Dr. John B. Elstrott Lead Independent Director c/o Director of Internal Audit Whole Foods Market 550 Bowie Street, Austin, TX 78703
Dear Dr. Elstrott:
Events of the past week establish yet again that John Mackey’s lack of personal discipline makes him a liability for Whole Foods Market, Inc. Despite past indications that the board needed to exercise independent oversight of Mr. Mackey and supervise his external communications closely – most notably his postings on the Yahoo! Finance bulletin board, which led to an SEC inquiry – you and your fellow directors failed to take meaningful action to prevent Mr. Mackey’s uncompensated brand and reputational risk to our Company.
The board must now recognize that managing reputational risk is central to building shareholder value at Whole Foods and act accordingly. Replacing Mr. Mackey as Chairman and CEO is the critical first step in this process. We first raised questions regarding Mr. Mackey’s leadership in a July 25, 2007 letter to you in which we called on the board to immediately remove him as Chairman and determine what additional steps were warranted in response to Mr. Mackey’s ill-advised Yahoo! Finance postings. As a result of the board’s inaction, Mr. Mackey’s indiscretion has continued to place our Company’s brand reputation at risk. We therefore call on the board to immediately undertake the following:
Immediately remove Mr. Mackey as Chairman of the Board. Establish and disclose to shareholders a clear succession plan so that he can be removed expeditiously from his position as CEO as soon as feasible; the plan should detail how the board intends to ensure that CEO succession is a routine topic of discussion by the board, there is an emphasis on development of internal candidates while remaining open to external candidates, all board members are given exposure to internal candidates, and that there is both a long-term perspective to address expected CEO transition periods and a short-term perspective to address crisis management in the event of death, disability, or an untimely departure of the CEO. Quickly implement a board policy and process for supervision of executive communications in order to ensure that Mr. Mackey can cause no further damage to Whole Foods’ brand and reputation in his remaining time with the company. Commit to issuing a thorough and exacting annual review of all political or partisan uses of corporate resources, including a justification of any such expenditure, and make this review publically available.
The CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 6 million members, to enhance long-term shareholder returns through active ownership. These funds are substantial long-term Whole Foods shareholders.
Whole Foods’ Unique Strength and Vulnerability
Whole Foods is the leading national provider of natural and organic foods, and as such has benefitted from growing environmental and health consciousness among affluent urban consumers. However, this leading position makes Whole Foods uniquely vulnerable to disaffection from these core customers if they perceive that the company is not managed in a manner consistent with their values. Following the publication of Mr. Mackey’s op-ed piece opposing President Obama’s health care reform proposal on August 16, 2009, Whole Foods customers have reacted with outrage: at least 26,000 have now joined a Whole Foods Boycott page on Facebook. Numerous commentators have noted that a boycott of Whole Foods by politically progressive customers could cause a significant loss of shareholder value. We note with apprehension that the Company’s letter of apology to customers – the necessity of which reinforces our concerns – appears to have done nothing to soften the backlash against Mr. Mackey, and unfortunately, Whole Foods itself.
While we respect Mr. Mackey’s First Amendment right to express his political views, as he did for instance in noting that the Constitution contains no “right” to health care, we hasten to point out that neither the First Amendment nor any other provision of the Constitution give Mr. Mackey or any other CEO the right to retain their position regardless of behavior or performance. Moreover, Mr. Mackey’s article was not a citizen’s “letter to the editor,” but a lengthy op-ed that explicitly tied him to Whole Foods by identifying him as the CEO. Given Whole Foods’ unique exposure to a key segment of the customer base, Mr. Mackey’s decision to express his views in such a public way, and on an issue of such enormous moment, seems ill-advised at best.
As noted above, we first called on the board to remove Mr. Mackey as chairman and to evaluate his suitability as director and CEO in a letter to you over two years ago. In that letter, we specifically called the board to investigate whether Mr. Mackey’s Yahoo! Finance postings violated Whole Foods’ code of conduct and to establish clear disciplinary policies for unsanctioned executive communications. Unfortunately, you failed to take any meaningful action, and now Whole Foods shareholders again face potentially damaging fallout from unmanaged and uncompensated reputational risk.
Similar inaction now is unacceptable. The board must act immediately to address the burgeoning crisis caused by Mr. Mackey’s undisciplined behavior or shareholders will have little option but to conclude that you and your fellow directors are unable or unwilling to hold management accountable.
Sincerely,
William Patterson Director
CC: Whole Foods Market Board of Directors
# # #
** NOTE: For additional information or comment please contact Per Olstad at (202) 721-6027 or per.olstad@changetowin.org. **
Political correctness is running amock.
Fascism is FUN. Let’s all bow to the Messiah and do not speaketh one’s differing opinion of the One.
Does whole foods honor food stamps? If they don’t now and they get rid of Mackey, they better start because that is the market they will have.
I don’t shop there, but I’ll make it a point to never purchase anything from them, ever.
How much of Whole Foods does CtW own? If any?
Sounds like another attempt by the unions to muscle people around, to me. I’m going shopping at Whole Foods tomorrow.
Oh, HELL no. They do that, they’re really gonna make me angry...
Whole Foods customers have reacted with outrage: at least 26,000 have now joined a Whole Foods Boycott page on Facebook.
++++++++++++
http://www.facebook.com/group.php?gid=116527991450&ref=search&sid=713098340.3652166600..1
I would suggest joining this group on Facebook! There are now 3,500 members - let’s see if we can’t counter the other group!!
In any case, it’s unbelievable to see what one op-ed piece, that really very sensible can do to the leftist clowns!
From the CtW Investment Group websit:
“Founded in February 2006, the CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 6 million members,”
This seems like a “non-investment” company. They specifically disclaim being a “fiduciary” yet boast that they “work with” pension funds. It’s unclear from their website just what they do.
Seems to me that they are corporate level “Community Organizers” I wouldn’t be surprised to find out that they organized the fake outrage over Mackey’s article, which was rather thoughtful and clearly well intended.
I’m really not a Whole Foods fan even though I live in Austin and have many friends and associates in common with Mackey; but the idea that he’s putting the company at risk by contrasting the merits and success of his corporate health care plan vs. the failures of government controlled health care is blazingly stupid.
It would be such a shame if they fire this CEO and I can no longer shop at Whole Paycheck. That means I’ll have to go to Sprouts Market and buy the exact same avocados for 88 cents each that I could have bought at Whole Paycheck for $1.69.
"..Founded in February 2006, the CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 6 million members, to enhance long-term shareholder returns through active ownership. Members of CtW affiliates participate in Taft-Hartley plans with an estimated $217 billion in assets.
The long-term health of these pension plans, and the retirement security of the workers and families who rely upon them, are threatened by conflicts of interest on Wall Street and in the boardroom, a corporate backlash that seeks to weaken the accountability of executives to shareholders, and outright corporate fraud.
The CtW Investment Group responds to these challenges by organizing workers' capital into an effective voice for corporate accountability and retirement security..."
This is organized Union Thuggery masquerading as grass roots activism. It is another sham PR group organization.
Disagreeing with the president can ruin the company’s reputation??
Oh, I forgot. The “disagree-ers” are automatically racists.
Hitler and Mussolini had such allies who tought that those who opposed their programs were too political. They woke up too late.
I have someone who shops at Whole Foods & wants to protest this action. Would the above be the phone # to call or is it the # of the site that posted this information?
She said that if they actually go through with this - she is no longer going to shop there!!
Here’s a link to a good story re this:
http://247wallst.com/2009/08/25/brand-image-did-mackey-really-hurt-whole-foods-wfmi/