BREAKING: CtW Investment Group Calls for Whole Foods Board to Remove CEO John Mackey

A boycott-ers dream come true?

CtW Investment Group has called for Whole Foods Board to start finding a suitable replacement for CEO John Mackey (confirmed with a published letter below).

It is said that the damage caused by Mackey’ WSJ Op-Ed made him a ‘liability’ to the company he co-founded.

CtW Investment Group Executive Director Bill Patterson commented:

“Mr. Mackey attempted to capitalize on the brand reputation of Whole Foods to champion his personal political views, but has instead deeply offended a key segment of Whole Foods consumer base,”

“This is not the first time Mr. Mackey’s unsanctioned communications have damaged Whole Foods’ image with consumers and investors. At a time when shareholders are looking for Whole Foods’ management to focus on improving operations in an uncertain economy, we cannot afford the risk to our Company’s brand reputation caused by Mr. Mackey’s indiscretion. He has become a liability and the board should begin the process of identifying a suitable replacement.”

The Killer Letter

August 24, 2009
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 publicly available.