Waltons fend off shareholder bid to dilute control of Wal-Mart board

FAYETTEVILLE, Arkansas (Reuters) - Wal-Mart Stores Inc named Vice Chairman Greg Penner as its new chairman on Friday, replacing his father-in-law Rob Walton and cementing the founding family's influence over the board of the world's largest retailer.

Penner, 45, has been on the board since 2008 and was named vice chairman last June. That move was widely seen as setting the stage for him to succeed Walton, the 70-year old son of founder Sam Walton and chairman for the past 23 years.

The change is effective as of the end of the annual shareholders' meeting on Friday, near Wal-Mart headquarters in Arkansas.

The family, which owns most of Wal-Mart's shares, was able to defeat an attempt by some investors to choose a chairman without ties to the Waltons, arguing that a greater measure of independent oversight is needed for a company dealing with a three-year-old probe into alleged bribery overseas.

Penner told the 14,000 workers, shareholders and others at the meeting that the board's structure was sound. After Friday's election, 10 of the 15 directors will be independent. Rob Walton will remain as a director.

"Because of our family?s commitment, combined with strong independent director voices, we have a great balance. This is so important right now with the tremendous change all of retail is going through," said Penner, one of three family members on the board.

Both major proxy advisory firms, Institutional Shareholder Services and Glass Lewis, recommended that investors vote for a shareholder proposal calling for an independent board chairman.

The proposal, submitted by the International Brotherhood of Teamsters General Fund, was voted down along with other shareholder proposals. The Walton family controls a majority of the company's stock.

Wal-Mart shares were down about 0.6 percent at $73.66.

"This is business as usual for Walt-Mart and the Walton family dominion of the company," said Louis Malizia, assistant director of the Teamsters? Capital Strategies Department. "The claims of long-term succession planning ring hollow and do not fit with the move for greater independence on the board committees."

To strengthen the responsibilities of independent directors, Wal-Mart said it was realigning its board committees so most of the independent directors would serve on at least two committees.

Penner started his career as an analyst at Goldman Sachs Group Inc before joining Wal-Mart as a management trainee and served in a number of roles, including as chief financial officer of its Japan operations and chair of the board's technology and e-commerce committee. Since 2005 he has been a partner at investment firm Madrone Capital Partners, the company said.

"Mr. Penner can likely use background in e-commerce & global finance to balance organic growth, new investment & capital return," Cowen analyst Oliver Chen said in a research note. "Also, we believe he brings a younger energy to WMT, while continuing family tradition."

He became part of the Walton family through his marriage to Carrie Walton Penner, granddaughter of Sam Walton, who died in 1992.

(Reporting by Nathan Layne in Fayetteville, Arkansas and Sruthi Ramakrishnan in Bengaluru; Additional Additional writing by Christian Plumb; Editing by Saumyadeb Chakrabarty and Steve Orlofsky)