As Michael Garland, CtW’s Director, Value Strategies, tells me: “We believe more aggressive steps may be required with regard to Mr. Mackey’s future with the company, but we’re willing to wait until the findings of the special committee.” The first step, he adds, is for “the board to name a strong independent board chair to replace him.”
Whole Foods already announced a special committee to investigate Mackey’s anonymous postings on Internet bulletin boards. This latest push has an undertone of possibly setting the stage for Mackey to step down as CEO, too.
Clearly, CtW is disgruntled by the whole thing. In his note, Executive Director William Patterson says, “In our view, Mr. Mackey’s apparent efforts to anonymously influence the share prices of the two companies were inappropriate, unethical and quite possibly illegal. To the extent that he may have sought to drive down the Wild Oats share price to reduce the cost of an acquisition by Whole Foods, the implications appear especially serious.”
Patterson goes on to draw a correlation between Mackey’s posts and Wild Oats’ share price swings, including a comment in which Mackey writes he “may short [Wild Oats] in another year if nothing fundamentally changes.” And he questions how much time Mackey was spending on company computers during work hours to make the 1,394 posts, deducing that some items took as long as 49 minutes to write and as many as 17 different comments were posted some days.
CtW works with union pension funds that own more than 900,000 Whole Foods shares and control another 6 million through the public pension funds of its members.
You might ask why Patterson felt a need to make his note public. Says Garland: “Mackey’s credibility is in question. The special committee is an insufficient step.” In his view, getting Mackey out as chairman will at least reinforce the independence of any investigation and “will send a strong signal to the SEC and shareholders.”
How can you manage smarter? BusinessWeek writers Diane Brady, Michelle Conlin, Nanette Byrnes and Jena McGregor synthesize insights from the brightest business thinkers, critique the latest management trends, and comment on leaders in the news.