In a return to a policy that harkens back to Sam Walton and his leadership of Walmart, the company announced it will conduct a split of its outstanding shares of common stock at a three-for-one rate.
Although the company described the stock split as a result of its ongoing review of optimal trading and spread levels, Walmart also related a desire to make purchasing shares more easily. Walmart noted that more than 400,000 of its employees participate in Walmart’s Associate Stock Purchase Plan, which enables eligible staffers to buy stock conveniently through payroll deductions while providing a 15% company match on the first $1,800 purchased each year. The stock split initiative comes as Walmart and other retailers have raised salaries and added benefits for employees, including hourly workers and store managers, in a tight labor market across the United States.
“Sam Walton believed it was important to keep our share price in a range where purchasing whole shares, rather than fractions, was accessible to all of our associates,” said Doug McMillon, Walmart president and CEO, in announcing the stock split. “Given our growth and our plans for the future, we felt it was a good time to split the stock and encourage our associates to participate in the years to come. As Sam said, ‘We’re all in this together. That’s the secret.’”
Subsequent to Sam Walton’s management, the company introduced a new share strategy and hasn’t split its stock since 1999, although it had done so every few years previously, as recorded on the Walmart investor relations site.
Walmart said the company’s focus on helping people save money and live better includes its 2.1 million employees worldwide. The company stated it has developed an opportunity path for staffers by offering good jobs and careers, with continued investments in compensation and attractive healthcare, as well as financial and educational benefits. The Associate Stock Purchase Plan has been part of the employee benefits provided by Walmart for nearly 30 years, the company maintained.
Shares to be issued in the stock split will be payable after market close on Friday, February 23. The stock split will increase the number of shares of Walmart’s outstanding common stock from approximately 2.7 billion shares to approximately 8.1 billion shares.
Walmart shareholders other than employees may also benefit from the stock split. A research note issued by Morgan Stanley analysts, including Simeon Gutman, pointed out historically stocks outperform the overall market immediately after and six months after a split.
