Will Wal-Mart’s Share Buyback Appease Disgruntled Shareholders?

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The biggest news emerging from Wal-Mart’s (NYSE:WMT) annual shareholder meeting on Friday was that the board approved a new $15 billion stock repurchase program, the first in two years. Such buybacks reduce the number of shares held by the public, and the smaller float means that even if profits remain the same, the earnings per share increases. For Wal-Mart, boosting that key metric is especially important because its business in the United States is only just recovering from a two-year slump that was prompted by mistakes in pricing and merchandising.

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But the share repurchase was by no means the only announcement, or even the most important announcement for Wal-Mart’s future, that was made at the Bentonville, Arkansas-based company’s meeting. The retailer’s board of directors could now be at risk of losing independent voices.

Wal-Mart’s current trajectory dates back to the retailer’s last stock repurchase program. That June 2011 $15-billion buyback propelled the stake held by Wal-Mart’s founding family, the Waltons, above 50 percent — giving them majority control and more power of the board of directors. According to the rules of the New York Stock Exchange, that makes the retailer a controlled company, a designation that allows it opt out of a requirement to have a majority of independent directors.

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