider the long-term interests of our company and our shareholders and discourage excessive risk-taking that could negatively impact our stock price.

Our performance-based incentive compensation programs are designed with payout curves that are relatively smooth and do not contain steep payout “cliffs” that might encourage short-term business decisions in order to meet a payout threshold.

Our Executive Officers’ fiscal 2014 cash incentive payments are subject to reduction if certain compliance objectives are not satisfied.

Finally, our cash incentive plan and our Stock Incentive Plan both contain provisions under which awards may be recouped or forfeited if the recipient has not complied with our policies, including our Statement of Ethics, or has committed acts detrimental to the best interests of our company.

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Summary Compensation

The Summary Compensation table below summarizes the compensation for each of our NEOs for the fiscal years shown.

Name and Principal

Position

Fiscal Year

ended

Jan. 31

Salary

($) (1)

Bonus

($)

Stock

Awards

($) (2)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($) (3)

Change in Pension

Value and Nonqualified

Deferred Compensation

Earnings

($) (4)

All Other

Compensation

($) (5)

Total

($)

Michael T. Duke,

President and CEO

2013

1,315,731

0

13,649,520

0

4,373,180

710,664

644,450

20,693,545

2012

1,264,775

0

13,066,877

0

2,878,305

544,523

377,258

18,131,738

2011

1,232,670

0

12,652,363

0

3,852,059

499,062

476,567

18,712,721

Charles M. Holley, Jr.,

Executive Vice President and CFO

2013

752,002

0

4,272,120

0

1,246,554

107,876

260,118

6,638,670

2012

731,598

0

3,284,162

0

832,454

85,790

178,168

5,112,172

2011

631,896

0

6,368,101

0

1,021,676

70,416

94,074

8,186,163

William S. Simon,

Executive Vice President

2013

899,732

0

6,544,249

0

3,558,426

5,775

213,615

11,221,797

2012

869,732

0

6,099,191

0

1,288,918

340

184,987

8,443,168

2011

802,335

0

12,187,555

0

950,997

120

113,817

14,054,824

C. Douglas McMillon,

Executive Vice President

2013

929,748

0

6,544,249

0

1,553,986

246,652

288,458

9,563,093

2012

904,521

0

8,568,298

0

1,126,230

172,318

190,037

10,961,404

2011

880,077

0

5,669,428

0

1,901,440

148,724

206,739

8,806,408

Rosalind G. Brewer,

Executive Vice President*

2013

801,992

0

11,914,550

0

1,463,770

8,650

268,160

14,457,122

*

Ms. Brewer was an NEO for the first time in fiscal 2013. Accordingly, as permitted by the SEC’s rules, only information relating to Ms. Brewer’s fiscal 2013 compensation is disclosed in the Summary Compensation and other compensation tables, the footnotes to those tables, and in the related discussions of the NEOs’ compensation. Ms. Brewer was promoted to her current position in February 2012 and first became subject to Section 16 at that time. We generally grant equity awards to officers subject to Section 16 in January of each year, prior to the end of our fiscal year, and to all other eligible Associates after the beginning of the next fiscal year. Because of this timing, the amounts in the “Stock Awards” column above for Ms. Brewer include two annual equity awards: her annual award for fiscal 2013, granted in February 2012; and her annual award for fiscal 2014, granted in January 2013.

(1)

The amounts shown in this column represent salaries earned during the fiscal years shown, with the following amounts being the amounts that certain of our NEOs elected to defer under the Deferred Compensation Matching Plan:

 

Name

Fiscal 2013 ($)

Fiscal 2012 ($)

Fiscal 2011 ($)

 

Michael T. Duke

260,000

260,000

260,000

Charles M. Holley, Jr.

261,560

249,485

214,110

C. Douglas McMillon

104,000

104,000

104,000

(2)

In accordance with SEC rules, the amounts included in this column are the aggregate grant date fair value for stock awards granted in the fiscal years shown, including restricted stock awards and performance share awards, computed in accordance with the stock-based compensation accounting rules that are a part of GAAP (as set forth in Financial Accounting Standards Board’s Accounting Standards Codification Topic 718). In accordance with the SEC’s rules, the amounts in this column for each fiscal year exclude the effect of any estimated forfeitures of such awards.

Each NEO received an annual restricted stock award on January 28, 2013. The grant date fair value of these awards was determined based on a per-Share amount of $69.35, which was the closing price of a Share on the NYSE on that date. Ms. Brewer also received an annual restricted stock award on February 1, 2012. The grant date fair value of this award was determined based on a per-Share amount of $62.18, which was the closing price of a Share on the NYSE on that date.

As discussed in the CD&A, the number of performance shares that vest, if any, depends on whether we achieve certain levels of performance with respect to certain performance measures. The grant date fair values of the performance share awards included in the amounts in this column are based on the probable outcome of those awards as of the grant date, i.e., the probable payout of such awards based on what we have determined, in accordance with the stock-based compensation accounting rules, to be the probable levels of achievement of the performance goals related to those awards as described in the CD&A. The table below shows the grant date fair value of the performance-based share awards granted to each NEO during fiscal 2013, fiscal 2012, and fiscal 2011 assuming: (i) that our performance with respect to those performance measures will be at the levels we deem probable as of the grant dates; and (ii) that our performance with respect to those performance measures will be at levels that would result in a maximum payout under those performance awards. The grant date fair value of each performance share award was determined based on the closing price of a Share on the NYSE on the grant date, discounted for the expected dividend yield for such Shares during the vesting period:

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Name

Fiscal Year of

Grant

Grant Date Fair

Value (Probable

Performance)

($)

Grant Date Fair

Value (Maximum

Performance)

($)

 

Michael T. Duke

2013

9,999,490

14,999,267

2012

9,585,466

14,378,199

2011

9,304,868

13,957,328

Charles M. Holley, Jr.

2013

2,397,104

3,595,687

2012

2,409,166

3,613,749

2011

4,468,062

6,702,119

William S. Simon

2013

4,794,271

7,191,438

2012

4,474,189

6,711,312

2011

8,625,025

12,937,590

 

C. Douglas McMillon

2013

4,794,271

7,191,438

2012

4,818,331

7,227,497

2011

4,169,455

6,254,182

Rosalind G. Brewer

2013

8,539,555

12,809,394

(3)

Incentive payments in this column were earned in connection with our company’s performance for fiscal 2013, fiscal 2012, and fiscal 2011, but were paid during the following fiscal year. The amount shown for Mr. Simon in this column includes a special performance-based cash award of $1.5 million based on Walmart U.S. performance during fiscal 2013, which is described above on page 49. Certain portions of these amounts were deferred at the election of the NEOs, as follows:

 

Name

Fiscal 2013 ($)

Fiscal 2012 ($)

Fiscal 2011 ($)

 

Michael T. Duke

3,373,180

2,158,729

2,889,044

Charles M. Holley, Jr.

615,260

346,095

306,503

William S. Simon

120,000

0

0

C. Douglas McMillon

776,993

563,115

950,720

Rosalind G. Brewer

146,377

Not applicable

Not applicable

(4)

The amounts shown in this column represent above-market interest credited on deferred compensation under our company’s nonqualified deferred compensation plans, as calculated pursuant to Item 402(c)(2)(viii)(B) of SEC Regulation S-K.

(5)

“All other compensation” for fiscal 2013 includes the following amounts:

 

Name

401(k) Plan

Matching

Contributions

($)

Company

Contribution to

SERP

($)

Personal Use

of Company

Aircraft

($)

Company

Contributions

to Deferred

Compensation Plans

($)

 

Michael T. Duke

15,000

115,132

101,947

395,734

Charles M. Holley, Jr.

15,000

33,298

73,238

134,808

William S. Simon

15,000

51,557

142,178

0

C. Douglas McMillon

15,000

45,049

55,075

170,269

Rosalind G. Brewer

15,000

19,173

76,948

121,663

 

The value shown for personal use of Walmart aircraft is the incremental cost to our company of such use, which is calculated based on the variable operating costs to our company per hour of operation, which include fuel costs, maintenance, and associated travel costs for the crew. Fixed costs that do not change based on usage, such as pilot salaries, depreciation, insurance, and rent, are not included.

The amounts in the “all other compensation” column for fiscal 2013 also include $10,418 in tax gross-up payments to Mr. Duke, and tax gross-up payments to each other NEO in amounts less than $10,000. The amount in this column also includes $22,269 in relocation benefits provided to Ms. Brewer in connection with her relocation to Bentonville, Arkansas. The amounts in this column also include the cost of term life insurance premiums for each NEO and the cost of physical examinations for certain NEOs. The values of these personal benefits are based on the incremental aggregate cost to our company and are not individually quantified because none of them individually exceed the greater of $25,000 or 10 percent of the total amount of perquisites and personal benefits for such NEO.

Other than post-termination agreements containing covenants not to compete (as described below under “Potential Payments upon Termination or Change in Control”), our company does not have employment agreements with our NEOs. We do not have any contracts or other arrangements with our NEOs that provide for payments or other benefits upon a change in control of our company. The CNGC reviews and approves at least annually the compensation package of all Executive Officers, consisting of base salary, annual cash incentive payments, equity awards, and perquisites. The various incentive and equity compensation plans and types of awards available under our company’s plans are described more fully in the CD&A, and more detail regarding the specific incentive and equity awards granted to NEOs during fiscal 2013 is set forth in the “Fiscal 2013 Grants of Plan-Based Awards” table and accompanying notes.

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Fiscal 2013 Grants of Plan-Based Awards

Name

Grant

Date

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

 

Estimated Future Payouts Under

Equity Incentive Plan Awards

All Other

Stock

Awards:

Number

of Shares

of Stock or

Units

(#)

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)

Exercise

or Base

Price of

Option

Awards

($/Sh)

Grant

Date Fair

Value of

Stock and

Option

Awards

($) (8)

Threshold

($) (1)

Target

($) (1)

Maximum

($) (1)

Threshold

(#)

 

Target

(#)

 

Maximum

(#)

 

Michael T. Duke

 

1,650,790

4,402,106

5,502,632

 

 

 

 

 

 

 

 

 

 

 

 

1/28/13

 

 

 

 

78,948

(2)

157,895

(2)

236,843

(2)

 

 

 

 

9,999,490

1/28/13

 

 

 

 

 

 

 

 

 

 

52,632

(6)

 

 

3,650,029

Charles M. Holley, Jr.

 

462,887

1,234,366

1,542,958

 

 

 

 

 

 

 

 

 

 

 

 

1/28/13

 

 

 

 

18,926

(2)

37,851

(2)

56,777

(2)

 

 

 

 

2,397,104

1/28/13

 

 

 

 

 

 

 

 

 

 

12,617

(6)

 

 

874,989

1/28/13

 

 

 

 

 

 

 

 

 

 

14,420

(7)

 

 

1,000,027

William S. Simon

 

708,750

1,890,000

2,362,500

 

 

 

 

 

 

 

 

 

 

 

 

1/28/13

 

 

 

 

37,852

(2)

75,703

(2)

113,555

(2)

 

 

 

 

4,794,271

1/28/13

 

 

 

 

 

 

 

 

 

 

25,234

(6)

 

 

1,749,978

C. Douglas McMillon

 

715,372

1,907,658

2,384,573

 

 

 

 

 

 

 

 

 

 

 

 

1/28/13

 

 

 

 

37,852

(2)

75,703

(2)

113,555

(2)

 

 

 

 

4,794,271

1/28/13

 

 

 

 

 

 

 

 

 

 

25,234

(6)

 

 

1,749,978

Rosalind G. Brewer

 

510,000

1,360,000

1,700,000

 

 

 

 

 

 

 

 

 

 

 

 

2/1/12

 

 

 

 

21,108

(3)

42,216

(3)

63,324

(3)

 

 

 

 

2,408,845

2/1/12

 

 

 

 

13,971

(4)

27,941

(4)

41,912

(4)

 

 

 

 

1,646,004

2/1/12

 

 

 

 

14,401

(5)

28,802

(5)

43,203

(5)

 

 

 

 

1,745,113

1/28/13

 

 

 

 

21,630

(2)

43,259

(2)

64,889

(2)

 

 

 

 

2,739,592

1/28/13

 

 

 

 

 

 

 

 

 

 

14,420

(6)

 

 

1,000,027

1/28/13

 

 

 

 

 

 

 

 

 

 

21,629

(7)

 

 

1,499,971

2/1/12

 

 

 

 

 

 

 

 

 

 

14,072

(6)

 

 

874,997

(1)

The amounts in these columns represent the threshold, target, and maximum amounts of potential cash incentive payments that may be earned by our NEOs under the Management Incentive Plan for performance during fiscal 2014. Our company and/or one or more operating divisions must meet the applicable threshold performance goals for an NEO to receive payments in the threshold amounts shown above, must meet the applicable target goals to receive payments in the target amounts shown above, and must meet the applicable maximum goals to receive payments in the maximum amounts shown above. Performance at a level between the threshold and target or target and maximum goals results in a payment that is prorated between the threshold and target or target and maximum amounts shown. If threshold performance goals are not satisfied, our NEOs will not receive any payment under the Management Incentive Plan for fiscal 2014. The CD&A provides additional information regarding our Management Incentive Plan, the performance measures used to determine if cash incentive payments will be received by our NEOs, and the potential amounts of any such payments.

(2)

Represents the threshold, target, and maximum number of Shares that may vest with respect to performance share awards with a three-year performance cycle ending January 31, 2016. These performance shares will vest if our company meets applicable performance goals with respect to the performance measures described below. Up to 150 percent of the target number of Shares will vest at the end of the performance cycle, depending on the level of performance relative to the performance goals.

The CNGC annually establishes performance measures and goals for each fiscal year within the performance period. These performance measures and goals may be the same as or different from the measures and goals for any other fiscal year in the performance period. The average of our performance against the annual goals for each fiscal year within the performance period will determine the number of performance shares that ultimately vest. For fiscal 2014, the applicable performance measures are: (i) return on investment; and (ii) sales growth of our company or one of its operating divisions, depending on each NEO’s primary area of responsibility. Each NEO’s performance measure weighting is as follows:

 

Name

Weighting

 

Michael T. Duke

50% Return on Investment

50% Total Company Sales

Charles M. Holley, Jr.

50% Return on Investment

50% Total Company Sales

William S. Simon

50% Return on Investment

50% Walmart U.S. Sales

C. Douglas McMillon

50% Return on Investment

50% Walmart International Sales

Rosalind G. Brewer

50% Return on Investment

50% Sam’s Club Sales

 

Performance at a level between the threshold and target or target and maximum goals results in a payment that is prorated between the threshold and target or target and maximum amounts shown. If Walmart does not meet the threshold level of performance for a particular performance measure, none of the performance shares tied to that performance measure will vest. However, performance shares tied to other performance measures will still vest if Walmart meets at least the threshold goal for those performance measures. Holders of performance shares do not earn dividends or enjoy other rights of shareholders with respect to such performance shares until such performance shares have vested. The CD&A provides additional information regarding our performance share program and the related performance measures.

  2013 Proxy Statement   57


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(3)

Represents the threshold, target, and maximum number of Shares that may vest with respect to a performance share award with a three-year performance cycle ending January 31, 2015. The vesting of these performance shares will be based on the average of performance against the applicable performance measures during fiscal 2013, fiscal 2014, and fiscal 2015. The performance measures applicable to these performance shares during fiscal 2014 are as described in footnote (2) above.

(4)

Represents the threshold, target, and maximum number of Shares that may vest with respect to a performance share award with a three-year performance cycle ending January 31, 2014. The vesting of these performance shares will be based on the average of performance against the applicable performance measures during fiscal 2012, fiscal 2013, and fiscal 2014. The performance measures applicable to these performance shares during fiscal 2014 are as described in footnote (2) above.

(5)

Represents the threshold, target, and maximum number of Shares that could have vested with respect to a performance share award with a three-year performance cycle ending January 31, 2013. The vesting of these performance shares was based on the average of performance against the applicable performance measures during fiscal 2011, fiscal 2012, and fiscal 2013. The actual number of shares vested is reflected on the “Fiscal 2013 Option Exercises and Stock Vested” table below.

(6)

Represents restricted stock granted under the Stock Incentive Plan. These Shares of restricted stock vest based on the continued service of the NEO as an Associate through the vesting date. These Shares are scheduled to vest in full on the third anniversary of the date of grant. During the period prior to their vesting, our NEOs may vote these Shares and receive dividends payable with respect to these Shares, but may not sell or otherwise dispose of these Shares until they vest. The restricted stock and all related rights will be forfeited if the restricted stock does not vest.

(7)

Represents restricted stock granted under the Stock Incentive Plan. These Shares of restricted stock will vest based on the continued service of the NEO as an Associate through the vesting date. The Shares held by Mr. Holley are scheduled to vest in two equal installments on the third and fourth anniversaries of the grant date, while the Shares held by Ms. Brewer are scheduled to vest in two equal installments on the second and fourth anniversaries of the grant date. During the period prior to their vesting, our NEOs may vote the Shares and receive dividends payable with respect to those Shares, but may not sell or otherwise dispose of those Shares until they vest. The restricted stock and all related rights will be forfeited if the restricted stock does not vest.

(8)

The grant date fair value of the equity awards awarded on January 28, 2013 is determined based on a per-Share amount of $69.35, which was the closing price of a Share on the NYSE on that date. The grant date fair value of the equity awards awarded on February 1, 2012 is determined based on a per-Share amount of $62.18, which was the closing price of a Share on the NYSE on that date. Fair values are computed in accordance with the stock-based compensation accounting rules, and exclude the effect of any estimated forfeitures of the performance shares or restricted stock. The grant date fair values of the performance share awards included in such amounts are based on the probable outcome of those awards on the date of grant, and based on the closing price of a Share on the date the award was made, discounted for the present value of the expected dividend yield for such Shares during the vesting period. For performance shares with a performance cycle ending January 31, 2016, a discounted per-Share value of $63.33 was used. For performance shares with a perform