At Wal-Mart, Clinton didn’t upset any carts

BENTONVILLE, Ark. —  At a Democratic presidential debate last month, Sen. Hillary Rodham Clinton described Wal-Mart, the world’s largest retail company, as a “mixed blessing.” She spoke from experience.

FOR THE RECORD: An article on May 19, 2007, about Sen. Hillary Rodham Clinton’s tenure on the Wal-Mart board of directors said that in early 1992 she told two friends confidentially that her husband, then- Arkansas Gov. Bill Clinton, was planning to run for president. The conversation took place in early fall 1991. Former Wal-Mart Stores Inc. board members and executives recall Clinton as a politically nimble insider who cautiously tried to nudge the company toward hiring more female executives and environmentally friendly practices, to limited effect, while remaining silent as Wal-Mart pursued anti-union strategies.

From 1986 to 1992, Clinton was a member of its board of directors, carefully navigating through a spate of internal policy concerns that now weigh on Wal-Mart’s corporate image.

Four times a year, Clinton would leave Little Rock, driven by Arkansas state troopers and sometimes accompanied by her husband, then-Gov. Bill Clinton, for a three-hour ride to Bentonville, the northwest Arkansas company town that sprouted up around Wal-Mart’s headquarters.

While her husband tended to state duties, she joined all-day Wal-Mart board meetings chaired by the firm’s billionaire patriarch, Sam Walton, and attended by Walton’s family members, directors and top executives.

Crowded with the others around metal folding tables in the kitchen of a converted warehouse -- a no-frills board room selected by “Mr. Sam” himself -- Clinton assumed the role of loyalist reformer, making the case for measured change without rocking the boat.

She voted on company policies and joined several advisory committees during a period that was a turning point for the firm as it transformed rapidly from a regional chain of cut-rate stores to a worldwide retail powerhouse. Her Wal-Mart tenure exposed Clinton to the inner workings of a mega-corporation, and foreshadowed an impulse in her political career to both prod and accommodate big business.

“She brought a pragmatic understanding of how life works,” said Robert K. Rhoads, a Fayetteville, Ark., attorney who was Wal-Mart’s general counsel and the board’s corporate secretary. “She was a real savvy board member and one smart lawyer.”

Wal-Mart critics say her presence brought little lasting change to the firm. And former executives say she was not a voice for bold reform.

“She was not a dissenter,” said Donald G. Soderquist, Wal-Mart’s former chief operating officer and the board’s vice chairman during Clinton’s tenure. “She was a part of those decisions.”

Corporate directors are obligated to “protect shareholder value, pure and simple,” said Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance. If Clinton was brought on to the Wal-Mart board as a “change agent,” Elson said, “she shouldn’t have been put on there in the first place.”

The New York senator’s former relationship with the company poses a mixed blessing for her presidential run. The phenomenal growth of Wal-Mart’s empire across the country has been a boon to consumers, but it has also drawn fierce fire from labor organizers who accuse the retail behemoth of union-busting tactics, poor wages and healthcare benefits, and mistreatment of female workers.

A request to interview Sen. Clinton was turned down by her campaign, but spokesman Howard Wolfson said: “Wal-Mart is now one of the country’s largest employers, and Mrs. Clinton still believes it is important to try to influence the decisions they make because they can affect so many people. Sen. Clinton has made clear that Wal-Mart has an obligation to provide good health benefits and good wages to its workers. Wal-Mart workers should be able to unionize and bargain collectively.”

Wal-Mart looms as one of labor’s litmus tests for Democratic presidential candidates. One top labor political director expressed doubt that Clinton’s 20-year-old Wal-Mart board tenure would be a “make or break” factor, but candidates have repeatedly been asked about their stands on Wal-Mart during recent AFL-CIO union forums.

Labor leaders said Clinton was questioned about Wal-Mart in January when she met with top officials of the United Food and Commercial Workers, the union at the forefront of national efforts to organize Wal-Mart workers. A UFCW official said “she made a presentation and was asked about Wal-Mart,” but would not give details on the session.

Clinton often touted Wal-Mart without reservation. But as the labor-backed campaign against Wal-Mart intensified in recent years, she has tempered her public enthusiasm, even giving back a $5,000 political donation from Wal-Mart’s political action committee in 2005.

Clinton amassed nearly $100,000 worth of Wal-Mart stock as a director, much of which she and her husband placed in 1993 into a blind trust that they still maintain.

She is not the only Democratic candidate with Wal-Mart ties. During his Senate term, John Edwards disclosed owning between $1,000 and $100,000 in company stock. Illinois Sen. Barack Obama’s wife, Michelle, serves on the board of a Wal-Mart supplier. And Sen. Christopher J. Dodd of Connecticut accepted $5,000 from Wal-Mart’s PAC in 2004.

Details of Clinton’s activities as a Wal-mart director have been scant. She covered her Wal-Mart tenure in a single paragraph in her autobiography, “Living History,” saying Walton taught her about “corporate integrity and success.”

Pressed during the April 26 debate whether Wal-Mart was a “good thing or a bad thing for the United States,” Clinton did not mention her board role. She praised the firm’s rural roots and its mission to “stretch the dollar,” but said the company’s growth had “raised serious questions about the responsibility of corporations.”

Responding to her remark, Wal-Mart President H. Lee Scott Jr. told the Associated Press: “We’re making progress on all the things that the senator talked about and have a great deal of pride in our historic relationship with her.”

But the company declined to comment “about board discussions or what our directors said during board meetings or the relationship between Sen. Clinton and other directors or with the company.”

Clinton, then a lawyer with the Rose Law Firm in Little Rock, joined the board in November 1986. She was the first woman on the board, brought on by Walton to diversify an all-male inner circle, mostly Southerners and political conservatives. During a 2004 speech, Clinton recalled that Walton had phoned her and said: “They tell me I have to have a woman on the board. Do you want to be her?”

“They,” according to several board members, were Walton’s late wife, Helen, and his daughter, Alice Walton, now the world’s wealthiest woman. Sam Walton died in 1992.

One former Wal-Mart board member, who spoke on condition of anonymity, said Sam Walton did not want directors with a political or ideological agenda. But “Alice and Helen had spent time with Bill and Hillary and they were impressed,” the former director said.

Clinton’s board appointment provided a welcome income boost. Clinton’s compensation as a Rose partner had diminished after her husband became governor and she was forced to curtail her lucrative legal work before state agencies. Wal-Mart paid her $18,000 a year, $1,500 for each meeting she attended and steady increments of stock that eventually totaled 1,600 shares.

Assigned to work on the diversity issue that preoccupied Walton’s wife and daughter, Clinton joined an advisory committee that Walton had assigned to draft recommendations on pay parity and hiring women and minorities as executives.

Rhoads said he and Clinton flew to New York to consult with a firm that helped corporations recruit more female directors. But Tom Seay, a former Wal-Mart vice president who was on the advisory committee, said that her “involvement was limited” and that Wal-Mart staffers did “most of the heavy lifting.”

The advisory group ended up suggesting mentoring programs and internal women’s groups, ideas that did little to improve conditions for Wal-Mart’s female workforce, critics say. The committee’s existence -- and Clinton’s role on it -- was not previously acknowledged by company officials, said Joseph T. Sellers, one of the lawyers behind a class action lawsuit against Wal-Mart on behalf of women claiming discrimination.

“There was no change for the better during that period for women at Wal-Mart,” Sellers said. “If there was change, it was minimal. Nobody knew about it or else it was just too subtle to recognize.”

The class action suit is pending, and could affect up to 1.6 million current and former workers.

On the board, Clinton impressed other outside directors brought in by Walton. “She stayed pretty much in the background. But she was an advocate for women, quietly and effectively,” said Toys “R” Us founder Charles Lazarus, who became a director in 1984.

Clinton was able to coexist with the board’s male, largely Southern culture. One director, Texas businessman Robert Dedman, often made politically incorrect jokes, prompting Clinton to “roll her eyes,” recalled Rhoads.

Union activism was a problem for Wal-Mart as it expanded into labor strongholds such as Missouri and Illinois. Since 1970, Sam Walton had worked closely with Omaha lawyer John E. Tate to ward off unionization using an aggressive campaign of rewards and tough talk.

Bob Ortega, author of “In Sam We Trust,” a history of Wal-Mart, said workers were provided with incentives such as stock purchase programs and bonuses for efficiency while the firm sent in teams of lawyers and executives to stiffen resistance to union organizing efforts.

Although the details of Wal-Mart’s anti-union efforts were rarely broached during board meetings, Tate said recently, Clinton “clearly knew the company’s reputation.” Tate said that when he “made presentations on what we were doing” during board meetings, Clinton did not raise objections.

Soderquist agreed, saying there was “no sign that she had any criticism.”

Nor did she object, Tate said, when he was brought in by Walton in 1988 as an executive vice president and a director, a step that required board approval.

Tate and Soderquist, like other Wal-Mart executives from that era, are loyal Republicans who donated more than $20,000 apiece to the party and its candidates in the 1990s and 2000s. But both praise Clinton’s performance as a board member. Soderquist recalls her as a “very positive member of Wal-Mart’s board,” while Tate said she was a “well-respected” attorney who showed a “broad understanding” of the law.

Several labor officials said recently that the fact Clinton was on the board when Wal-Mart was mounting union-busting tactics could pose a predicament as they mull presidential endorsements.

Nu Wexler, a spokesman for Wal-Mart Watch, one of several union-backed groups pressing for change at the company, said that any Democratic candidate’s ties to Wal-Mart would probably be examined, but he added: “I suspect that unions are far more interested in her plan for universal healthcare than her board service 15 years ago.”

Jonathan Tasini, executive director of the Labor Research Assn. and a Senate primary rival of Clinton in 2006, countered that activists would continue to raise questions even if union leaders sidestepped the issue. “She has never answered fully what she did or did not do on the board of Wal-Mart,” Tasini said.

Clinton’s clearest impact, former company colleagues said, was on environmental issues. Clinton asked Walton to put her on an environmental advisory committee, and Walton agreed, recalled Paul Higham, a former Wal-Mart executive who also was on the panel.

The committee soon included two old friends from the Clintons’ 1972 stint with the George McGovern presidential campaign in Texas -- former Texas Land Commissioner Garry Mauro and Roy Spence, an Austin advertising man who handled Wal-Mart’s account and now is working on Clinton’s campaign ads. Higham said Clinton played a critical role in getting Wal-Mart to press its suppliers to use packaging that was easily recycled. The group also spurred more recycling programs and architectural alterations that saved energy in many stores, Higham said.

But the committee tailed off soon after Clinton’s departure from Wal-Mart in 1992.

During a car ride through Bentonville after one committee meeting in early 1992, Clinton confided in Mauro and Spence that her husband would run for president. That meant, she told them, that she would have to step down from the Wal-Mart board to devote full time to the campaign. She left that spring.

Mauro stayed on, expecting the firm would continue sorting through ideas. But the board member who replaced her was “a pretty far-right guy who didn’t have the personal commitment she had,” Mauro recalled. “We had two or three meetings and then the committee just kind of went away.”