Should Whole Foods Bag Its CEO?

Whole Foods Market (Nasdaq: WFMI  ) Chairman and CEO John Mackey is no stranger to controversy. His recent health care op-ed in The Wall Street Journal led some angry customers to threaten a boycott. Now a shareholder's joined the dogpile, agitating for Mackey's resignation or removal by the company's board.

CtW Investment Group argues that Mackey "attempted to capitalize on the brand reputation of Whole Foods to champion his personal political views," and that his action "deeply offended" members of the grocery's consumer base. Note that CtW is part of Change to Win, a federation of unions; it's no secret that non-unionized Whole Foods isn't exactly chummy with the labor movement.

Ironically, all the outrage seems to ignore that Whole Foods is a very progressive company that treats its employees very well. A Slate article recently noted that Mackey actually uses the same health plan as his employees. When it comes to health care, whatever his opinions, he eats his own (presumably organic) cooking.

Still, the rancorous buzz raises a legitimate question for investors: Should a CEO potentially endanger a company's brand by speaking out about personal beliefs? Executive crusades can be risky and distracting, as Overstock.com's (Nasdaq: OSTK  ) CEO Patrick Byrne's increasingly quixotic war against naked short selling amply demonstrated. Domino's Pizza's (NYSE: DPZ  ) founder Thomas Monaghan's well-known anti-abortion views also led some customers to steer clear of the chain in the 1980s. On the opposite side of the debate, abortion foes have criticized Berkshire Hathaway's (NYSE: BRK-A  ) Warren Buffett for his quieter but still substantial support for family planning organizations. If executives' strong opinions distract them from running their businesses, or trigger customer backlash, shareholders could suffer real consequences.

However, some CEOs can voice opinions with nary a peep. Safeway's (NYSE: SWY  ) CEO Steven Burd similarly opined on health care reform recently. "Market-based solutions can reduce the national health-care bill by 40%," read the subhead in his own WSJ op-ed piece. But given the subsequent radio silence, nobody really gave a flying fig (organic, conventional, or otherwise) about Burd's thoughts on the topic.

Personally, I think Mackey should stay. He's the company's founder, and in my opinion, taking stances on controversial issues (and rationally supporting his theses) actually demonstrates his intelligence. He may be a loose cannon sometimes, but he's also one of the sharper knives in the proverbial drawer. And lest we forget, he's built a fabulous company.

That said, many investors disagree with me. Some still haven't gotten over the Rahodeb discussion board scandal.

What do you think? Should Whole Foods keep Mackey and his fresh ideas in the CEO spot, or toss him out like last week's lettuce? Sound off in our poll below.

Whole Foods Market and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy.


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  • Report this Comment On August 27, 2009, at 4:20 PM, AnJo1 wrote:

    Mr. Mackey may be taking a longer-term view of his company's prospects. Whole Foods needs plenty of rich and nearly-rich price-insensitive shoppers. ObamaCare and other ObamaNotions threaten the existence of that demographic in this country, based, as they are, on a kind of Zimbabwean "you can eat your rich and have them too" economic fantasy.

  • Report this Comment On August 27, 2009, at 4:54 PM, bt1960 wrote:

    I read Mackey's Op-Ed piece and thought it well conceived, showing how WF manages its health care benefits to maximize employee's options and coverage, and how that model would be useful for other business and for the government to consider. The only issue was Mackey's unwise use of the quote about socialism - that was a poor choice as an opener. Mackey is a visionary, he just needs a trusted editor from time to time. I can understand, though, where he's coming from when it comes to governmental action, because the FTC's ridiculous pursuit of its unfounded case against WF's friendly merger with Wild Oats most definitely hurt him, his company, and taxpayers at large.

  • Report this Comment On August 27, 2009, at 5:09 PM, eddietheinvestor wrote:

    Why does a union company like CtW invest in a company to which they are philosophically opposed? What no one seems to realize or talk about is that the WFMI stock price has increased markedly since he wrote the op-ed article. If though he runs a company, he is also a citizen and has the right to free speech. Free speech is for everyone, not only for people whose opinions one agrees with.

  • Report this Comment On August 27, 2009, at 5:10 PM, Varchild2008 wrote:

    Boycott? what boycott. I never shopped at Whole Foods ever in my life until I heard about John Mackey's stance against the Public Option.

    Now I plan to shop at Whole Foods as part of my weekly Grocery Store trips.

    Whole Foods has GAINED customers because of John Mackey. There are more of US than there are of THEM as the overwhelming majority of the U.S. Population is AGAINST the public option...

    Should Whole Foods be working to provide cheaper organic goods to entice a broader segment of shoppers than the price insensitive shopper, rather than worrying about silly little boycotts from the Welfare recipients who want more Welfare?

  • Report this Comment On August 27, 2009, at 6:49 PM, dianejen1 wrote:

    Hooray for us little guys. It's about time that "we the people" are standing up for our constitutional rights to freedom of speech. We are sick and tired of organizations like yours, color of change, move on dot org. and coutless others who have been intimidating us for so long. Why don't you spend your time doing something constructive instead of being haters against others who do not think as you do. Keep up the hating, it only makes organizations like yours look more and more ridiculous!

  • Report this Comment On August 28, 2009, at 8:30 AM, nrlbuild wrote:

    I listened to the Motley Fool Conversations interview with Mackey...I felt he did not come across very well in that situation. He seemed to be whining somewhat, complaining about how investors want to control the company and also how he has ended up in the spotlight as Whole Foods has become successful.

    On the other hand he also came across as a sort of ordinary guy that has done an extraordinary job with Whole Foods.

    I own some WFMI, have never shopped there (no locations even remotely near), but know some people who swear it is great. I think the concept and business plan are sound and opportunistic.

    That being said...I am in no position to pass judgment on Mackey, but I hope there are people who are and know how to play.

  • Report this Comment On August 28, 2009, at 9:58 AM, thedatadude wrote:

    CEO's are people too, they have personal views on many issues that may be different than the view held by you or me. If someone see's Mackey buying a Dominoe's pizza, do they boycott Whole Foods because Dominoe's CEO is anit-abortion? Do Chevy owners boycott because he drives a Ford? I mean, c'mon, if more people in Mackey's position were able to state their views as intelligently as he did, any debate they engaged in would be advanced becasue of their input. Whether you agree or disagree with the views that are put forward, better debate almost always makes for better long-term decisions. Those who try to be politically correct on every occasion simply lack the courage of their convictions and are generally ignored. And remember...there is no such thing as "bad publicity"...GO Mackey!

  • Report this Comment On August 28, 2009, at 12:44 PM, jaybally wrote:

    John Mackey is a "Genuinous" within the Industry.

    ApparentlyCtW Invetment Group is trying to muscle in on a "Treasure" built fro scratch.

    "If you can't stand the heat from the oven, GET OUT of the kitchen: CtW thinking is related to a Bicameral Mentality.

    Hasta La Vista Pendejos !

    Mackey STAYS!!

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