Equity Compensation Glass Ceiling

“During a meeting last October, Tom Coughlin, the chief of Wal-Mart’s U.S. stores looked out at a room full of division heads and top line managers and saw something wasn’t right. He rearranged the room, asking people to sit by gender and ethnicity so they could see what he saw: a room of white men.” (Time Magazine; “Women vs. Wal-Mart” July 21, 2003 commenting on Coughlin’s testimony in a sex discrimination lawsuit.)

WHEREAS,

In June 2004, US District Judge Martin Jenkins certified a class action suit involving 1.6 million women who are current and former Wal-Mart employees, calling the suit “historic in nature, dwarfing other employment suits that came before it.” Plaintiffs in the suit charge that Wal-Mart pays women less than men for doing the same job and point out that about two-thirds of Wal-Mart’s hourly workers are women, but less than a third of managers are female, far less than other competitors in the retail industry.

Employee discrimination suits are on the rise nationwide and can be financially costly to companies and risk damage to their reputation. In 2000, Coca-Cola settled one of the nation’s largest employee race discrimination suits for $192 million. In 1997, Home Depot shareholders spent $104 million to settle sex discrimination charges involving just 25,000 female employees.

One of the frequent contentions in employee discrimination suits is that employees are compensated differently on the basis of their race and gender. Historically these cases have rested largely on the payment of salaries and bonuses, but we believe in the future, employees will look more closely at corporate wealth distributed in the form of stock options and restricted stock.

According to Wal-Mart’s proxy statements, in fiscal 2004 Wal-Mart distributed 13% of total options to the five most highly compensated employees, all white males, up from 9.4% of total options the previous year.

RESOLVED,

Shareholders request that the Board shall prepare a special report, documenting the distribution of last year’s equity compensation by race and gender of the recipient of the stock options and restricted stock awards (i.e. percentage of options and restricted stock received by white men, white women, African-American men, African-American women and so on). The report shall also provide context explaining the recent trends in equity compensation granted to women and employees of color. The report, prepared at reasonable cost and omitting proprietary information, shall be available to shareholders, upon request, no later than November 1, 2005.

SUPPORTING STATEMENT

This report will provide information that will allow shareholders to evaluate whether there is an equity compensation glass ceiling at Wal-Mart, which might lead to potential future liability. In requesting this report we wish to be sure that all Wal-Mart’s associates received wealth-creating opportunities that fairly reflect their contribution to the company. Wal-Mart has made a public commitment to be a leader in corporate diversity initiatives and we believe the disclosure of this additional information is consistent with our company’s commitment.

Please vote FOR this resolution.

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