Hillary's Secret

As a Director, Clinton Moved Wal-Mart Board, but Only So Far

In 1986, Sam Walton, the founder of Wal-Mart, had a problem. He was under growing pressure from shareholders — and his wife, Helen — to appoint a woman to the company’s 15-member board of directors.

So Mr. Walton turned to a young lawyer who just happened to be married to the governor of Arkansas, where Wal-Mart is based: Hillary Rodham Clinton.

Mrs. Clinton’s six-year tenure as a director of Wal-Mart, the nation’s largest company, remains a little known chapter in her closely scrutinized career. And it is little known for a reason. Mrs. Clinton rarely, if ever, discusses it, leaving her board membership out of her speeches and off her campaign Web site.

Fellow board members and company executives, who have not spoken publicly about her role at Wal-Mart, say Mrs. Clinton used her position to champion personal causes, like the need for more women in management and a comprehensive environmental program, despite being Wal-Mart’s only female director, the youngest and arguably the least experienced in business. On other topics, like Wal-Mart’s vehement anti-unionism, for example, she was largely silent, they said.

Her years on the Wal-Mart board, from 1986 to 1992, gave her an unusual tutorial in the ways of American business — a credential that could serve as an antidote to Republican efforts to portray her as an enemy of free markets and an advocate for big government.

But that education came via a company that the Democratic Party — and its major ally, organized labor — has held up as a model of what is wrong with American business, with both groups accusing it of offering unaffordable health insurance and mistreating its workers.

So rather than promote her board membership, Mrs. Clinton is now running from it, even returning a $5,000 campaign donation from the giant discount chain in 2005, citing “serious differences” with its practices. But disentangling herself from the company is harder than it may seem.

Despite her criticism, Mrs. Clinton maintains close ties to Wal-Mart executives through the Democratic Party and the tightly knit Arkansas business community. Her husband, former President Bill Clinton, speaks frequently to Wal-Mart’s current chief executive, H. Lee Scott Jr., about issues like health care and even played host to Mr. Scott at the Clintons’ home in New York last July for a private dinner.

And several months ago, Mrs. Clinton helped broker a secret meeting between a top Wal-Mart executive and former Democratic operative, Leslie Dach, and leaders of the retailer’s longtime adversary at the United Food and Commercial Workers union, according to several people briefed on the matter, who spoke on condition of anonymity because they were not authorized to do so publicly.

The goal of the meeting was to tamp down the rancor between the company and the union, which has set up a group, WakeUpWalMart.com, that has harshly criticized the chain and leaked embarrassing internal documents to the news media, though an accord has not yet been reached.

Mrs. Clinton declined to be interviewed for this article. In a statement, her spokesman 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.”

In Mrs. Clinton’s complex relationship with Wal-Mart, there are echoes of the familiar themes that have defined much of her career: the trailblazing woman unafraid of challenging the men around her; the idealist pushing for complicated, at times expensive, reforms; and the political pragmatist, willing to accept policies she did not agree with to achieve her ends.

“Did Hillary like all of Wal-Mart practices? No,” said Garry Mauro, a longtime friend and supporter of the Clintons who sat on the Wal-Mart Environmental Advisory Board with Mrs. Clinton in the late 1980s and worked with her on George McGovern’s 1972 presidential campaign.

“But,” Mr. Mauro added, “was Wal-Mart a better company, with better practices, because Hillary was on the board? Yes.”

Mrs. Clinton was not Mr. Walton’s first choice for a woman on the board. That honor belonged to an executive at Nordstrom, the upscale department store. But Nordstrom opposed its employees sitting on a competitor’s board, so Wal-Mart turned instead to the 39-year-old Mrs. Clinton. They offered her about $15,000 a year for her time, generally four meetings a year.

She was a logical candidate: the wife of the governor, a Wal-Mart shareholder — with stock eventually worth nearly $100,000 — and a highly regarded lawyer at the Rose Law Firm, which had represented Wal-Mart in several cases.

But if her circumstances made her a natural choice for the board, her often liberal beliefs did not and she struggled to change the rigid, conservative culture at Wal-Mart, achieving modest results.

Early in her tenure, she pressed for information about the number of women in Wal-Mart’s management, worrying aloud that the company’s hiring practices might be discriminatory.

The data she received would have been troubling: by 1985, there was not a single woman among the company’s top 42 officers, according to “In Sam We Trust,” the 1998 book about Wal-Mart by Bob Ortega.

John E. Tate, who served as a director with Mrs. Clinton from 1988 to 1992, recalled that by her third board meeting Mrs. Clinton had announced “that you can expect me to push on issues for women. You know that. I have a reputation of trying to improve the status of women generally, and I will do it here.”

Mr. Walton appeared relieved to have a woman on the board to deflect criticism, telling shareholders during the annual meeting in 1987 that the company had a “strong-willed young lady on the board now who has already told the board it should do more to ensure the advancement of women.”

Still, the board’s discussions did not translate into significant progress. By the late 1990s, after Mrs. Clinton had left the board, Wal-Mart had added a second female director, but the number of women in senior management remained paltry, according to company records. (Today, 23 percent of Wal-Mart’s top 300 corporate officers are women, but the company is fighting a class-action lawsuit claiming sex discrimination filed on behalf of 1.6 million current and former female employees.)

Mrs. Clinton had greater success on environmental issues. At her request, Mr. Walton set up the environmental advisory group, which sent a series of recommendations to the company’s board.
When it came time to pick members, Mrs. Clinton, who led the advisory group, reached out to at least two colleagues from the McGovern presidential campaign — Mr. Mauro and Roy Spence, who headed an advertising firm in Texas that did extensive work for Wal-Mart.

Under her watch, the advisory group drew up elaborate plans. Consumers would bring in used motor oil and batteries for recycling. Suppliers would reduce the size of their packaging. And Wal-Mart would build stores with energy-saving features.

Wal-Mart executives put much of the program into place. In 1993, for example, they opened an experimental “eco-store” in Kansas, with skylights and wooden beams from forests that had not been clear cut.

One executive derided it as “Hillary’s store” because it was more expensive to build than the average Wal-Mart, but several of its features, like the skylights that cut energy bills by reducing the need for artificial lighting, were widely copied across the industry.

“We were on the leading edge of something that is being mandated now,” said Bill Fields, the head of merchandise at Wal-Mart in the early 1990s who worked closely with Mrs. Clinton on the environmental project.

For Wal-Mart, the largest employer in Arkansas, Mrs. Clinton’s presence had obvious advantages: on matters big and small, the company had the ear of the governor’s wife.
For Mrs. Clinton, being a director at Wal-Mart gave her access to several of the state’s most powerful business executives. In the early 1980s, for example, Mr. Walton was instrumental in building support for a corporate tax program, pushed by Mrs. Clinton, that financed a major education overhaul in Arkansas, a signal achievement of her husband’s governorship.

Though she was passionate about issues like gender and sustainability, Mrs. Clinton largely sat on the sidelines when it came to Wal-Mart and unions, board members said. Since its founding in 1962, Wal-Mart has fought unionization efforts at its stores and warehouses, employing hard-nosed tactics — like allegedly firing union supporters and spying on employees — that have become the subject of legal complaints against the company.

A special team at Wal-Mart handled those activities, but Mr. Walton was vocal in his opposition to unions. Indeed, he appointed the lawyer who oversaw the company’s union monitoring, Mr. Tate, to the board, where he served with Mrs. Clinton.

During their meetings and private conversations, Mrs. Clinton never voiced objections to Wal-Mart’s stance on unions, said Mr. Tate and John A. Cooper, another board member.

“She was not an outspoken person on labor, because I think she was smart enough to know that if she favored labor, she was the only one,” Mr. Tate said. “It would only lessen her own position on the board if she took that position.”

Mr. Tate, a prominent management lawyer who has helped stop union drives at many major companies, said he worked closely with Mr. Walton to convince workers that a union would be bad for the company, personally telling employees when he visited stores that “the only people who need unions are those who do not work hard.”

A spokesman for Mrs. Clinton said, “Wal-Mart workers should be able to unionize and bargain collectively.”