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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.