Dear CII members:

Walmart workers who are members of United for Respect, together with Majority Action, released a report today which delineates the material reputational, operational, and legal risks Walmart (WMT) faces as a result of a breakdown in the feedback loop between the Board of Directors, senior management, and frontline essential workers. A new survey of more than 1,500 WMT associates conducted in May 2020, demonstrates that hourly associates struggle to maintain proper distancing, don’t trust WMT to keep them safe, and are likely to go to work ill, contrary to WMT’s public statements about their COVID-19 response. Workers propose that an hourly associate on the board of directors (Proposal 7 on the proxy) would bring deep expertise in the day-to-day operations of Walmart stores, and would have the capacity and incentive to oppose risky corporate behavior, short-termism, and misaligned executive compensation incentives. Walmart worker-shareholders are available to meet with institutional investors to discuss these issues; please email me directly (lisa@majorityact.org) to arrange a day and time that is convenient for you.

Walmart’s status as the largest retailer and grocery chain in the country makes it a critical provider of essential goods, and in many communities it is one of the few places large crowds still gather. As cases of COVID-19 and deaths from the disease grow across the country, the risks to the company are escalating. There are already multiple COVID-19 outbreaks, thousands of cases, and at least 21 deaths associated with Walmart stores.

Unfortunately, Walmart management’s actions have failed to keep pace with critical public health guidelines; and front-line workers— known as associates at Walmart— continue to report a failure to fully implement changes in stores and have raised concerns about the enforcement and effectiveness of policies. The attached report is based on both the findings of a survey of 1,500 Walmart associates conducted in May 2020, weeks after Walmart had announced pandemic measures, such as limiting customer numbers and providing emergency leave, as well as qualitative interviews with associates. Key findings include:
 
●        Walmart delayed instituting customer limits in stores and management has failed to limit crowding in many stores. Only 9% of workers surveyed reported they could always maintain appropriate distancing at work weeks after store customer limits and other procedures were announced.
●        Associates report a lack of cleaning equipment and protective equipment and insufficient time to clean, and they say that enhanced overnight cleaning is not happening at many stores. A UC Berkeley survey shows that Walmart lagged behind its peers in adopting new cleaning procedures and providing access to protective equipment. Only 2 in 5 Walmart workers surveyed said they trusted Walmart to keep them, their coworkers, and their customers safe during this crisis.
●        Walmart’s emergency leave policy contains dangerous gaps in coverage and incentivizes workers to come to work sick.  Nearly half of workers surveyed report that they are likely to come to work even if they feel unwell or are mildly ill. Of those, 58% cite fear of discipline or consequences as the primary reason for doing so.
 
Walmart entered the crisis with longstanding and costly reputational headwinds related to its employment practices, as associates have repeatedly raised concerns regarding understaffing, problems with Walmart’s sick leave policy, and the increasing reliance on part-time work and ineligibility for health benefits that have gone unaddressed by Walmart management. The risks associated with these longstanding concerns have magnified as the COVID crisis unfolds, with heightened scrutiny around cases and deaths at Walmart locations, mistreatment of workers, store closures, absenteeism due to unsafe workplaces, and legal action against the company.
 
Board oversight is more important than ever. Rapidly evolving laws, public health guidance, and conditions at all levels make it vital for the Board to have the clearest and most timely information about conditions on the ground. This information is needed to lead the ongoing response to this crisis, oversee the effectiveness of management systems and implementation of Board guidance and priorities, and better prepare for the next challenges. This experience and perspective is particularly important as the only directors with disclosed retail experience on Walmart’s Board are not designated as independent: the CEO and members of the Walton family.  
 
Board-level employee representation is a proven governance reform that would provide the necessary insight into risks and strengthen alignment between the long-term interests and both employees and shareholders. A non-management employee on the Board would provide crucial experience and insight to strengthen board oversight, improve governance, and protect customers, associates and shareholders.

Please contact me if you are available for a 30 minute call with Walmart workers to discuss these issues.  Thank you very much for your attention and stay safe.

Kind regards,
Lisa Lindsley

Lisa Lindsley | Director of Investor Engagement | Majority Action | +1.201.321.0301 | www.majorityaction.us | @majorityact