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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

Wal-Mart Stores, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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702 Southwest 8^th Street

Bentonville, Arkansas 72716-0215

(479) 273-4000

NOTICE OF 2007 ANNUAL SHAREHOLDERS’ MEETING

To Be Held June 1, 2007

Please join us for the 2007 Annual Shareholders’ Meeting of Wal-Mart Stores, Inc. The meeting will be held on Friday, June 1, 2007, at 7:00 a.m. in Bud Walton Arena, University of Arkansas, Fayetteville, Arkansas.

The purposes of the 2007 Annual Shareholders’ Meeting are:

You must be the holder of record of shares of Wal-Mart Stores, Inc. common stock at the close of business on April 5, 2007, to vote at the 2007 Annual Shareholders’ Meeting. If you plan to attend, please bring the Admittance Slip on the back cover and picture identification. Regardless of whether you will attend, please vote as described on pages 3-5 of the proxy statement. Voting in any of the ways described will not prevent you from attending the 2007 Annual Shareholders’ Meeting.

By Order of the Board of Directors

Thomas D. Hyde

Secretary

Bentonville, Arkansas

April 19, 2007

Admittance Requirements on Back Cover

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702 Southwest 8^th Street

Bentonville, Arkansas 72716-0215

(479) 273-4000

PROXY STATEMENT

This proxy statement and accompanying proxy card are being mailed beginning April 19, 2007, in connection with the solicitation of proxies by the Board of Directors of Wal-Mart Stores, Inc., a Delaware corporation, for use at the 2007 Annual Shareholders’ Meeting. The meeting will be held in Bud Walton Arena, University of Arkansas, Fayetteville, Arkansas, on Friday, June 1, 2007, at 7:00 a.m.

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TABLE OF ABBREVIATIONS

The following abbreviations are used for terms that appear in more than one section of this proxy statement:

2005 Stock Incentive Plan: Wal-Mart Stores, Inc. Stock Incentive Plan of 2005, as it amended and restated the Wal-Mart Stores, Inc. Stock Incentive Plan of 1998 to be effective January 1, 2005

Associate: an employee of Wal-Mart or one of its subsidiaries

Board: the Board of Directors of Wal-Mart

Board committees:

Audit Committee

CNGC: Compensation, Nominating and Governance Committee

EC: Executive Committee

SOC: Stock Option Committee

SPFC: Strategic Planning and Finance Committee

Bylaws: the amended and restated Bylaws of Wal-Mart, effective as of September 21, 2006

Categorical Standards: standards adopted by the Board that describe types of relationships that a director might have with Wal-Mart or its subsidiaries that the Board believes are per se immaterial to a director’s independence, as permitted by the NYSE Listed Company Manual

CD&A: the Compensation Disclosure and Analysis, located in this proxy statement

CEO: the Chief Executive Officer

CFO: the Chief Financial Officer

Chairman: the Chairman of a board of directors

Computershare: Computershare Trust Company, N.A., Wal-Mart’s transfer agent and successor in interest to EquiServe Trust Company, N.A.

Deferred Compensation Plan: the Wal-Mart Stores, Inc. Officer Deferred Compensation Plan, as amended and restated effective March 31, 2003

Director Compensation Plan: the Wal-Mart Stores, Inc. Director Compensation Plan, as amended and restated effective January 1, 2005

E&Y: Ernst & Young LLP, Wal-Mart’s independent registered public accounting firm

Exchange Act: the Securities Exchange Act of 1934, as amended

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Executive Committee of the Company: a Company committee consisting of the Executive Officers and certain other Senior Officers of the Company

Executive Officers: certain Senior Officers designated by the Board and as defined by Rule 3b-7 of the Exchange Act that have certain disclosure obligations and who also must report all transactions in equity securities of the Company under Section 16

Fiscal 2005, fiscal 2006, fiscal 2007, and fiscal 2008: fiscal years ending January 31, 2005, 2006, 2007, and 2008, respectively

Independent Directors: the directors whom the Board has determined have no material relationships with the Company pursuant to the standards set forth in the NYSE Listed Company Manual and, as to members of the Audit Committee, who meet the requirements of Section 10A of the Exchange Act and Rule 10A-3

Management Incentive Plan: the Wal-Mart Stores, Inc. Management Incentive Plan, as amended and restated effective February 1, 2003

Named Executive Officers: the Company’s President and CEO, CFO, and the next three most highly compensated Executive Officers

Non-Management Directors: the members of the Board who do not hold another position with Wal-Mart or one of its subsidiaries

NYSE: the New York Stock Exchange

NYSE Listed Company Manual: the manual of the NYSE that sets forth policies, practices, and procedures for companies with securities listed for trading on the NYSE

Profit Sharing/401(k) Plan: the Wal-Mart Profit Sharing and 401(k) Plan, as restated effective October 31, 2003, and subsequently amended

Retail Industry Survey: a select group of peer retail companies consisting of publicly traded retailers in the United States from various retail segments, other than Wal-Mart

SEC: the Securities and Exchange Commission

Section 16: Section 16 of the Exchange Act

Select Fortune 100 Survey: a select group of 37 publicly traded companies included in the Fortune 100, identified as having certain characteristics, such as business model, size, or global reach, that are comparable to the Company

Senior Officers: the President and CEO, Vice Chairmen, Executive Vice Presidents, and Senior Vice Presidents of Wal-Mart

SERP: the Wal-Mart Stores, Inc. Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2005

Share or Shares: a share or shares of Wal-Mart common stock, $0.10 par value per share

SOX: the Sarbanes-Oxley Act of 2002

Stock Purchase Plan: the Wal-Mart Stores, Inc. 2004 Associate Stock Purchase Plan, as restated effective February 1, 2004, and subsequently amended

Top 50: the 50 largest U.S. publicly traded companies, other than Wal-Mart, ranked by market capitalization

Wal-Mart or the Company: Wal-Mart Stores, Inc.

Your proxy is solicited by the Board. The Company pays the cost of soliciting your proxy and reimburses brokers and others for forwarding you the proxy statement, proxy card, and Annual Report to Shareholders.

VOTING INFORMATION

Who may vote?    You may vote if you were the holder of record of Shares at the close of business on April 5, 2007. You are entitled to one vote on each matter presented at the 2007 Annual Shareholders’ Meeting for each Share you owned on that date. If your Shares are held in “street name” through a bank, broker, or other nominee, you must obtain a proxy, executed in your favor, from the holder of record as of the close of business on April 5, 2007, to be able to vote at the meeting. As of March 30, 2007, Wal-Mart had 4,121,668,519 Shares outstanding.

What am I voting on?    You are voting on:

Who counts the votes?    Computershare will count the votes. The Board has appointed two employees of Computershare as inspectors of the election.

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Is my vote confidential?    Yes, your proxy card or ballot and voting records will not be disclosed to Wal-Mart unless the law requires disclosure, you request disclosure, or your vote is cast in a contested election. If you write comments on your proxy card or ballot, your comments will be provided to Wal-Mart, but how you voted will remain confidential.

What vote is required to elect a director at the 2007 Annual Shareholders’ Meeting?    In an uncontested election of directors, to be elected as a director of the Company, a director nominee must receive a majority of the votes cast by the Shares present in person or represented by proxy at the 2007 Annual Shareholders’ Meeting and entitled to vote on the election of directors. In a contested election of directors, to be elected, a director nominee must receive a plurality of the votes of the Shares present in person or represented by proxy at the 2007 Annual Shareholders’ Meeting and entitled to vote on the election of directors. Under the Bylaws: (i) an “uncontested election” is an election in which the number of nominees for director is not greater than the number to be elected and (ii) a “contested election” is an election in which the number of nominees for director is greater than the number to be elected.

What happens if a director nominee does not receive a majority of the votes cast by the Shares present in person or represented by proxy as required to elect a director at the 2007 Annual Shareholders’ Meeting?    Assuming an uncontested election of directors, director nominees who are not incumbent members of the Board and who do not receive a majority of the votes cast by the Shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors (a “majority vote”) will not be elected as directors and a vacancy will be left on the Board. The Board, pursuant to the Bylaws, may fill the resulting vacancy or may decrease the size of the Board to remove the vacancy.

Any incumbent director who is a director nominee and who does not receive a majority vote must promptly tender his or her offer of resignation as a director for consideration by the Board. Each incumbent director standing for re-election at the 2007 Annual Shareholders’ Meeting has agreed to resign, upon acceptance of such resignation by the Board, in the event he or she does not receive a majority vote. A recommendation on whether or not to accept such resignation offer will be made by the CNGC, or if each member of the CNGC standing for re-election did not receive the required majority vote, by a special committee of Independent Directors of the Company appointed by the Board for the purpose of making a recommendation to the Board (either such committee referred to as the “nominating committee”). If no Independent Directors standing for re-election received the required majority vote, the Board will act on each of the resignation offers.

Within 60 days following certification of the shareholder vote on the election of directors, the nominating committee must recommend to the Board the action to be taken with respect to each offer of resignation. In determining whether or not to recommend that the Board accept a resignation offer of a director, the nominating committee will be entitled to consider all factors it believes relevant, including without limitation: (1) any stated reasons for the director not receiving the required majority vote and whether the underlying cause or causes are curable; (2) the factors, if any, set forth in the Company’s guidelines or other policies that are to be considered by the CNGC in evaluating potential candidates for the Board, as such factors relate to such director; (3) the length of service of such director; (4) the effect of such resignation on the Company’s compliance with any law, rule, regulation, stock exchange listing standards, or contractual obligations; (5) such director’s contributions to the Company; and (6) any other factors that the nominating committee believes are in the best interests of the Company.

The Board must act on the nominating committee’s recommendation within 90 days following certification of the shareholder vote and notify the director concerned of its decision. In determining whether or not to accept any resignation offer, the Board will take into account the factors considered by the nominating committee and any additional information and factors that the Board believes to be relevant. If a director’s resignation offer is not accepted, the Board must, within four business days after reaching its decision, publicly disclose the decision, including the reasons for not accepting the resignation offer, by means of a press release, a filing with the SEC, or other broadly disseminated means of communication. If the Board’s acceptance of all pending offers of resignation would result in the Company having fewer than three directors who were in office before the election, the Board may extend such 90-day period by an additional 90 days if it concludes that such an extension is in the Company’s best interests.

If a director’s resignation offer is not accepted by the Board, that director will continue to serve until the next annual shareholders’ meeting of the Company and his or her successor is duly elected and qualified or until the director’s earlier death, resignation, or removal. If a director’s resignation offer is accepted by the Board, then the Board, in its sole discretion, may fill any resulting vacancy pursuant to the Bylaws or may decrease the size of the Board.

What vote is required to pass the other proposals at the 2007 Annual Shareholders’ Meeting?    The vote of the holders of a majority of the Shares present in person or represented by proxy at the meeting and entitled to vote is required for ratification of the appointment of E&Y as Wal-Mart’s independent accountants and the shareholder proposals.

What is the effect of an “abstention” or “broker non-vote” on the election of directors or any proposals?    An “abstention” or “withhold” vote with respect to a director nominee will have the effect of a vote against any director nominee or any other

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proposal. Broker non-votes will have no effect on the vote for any of the shareholder proposals. A “broker non-vote” occurs if your Shares are not registered in your name and you do not provide the record holder of your Shares (usually a bank, broker, or other nominee) with voting instructions on a matter and the record holder is not permitted to vote on the matter without instructions from you under applicable NYSE rules. Under the NYSE rules, the election of directors and the ratification of appointment of independent accountants are discretionary items. Generally, brokers who do not receive instructions as to how to vote on these matters may vote on these matters in their discretion.

Unless you indicate otherwise, the persons named as proxies on the proxy card will vote your Shares: FOR all of the nominees for director named in this proxy statement, FOR the ratification of E&Y as Wal-Mart’s independent accountants, and AGAINST the 11 shareholder proposals.

How do I vote?    The process for voting your Shares depends on how your Shares are held. Generally, you may hold Shares in your name as a “record holder” or in “street name” (that is, through a nominee, such as a broker or bank).

If you are a record holder, you may vote by proxy or you may vote in person at the 2007 Annual Shareholders’ Meeting. If you are a record holder and would like to vote your Shares by proxy prior to the 2007 Annual Shareholders’ Meeting, there are three ways for you to vote:

Please note that telephone and internet voting will close at 11:00 p.m. (CT) on May 31, 2007.

If you plan to attend the 2007 Annual Shareholders’ Meeting and wish to vote in person, the Company will give you a ballot at the 2007 Annual Shareholders’ Meeting. Please note that you may vote by proxy prior to June 1, 2007, and still attend the 2007 Annual Shareholders’ Meeting.

If your Shares are held in the name of a broker, bank, or other nominee, you should receive separate instructions from the holder of your Shares describing how to vote. Nonetheless, if your Shares are held in the name of a broker, bank, or other nominee and you want to vote in person, you will need to obtain (and bring with you to the 2007 Annual Shareholders’ Meeting) a legal proxy from the holder of your Shares (who must have been the record holder of your Shares as of the close of business on April 5, 2007) indicating that you were a beneficial owner of Shares on April 5, 2007, as well as the number of Shares of which you were the beneficial owner on the record date.

If your Shares are held through the Profit Sharing/401(k) Plan or the Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan and you do not vote your Shares in one of the methods described above, your Shares will be voted by the Retirement Plans Committee of the Company in accordance with the rules of the applicable plan.

Can I revoke my proxy?    Yes, you can revoke your proxy if you are a record holder by:

If your Shares are held in street name through a broker, bank, or other nominee, you need to contact the holder of your Shares regarding how to revoke your proxy.

INFORMATION ABOUT THE BOARD

Wal-Mart’s directors are elected at each annual shareholders’ meeting and hold office until the next election. All nominees are presently directors of Wal-Mart, except for Allen I. Questrom. Assuming shareholders elect all the director nominees at the 2007 Annual Shareholders’ Meeting, Wal-Mart will have 15 directors. The Board has authority under the Bylaws to fill vacancies and to increase or, upon the occurrence of a vacancy, decrease the Board’s size between annual shareholders’ meetings.

Your proxy holder will vote your Shares for the Board’s nominees unless you instruct otherwise. If a nominee is unable to serve as a director, your proxy holder may vote for any substitute nominee proposed by the Board.

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PROPOSAL NO. 1

NOMINEES FOR ELECTION TO THE BOARD

The following candidates are nominated by the Board based on the recommendation of the CNGC. They have held the positions shown for at least five years unless otherwise noted. They were selected on the basis of outstanding achievement in their professional careers; broad experience; wisdom; personal and professional integrity; ability to make independent, analytical inquiries; experience with and understanding of the business environment; and willingness to devote adequate time to Board duties. The Board is committed to diversified membership. In selecting nominees, the Board does not discriminate on the basis of race, color, national origin, gender, religion, disability, or sexual preference.

		Aida M. Alvarez, 57 Ms. Alvarez is the former Administrator of the U.S. Small Business Administration and was a member of President Clinton’s Cabinet from 1997 to 2001. She was the founding Director of the Office of Federal Housing Enterprise Oversight, the financial regulator of Fannie Mae and Freddie Mac, from 1993 to 1997. Ms. Alvarez was a vice president in public finance at First Boston Corporation and Bear Stearns & Co., Inc. prior to 1993. She is presently Chair of the Latino Community Foundation of San Francisco and a director of UnionBanCal Corporation. Ms. Alvarez also serves on the diversity advisory board for Deloitte & Touche LLP. Ms. Alvarez has been a member of the Board since 2006.
		James W. Breyer, 45 Mr. Breyer is a Managing Partner of Accel Partners, a venture capital firm. He also serves as a director of RealNetworks, Inc., Marvel Entertainment, Inc., and several private companies. Mr. Breyer has been a member of the Board since 2001.
		M. Michele Burns, 49 Ms. Burns is the Chairman and CEO of Mercer Human Resource Consulting, a subsidiary of Marsh & McLennan Companies, Inc. She joined Marsh & McLennan Companies, Inc., a global professional services and consulting firm, in March 2006 and served as Executive Vice President and CFO until September 2006. She is the former Executive Vice President, CFO, and Chief Restructuring Officer of Mirant Corporation, an energy company, where she served from April 2004 to December 2005. She served as the Executive Vice President and CFO of Delta Air Lines, Inc., an air carrier, from August 2000 through April 2004. She also serves as a director of Cisco Systems, Inc. Ms. Burns has been a member of the Board since 2003.
		James I. Cash, Jr., Ph.D., 59 Dr. Cash is the retired James E. Robison Professor of Business Administration at Harvard Business School, where he served from July 1976 to October 2003. Dr. Cash also served as the Senior Associate Dean and Chairman of HBS Publishing while on the faculty of the Harvard Business School. Dr. Cash serves as a director of The Chubb Corporation, General Electric Company, Phase Forward Inc., ITM Software Corp., and Microsoft Corporation. Dr. Cash has been a member of the Board since 2006.
		Roger C. Corbett, 64 Mr. Corbett is the retired CEO and Group Managing Director of Woolworths Limited, the largest retail company in Australia. Mr. Corbett is a director of The Reserve Bank of Australia, Fairfax Media Limited (a major Australian newspaper publisher), and Chairman of the board of directors of ALH Group Pty Limited. He is a member of the Prime Minister’s Community Business Partnership and serves on the board of Outback Stores (a joint venture with the Australian government providing indigenous Australians in small outback communities with retail facilities). He is a member of the Advisory Council of the Australian Graduate School of Management for the University of New South Wales. Mr. Corbett is also the Chairman of CIES Food Business Forum (France), the Salvation Army Advisory Committee, the Children’s Hospital of Westmead Advisory Board, and Chairman of the Council and member of the Executive Committee of Shore School. Mr. Corbett has been a member of the Board since 2006.

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		Douglas N. Daft, 64 Mr. Daft is the retired Chairman and CEO of The Coca-Cola Company, a beverage manufacturer, where he served in that capacity from February 2000 until May 2004 and in various other capacities since 1969. Mr. Daft serves as a director of The McGraw–Hill Companies, Inc. Mr. Daft has been a member of the Board since January 2005.
		David D. Glass, 71 Mr. Glass is the former Chairman of the Executive Committee of the Board, serving in that position from February 2000 until June 2006. Mr. Glass served as Wal-Mart’s President and CEO from January 1988 to January 2000. Mr. Glass has been a member of the Board since 1977.
		Roland A. Hernandez, 49 Mr. Hernandez is the retired Chairman and CEO of Telemundo Group, Inc., a Spanish-language television station company, where he served from August 1998 to December 2000. From March 1995 to August 1998, he served as President and CEO of Telemundo Group, Inc. He serves as a director of MGM Mirage, Lehman Brothers Holdings Inc., The Ryland Group, Inc., and Vail Resorts, Inc. Mr. Hernandez has been a member of the Board since 1998.
		Allen I. Questrom, 67 Mr. Questrom was the Chairman and CEO of J.C. Penney Company, Inc. from 2000 to December 2004. Between May 1999 and September 2000, Mr. Questrom served as Chairman, CEO and President of Barneys New York, Inc., a fashion retailer. Previously, Mr. Questrom was Chairman and CEO of The Neiman Marcus Group, Inc. and also has served as Chairman and CEO of Federated Department Stores, Inc. from January 1990 through April 1997. Mr. Questrom is a member of the board of directors of Burt’s Bees, Inc., Sotheby’s, Jones Apparel Group, Inc., and is a partner with Lee Equity Partners, LLC. Mr. Questrom is standing for election to the Board for the first time.
		H. Lee Scott, Jr., 58 Mr. Scott is the President and CEO of Wal-Mart and has served in that position since January 2000. Prior to this appointment, he held other positions with Wal-Mart since joining the Company in September 1979, including Vice Chairman and Chief Operating Officer, from January 1999 to January 2000, and Executive Vice President and President and CEO, Wal-Mart Stores Division, from January 1998 to January 1999. He has been a member of the Board since 1999.
		Jack C. Shewmaker, 69 Mr. Shewmaker is the President of J-COM, Inc., a consulting company, and he is a rancher. He is also a former Wal-Mart executive who retired in 1988. Mr. Shewmaker has been a member of the Board since 1977.
		Jim C. Walton,* 58 Mr. Walton is the Chairman and CEO of Arvest Bank Group, Inc., a group of banks operating in the states of Arkansas, Kansas, Missouri, and Oklahoma. Mr. Walton also serves as Chairman of Community Publishers, Inc. which operates newspapers in Arkansas, Missouri, and Oklahoma. Mr. Walton has been a member of the Board since 2005.
		S. Robson Walton,* 62 Mr. Walton is the Chairman of Wal-Mart and has been a member of the Board since 1978.

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		Christopher J. Williams, 49 Mr. Williams is the Chairman and CEO of The Williams Capital Group, L.P., an investment bank. Since 2002, he has also served as the Chairman and CEO of Williams Capital Management, LLC, an investment management firm. He also serves as a director of Harrah’s Entertainment, Inc. Mr. Williams has been a member of the Board since 2004.
		Linda S. Wolf, 59 Ms. Wolf is the former Chairman and CEO of Leo Burnett Worldwide, Inc., an advertising agency and division of Publicis Groupe S.A. Ms. Wolf served in various positions with Leo Burnett Worldwide, Inc. and its predecessors from 1978 to April 2005. She serves as a trustee for investment funds advised by the Janus Capital Group Inc. and serves on the board of InnerWorkings, Inc. Ms. Wolf has been a member of the Board since 2005.

The Board recommends that the shareholders vote FOR all nominees for election to the Board.

DIRECTOR INDEPENDENCE

Pursuant to the NYSE Listed Company Manual, Wal-Mart is required to have a majority of Independent Directors on its Board. In addition, the Audit Committee and CNGC must be composed solely of Independent Directors. The NYSE Listed Company Manual defines specific relationships that would disqualify a director from being independent and further requires that, for a director to qualify as “independent,” the Board must affirmatively determine that the director has no material relationship with the Company.

As permitted by the NYSE Listed Company Manual, the Board determined categorically that one or more of the relationships within the Categorical Standards described below will not be considered to be material relationships that impair a director’s independence:

(1) The director, an entity with which a director is affiliated, or one or more members of the director’s immediate family, purchased property or services from Wal-Mart in retail transactions on terms generally available to other Associates during Wal-Mart’s last fiscal year;

(2) The director or one or more members of the director’s immediate family owns or has owned during the entity’s last fiscal year, directly or indirectly, five percent or less of an entity that has a business relationship with Wal-Mart;

(3) The director or one or more members of the director’s immediate family owns or has owned during the entity’s last fiscal year, directly or indirectly, more than five percent of an entity that has a business relationship with Wal-Mart so long as the amount paid to or received from Wal-Mart during the entity’s last fiscal year accounts for less than $1,000,000 or, if greater, one percent of the entity’s consolidated gross revenues for that entity’s last fiscal year;

(4) The director or one or more members of the director’s immediate family is a director or trustee or was a director or trustee of an entity during the entity’s last fiscal year that has a business or charitable relationship with Wal-Mart and that made payments to, or received from, Wal-Mart during the entity’s last fiscal year an amount representing less than $5,000,000 or, if greater, five percent of the entity’s consolidated gross revenues for that entity’s last fiscal year;

(5) Wal-Mart paid to, employed, or retained one or more members of the director’s immediate family for compensation not exceeding $60,000 during Wal-Mart’s last fiscal year;

(6) The director or a member of the director’s immediate family is, or has been during the entity’s last fiscal year, an executive officer or employee of an entity that made payments to, or received payments from, Wal-Mart during the entity’s last fiscal year that account for less than $1,000,000 or, if greater, one percent of the entity’s consolidated gross revenues for that entity’s last fiscal year; or

(7) The director or one or more members of the director’s immediate family received from Wal-Mart, during Wal-Mart’s last fiscal year, personal benefits having an aggregate value of less than $5,000.

In developing the Categorical Standards, the Board considered that: (1) directors (or their immediate family members) regularly purchase items at Wal-Mart’s stores, Neighborhood Markets, and Sam’s Clubs; (2) directors (or their immediate family

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members) may hold minor investments in companies that do business with Wal-Mart; (3) directors (or their immediate family members) may hold more than a minor investment in companies that do business with Wal-Mart, but the amount of business done with Wal-Mart is immaterial; (4) directors (or their immediate family members) may serve on the board of commercial or charitable entities with immaterial relationships with Wal-Mart; (5) directors may have immediate family members employed by Wal-Mart in positions earning $60,000 per year or less; (6) directors (or their immediate family members) may be officers or employees of companies that receive payments from Wal-Mart or its affiliates that account for less than $1,000,000 or, if greater, 1 percent of such company’s gross revenues; and (7) that former officers who are directors of Wal-Mart (or their immediate family members) may continue to receive from Wal-Mart certain residual benefits from their service with the Company.

Our Board has determined that the following directors are Independent Directors under the independence standards set forth by the NYSE Listed Company Manual: Aida M. Alvarez, James W. Breyer, M. Michele Burns, James I. Cash, Jr., Roger C. Corbett, Douglas N. Daft, Roland A. Hernandez, Jack C. Shewmaker, Christopher J. Williams, and Linda S. Wolf. Furthermore, the Board determined that director nominee, Allen I. Questrom, is independent under the NYSE Listed Company Manual independence standards. The Board also determined that John D. Opie, J. Paul Reason, and José H. Villarreal, each of whom did not stand for reelection at the 2006 Annual Shareholders’ Meeting were independent under the NYSE Listed Company Manual independence standards during the portion of fiscal 2007 in which they served as directors of the Company.

In making these determinations, the Board found that the current Independent Directors standing for election and director nominee, Allen I. Questrom, do not have a material or other disqualifying relationship with Wal-Mart. The Board also found that Messrs. Opie, Reason, and Villarreal did not have material or other disqualifying relationships with Wal-Mart during their period of Board service during fiscal 2007. In making these determinations, the Board considered all transactions exceeding the Categorical Standards above and any relationships and arrangements described below under “Related-Party Transactions.”

In connection with its independence determinations, the Board noted that Mr. Breyer serves as a director of Marvel Entertainment, Inc., a character-based entertainment company. The amounts paid to Marvel Entertainment, Inc. during its last fiscal year for the purchase of its licensed products exceeded the threshold set forth in Categorical Standard No. 4. However, because Mr. Breyer only serves as a director of Marvel Entertainment, Inc., and he did not participate in the negotiation of the commercial transactions or the execution of the transactions, the Board determined that the commercial relationship between the Company and Marvel Entertainment, Inc. is not material.

COMPENSATION OF THE DIRECTORS

Annual Director Compensation

The base compensation for Non-Management Directors upon their election to the Board on June 2, 2006, consisted of a Share award and an annual retainer. H. Lee Scott, Jr. and S. Robson Walton received compensation only for their services as Executive Officers of the Company and not in their capacities as directors. Until his retirement as Chairman of the EC on June 2, 2006, David D. Glass received compensation only for his services as an Executive Officer of the Company and not in his capacity as a director.

Upon election to the Board at the 2006 Annual Shareholders’ Meeting on June 2, 2006, each Non-Management Director received an annual equity award of Shares with a market value of $140,000 on the date of grant for the Board term ending at the 2007 Annual Shareholders’ Meeting. This annual equity award was paid directly in Shares or deferred in stock units under the Director Compensation Plan, as elected by each Non-Management Director. In addition, each Non-Management Director elected to the Board at the 2006 Annual Shareholders’ Meeting was entitled to receive an annual retainer of $60,000, payable in arrears in equal quarterly installments for the Board term ending at the 2007 Annual Shareholders’ Meeting. This annual retainer could be taken in cash, Shares, deferred in stock units under the Director Compensation Plan, or deferred to an interest-credited account under the Director Compensation Plan, as elected by the director. Non-Management Directors who were appointed to the Board after the 2006 Annual Shareholders’ Meeting and before the 2007 Annual Shareholders’ Meeting were entitled to receive a prorated portion of both the annual equity award and annual retainer.

The Non-Management Director Board committee chairs also received a chair retainer for the additional time required for Board committee business. For the Board term commencing at the 2006 Annual Shareholders’ Meeting, the retainer for the Audit Committee chair was $25,000, the retainer for the CNGC chair was $15,000, and the retainer for the SPFC chair was $15,000. Any directors appointed as Board committee chairs after the 2006 Annual Shareholders’ Meeting and before the 2007 Annual Shareholders’ Meeting were entitled to a prorated portion of the chair retainer. In addition, Christopher J. Williams received a retainer of $15,000 for his service on the EC because he serves on more than one Board committee. These additional retainers were payable in arrears in equal quarterly installments, and could be taken in cash, Shares, deferred in stock units under the Director Compensation Plan, or deferred in an interest-credited account under the Director Compensation Plan, as elected by the director.

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Pursuant to the CNGC charter, director compensation for the Non-Management Directors is reviewed annually by the CNGC, which recommends to the Board the annual compensation for those directors. Consistent with Wal-Mart’s compensation philosophy applicable to its Executive Officers, the total compensation for Non-Management Directors and Board committee chairs upon election in fiscal 2007 placed them in the top quartile of the Retail Industry Survey, below the median for the Top 50, and near the top quartile for the Select Fortune 100 Survey. Despite an increase in director compensation in the Select Fortune 100 Survey and the Top 50, the total compensation approved by the Board for the Non-Management Directors upon their election on June 1, 2007, will remain at a total of $200,000 and will be granted to directors in the same composition as described above. The committee chair retainers will also remain at the amounts described above.

The compensation paid to the Directors during fiscal 2007 is described in the table below.

DIRECTOR COMPENSATION FOR FISCAL 2007 (1)