This Is 1 Incredible CEO

The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting shareholder interests and those of the public first and are generally deserving of kudos from investors. For reference, here is last week's selection.

This week, we're going to take a look at how a grocer is revolutionizing an industry, and why co-CEO John Mackey of Whole Foods Market (NYSE: WFM  ) , who began sharing the role with Walter Robb late last year, is truly an incredible leader.

Kudos to you, Mr. Mackey
The grocery business is a land filled with razor-thin margins and missed opportunities. Rising raw material costs and superstores, like Costco (Nasdaq: COST  ) and Wal-Mart (NYSE: WMT  ) , that derive a good chunk of their revenue from grocery sales and cater specifically to cost-conscious customers through aggressive pricing and advertising, are luring consumers away from traditional grocers. SUPERVALU (NYSE: SVU  ) , the parent company of Albertsons, is struggling under crushing amounts of debt and recently suspended its dividend in order to conserve cash during its store remodel campaign. Likewise, Safeway (NYSE: SWY  ) has only been measuring its growth in inches while implementing tight cost-control measures in recent quarters.

Then there's Whole Foods, aka, the game changer!

Whole Foods has gone in a completely opposite direction relative to these other grocers. Instead of focusing on cost-cutting and placing the same products in its stores that you could find in basically any of the above-listed stores, Whole Foods chose to focus on local and organic foods. The methodology behind Whole Foods choices is that an increasingly health-conscious consumer will trade up to higher-priced, higher margin food items if they are more nutritious.

There was a little kickback in sales during the recession, but aside from surviving the worst recessionary downturn in 70 years, Whole Foods came out the other side stronger than ever. Here's a quick rundown of how Whole Foods' profit margins currently stack up next to those of its peers:

Company Safeway Kroger SUPERVALU Whole Foods
Profit Margin (TTM) 1.29% 0.66% (3.02%) 3.70%

Source: Yahoo! Finance. TTM = trailing 12 months.

The supermarket industry is a game of inches, and Whole Foods is beating everyone by the length of a football field. In greater numbers, consumers are responding to Whole Foods healthier food choices and their support of local natural and organic food growers.

A step above his peers
Not everything, though, can be taken into account with a simple black-and-white question, "Is Company XYZ delivering on its results?" If that was the case, we'd have more than 2,000 incredible CEOs out there -- and I'm sorry to say we are a far cry away from that number. It's the intangible things Mr. Mackey has done for his employees and for the sake of reason that makes him truly incredible.

You might recall that the Supreme Court recently upheld the constitutionality of the Patient Protection and Affordable Care Act, which will broaden health coverage to all American citizens by 2014. Well, that's old news for Whole Foods' employees. That's because long before President Obama passed this bill, Whole Foods was completely paying for nearly 100% of its employee health care costs.

All of these perks have to come with a price, right? I mean, company executives and long-tenured managers probably make the big bucks here, right? Wrong! In a true example of conscious capitalism (as my Foolish colleague Alyce Lomax termed it), John Mackey has placed a cap on executive salaries such that no executive may earn more than 19 times the average annual salary in the company. You'd be amazed how quickly morale and respect improve within a company when executives aren't looked upon as being born with a silver spoon in their mouths.

Finally, Mackey himself follows through with this conscious capitalism ethos by taking an annual salary of just $1 each year. He has done so since 2006, when he released a letter to shareholders stating, "I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart."

Two thumbs up
Seriously, how could you not like this guy? Apparently Fortune agrees and recently named Whole Foods the No. 32 on its list of the 100 best places to work. It's really not hard to see why considering the vested interest Mackey places in his employees and the tireless effort placed in bringing better-quality products to his customer. And the dividend growth ... that's not too shabby either!

In my opinion, Whole Foods could very easily be the second-best place to work, behind The Motley Fool of course, and Mr. Mackey is a critical element as to why I feel that way. Two very enthusiastic thumbs-up to you, sir!

Do you have a CEO you'd like to nominate for this prestigious weekly honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just might see your nominee in the spotlight.

Here at the Fool, we love management teams that have strong track records of rewarding their shareholders, which is why I invite you to download a copy of our latest special report, "Secure Your Future With 9 Rock-Solid Dividend Stocks." This report contains a wide array of companies and sectors that are likely to keep your best interests in mind, just like Whole Foods, whether the market is up or down. Best of all, it's completely free for a limited time, so don't miss out!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves giving credit when credit is due. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Supervalu, Whole Foods Market, and Costco Wholesale. Motley Fool newsletter services have recommended buying shares of Costco Wholesale and Whole Foods Market. Motley Fool newsletter services have recommended creating a bull call spread position in Wal-Mart Stores. Motley Fool newsletter services have recommended buying calls on Supervalu. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 18, 2012, at 8:37 PM, jm7700229 wrote:

    I was a regular customer of Whole Foods when I lived in Chicago. Here in Tucson, though, I think the quality is not up to the supermarket standard and the prices seem to have gotten much worse. This seems to be a regional phenomenon, as my nephew in Portland, Oregon loves the store and another in Indiana avoids it. I'm not sure, despite the better margins, that they are on the right track.

  • Report this Comment On July 18, 2012, at 10:56 PM, mrchemist wrote:

    I am not impressed. The Whole Foods store in our area is located in an upscale area. Its high prices are not competitive with those of Trader Joe or either of the other 2 local health food stores. My stock investment in them a year or so ago did not do well.

  • Report this Comment On July 19, 2012, at 6:13 PM, dennyinusa wrote:

    Bravo, Nice to see CEO who has respect for all employees. Imagine if a CEO of one of the big 3 auto makers would have took this approach, they would have crushed their competition. Employees who are fairly compensated and feel appreciated will always outperform disgruntled employees. This article is a breath of fresh air.

  • Report this Comment On August 02, 2012, at 4:02 PM, thidmark wrote:

    Mackey hasn't done anything special ... somebody else made that happen.

    At least that's what my government tells me ...

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