Jr., H. Lee Scott,

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Jr., H. Lee Scott,

Chief Executive Officer of Wal-Mart

B orn Harold Lee Scott Jr., March 14, 1949, in Joplin, MO; son of Harold (a gas station owner)and an elementary school music teacher; married Linda Gail Aldridge; children: Eric Sean, Wyatt Parson. Education: Pittsburg State University, B.A., 1971; completed executive-development programs at Pennsylvania State University and Columbia University.

Addresses: Office—Wal-Mart Stores Inc., 702 SW 8th St., Bentonville, AR 72716-8611.

Career

E mployed by McNally’s (a tire-moldmanufacturer), 1970s; terminal manager, YellowFreight System, 1977-79; employed by Queen City Warehouse, Springfield, MO, 1979; assistant director, transportation department, Wal-Mart, 1979; director of transportation, vice president of transportation, vice president of distribution, senior vice president of logistics, Wal-Mart, 1980s through early 1990s; executive vice president of logistics, Wal-Mart, 1993-95; executive vice president of merchandising, Wal-Mart, 1995-98; chief executive of Wal-Mart Stores Division, 1998-99; chief operating officer and vice chairman, Wal-Mart, 1999-2000; president and chief executive officer, Wal-Mart, 2000—.

Sidelights

S omeone meeting H. Lee Scott, Jr. in person mightbe surprised to know that he was the chief executive officer (CEO) of Wal-Mart, the largest company in the world. Not only does Scott have an un-assuming demeanor and folksy manner of speech, he appears at local Wal-Marts, unannounced, once every week, just to touch base with associates who work on the floor and make sure that the company is running the way it should in person as well as on paper.

Born on March 14, 1949, in Joplin, Missouri, Scott grew up in Baxter Springs, Kansas, with two brothers. His father owned a gas station and his mother taught music at an elementary school. He was active in both music and sports during his school career, and attended Pittsburg State University in Pittsburg, Kansas, for his undergraduate degree. He met his wife Linda during college and, in order to pay for both college and executive development courses at Pennsylvania State University and Columbia, they lived in a rented trailer, raising their son. “I worked at McNally’s [a tire-mold manufacturer] from about 3:30 p.m. to midnight, and studied between midnight and 2 a.m.,” Scott told Paul Harris of the London Observer. “At the time, it didn’t seem difficult, it just seemed cold, because the heater in the trailer didn’t work.”

Despite his education, Scott had trouble finding a position in his field. He applied at the trucking company Yellow Freight System, but was turned down for a job until a friend intervened. Once employed, Scott quickly climbed into a management position, showing his skill at negotiation and collection of outstanding bills. It was in this position that he first encountered David Glass, former CEO of Wal-Mart, who, at the time, was head of finance. Scott tried to collect an outstanding $7,000 Yellow Freight System was owed; Glass denied the claim and refused to pay. But Scott’s handling of the interaction so impressed Glass that he offered Scott a job. “I’m not the smartest guy that’s ever been in your office, but I’m not going to leave the fastest-growing trucking company in America to go to work for a company that can’t pay a $7,000 bill,” Scott remembered telling Glass, recalling their conversation in an interview with BusinessWeek’s Wendy Zellner.

Though he had claimed loyalty to his position, Scott left Yellow Freight System to work for Queen City Warehouse in Springfield, Missouri, in 1979. Offered the position of assistant director in the transportation department of Wal-Mart in 1979, Scott accepted, beginning his long career inside the company. Though he thought he would be the head of the department, upon his arrival, he discovered that the person he had been told he was replacing had not yet left the company, and Glass asked him to work as the second in command. Showing a lack of ego that has been notable throughout his career at Wal-Mart, Scott acquiesced, and waited to move up into the position until it was right for the company.

The beginning of his career was off to a rocky start, however. He was a stickler for the rules, and became known as extremely stern and, at the time, inflexible. When the truckers under him committed infractions, he wrote a letter to all of the truck drivers on staff, threatening to fire those whose performance was hindered. This alienated the workers under him who followed the rules, and they approached Sam Walton, founder of Wal-Mart, asking that Scott be fired. Instead, Walton encouraged Scott to open his door and listen to the workers individually. These instructions humbled Scott and he learned part of the culture that Walton was trying to embrace. “You couldn’t be around Sam Walton and not fully understand the culture of the company,” Joseph S. Hardin Jr., a former Wal-Mart executive who is now the CEO of Kinko’s Inc., told BusinessWeek. “That’s one of the things that has helped Lee so much.”

The lesson served Scott well, and he was promoted several times in the next few years, moving into leadership positions inside transportation, distribution, and logistics. He worked with distributors to develop innovative technology, including the universal barcode that allows retailers to track their merchandise at all stages of the distribution process. In 1995, he was assigned to merchandising, an area outside his expertise, because the company was lag-ging and wanted new ideas on how to promote itself. Using the same techniques he had developed in logistics, Scott listened to vendors and distributors to develop a way to grow sales. From slashing inventory to changing displays and presentation, Scott’s efforts made a big impact on Wal-Mart, and, in 1998, three years after becoming head of merchandising, Scott was promoted to CEO of the Wal-Mart Stores Division.

The appointment to CEO of Wal-Mart Stores was a solid indication that Scott would be chosen as then-CEO Glass’s successor. “It’s his to lose,” Glass commented in BusinessWeek in 1999. Walter Loeb of Loeb Associates consultants noted of the promotion in a 1998 article in WWD, “[W]ithin the past year he has risen because of his business leadership as well as the capabilities he has developed as a merchant.” Loeb, a year later, said in the same periodical, “[Scott] is one of the most important, dynamic people Wal-Mart has.” Scott’s appointment was also notable given the number of competitors, including Kmart and Saks Fifth Avenue, that hired outsiders into key positions that same year, rather than hiring from within. In 2000, the predictions were fulfilled as Glass retired, promoting Scott to head of the company. He had big dreams for the company, always hoping for improvement no matter what the sales increases looked like. “If you consider the workers inside this company, and if we could accelerate our improvement, we could really be a successful company some day,” he said in WWD. “I mean that.”

Scott’s years at the top have not been easy as he has faced some of the biggest challenges the retailer has encountered since its founding. After the United States government, Wal-Mart was, as of 2004, the most-sued entity in the world. In 2004, current and former female employees, numbering approximately 1.6 million, filed a class-action law suit accusing the company of sex-discrimination. Wal-Mart has been criticized for using foreign labor depen-dant on sweatshops, has been called anti-union, and has been accused of paying unfair wages with poor health-care benefits.As late as 2007, statements from activist groups including the Service Employees International Union, came down on Wal-Mart’s policies: “No one, in good conscience or without a real commitment from Wal-Mart to make substantive changes, could look the other way and ignore the awful fact that Wal-Mart still fails to provide com- pany health care to [more than] half of its employees,” read a statement by the union-run Web site, WakeUpWalMart.com, reprinted in the New York Times.

Even before becoming the CEO, Scott made efforts to combat criticism of the company, meeting with politicians and engaging in conversations, as well as putting forward a positive image in the media. “For the most part [I was] listening,” he said of his lunches with politicians during the Clinton administration in BusinessWeek. “I already know what I think. I want to hear what they think.” Scott also made diversity a priority in hiring, given equally qualified applicants, and made his own salary dependent upon meeting diversity goals. In response to criticism about environmental concerns, Scott researched ways that Wal-Mart could become more environmentally friendly and still save money. He increased the efforts of the company to communicate with the public, launching a Web site to answer questions and making appearances on television shows. Commenting in USA Today, Scott noted that he wanted to combat Wal-Mart’s negative reputation and address concerns of wealthy individuals who neither worked at nor shopped at his stores. “One of the things that strikes me is so many of the critics are people whose lifestyle doesn’t change when the price of fuel changes,” he said. “In some ways, people forget about average working people, and how they live their lives.” His hopes with the public relations campaign was to give associates at Wal-Mart back some of their pride in their work.

Scott has long viewed himself as part of the team, going so far as to refuse to pose for Fortune magazine’s 2003 Most Admired Company cover, as he felt it would give him too much credit for the company’s success. In order to set a good example for his employees, he sold his BMW in favor of a Volkswagon Bug, and makes far less in salary than CEOs of comparable companies. In keeping with Walton’s open door policy, Scott launched an employee Web site, Lee’s Garage, where employees can ask questions ranging from local to company-wide concerns. As for his own goals, senior vice president of corporate affairs Jay Allen told Supermarket News, “He’s always answered the same way, that when he walks out the door, he wants to know if Sam Walton were standing there that he’d say, ‘You did a good job.’”