WHOLE FOODS' MACKEY WALKS OUT DURING FOWL REMARKS

SANTA MONICA, Calif. -- John Mackey, chairman, president and chief executive officer of Whole Foods Market, Austin, Texas, led a spontaneous walkout of corporate executives and shareholders that lasted a few minutes during last week's annual meeting here.The walkout came moments after a representative of People for the Ethical Treatment of Animals began reading a statement questioning Whole Foods'

SANTA MONICA, Calif. -- John Mackey, chairman, president and chief executive officer of Whole Foods Market, Austin, Texas, led a spontaneous walkout of corporate executives and shareholders that lasted a few minutes during last week's annual meeting here.

The walkout came moments after a representative of People for the Ethical Treatment of Animals began reading a statement questioning Whole Foods' policy on animal welfare and a few minutes after shareholders heard an extended statement from a vegetarian advocacy group called Viva protesting the treatment of ducks by a Whole Foods supplier. Both Viva and PETA had pickets outside the meeting.

In response to the Viva speaker's remarks, Mackey said, "Whole Foods will not be coerced by Viva, PETA, labor unions or any other advocacy groups under any circumstances. We will do what we believe is the right thing to do."

His comments were greeted with an outburst of applause and a standing ovation from most shareholders.

When Mackey took the next question, it turned out to be from the PETA representative, who began reading his own statement, prompting Mackey to whisper something to an associate at the podium and then to stride purposefully across the front of the meeting room, up the side aisle and out of the room.

In the next few moments, several of the Whole Foods executives in the front two rows also walked out or to the rear of the room, where coffee was available; at the same time, several shareholders also left their seats, while others began conversations that all but drowned out what the PETA spokesman said.

At the end of the PETA statement, Margaret Wittenberg, Whole Foods' vice president of governmental and public affairs, who had been left standing at the podium, said the company has "a solid auditing program" in place and takes animal farming seriously.

She called on another questioner, who declined to state his question until Mackey came back to the podium.

The meeting started calmly, with Mackey listing the chain's three major challenges:

To continue to make Whole Foods better through ongoing improvements and innovations -- "our most sustainable competitive advantage," he said.

To work harder to increase the number of Whole Foods stores in development.

To integrate Harry's Farmers Markets into the rest of the company. "Harry's financial operating systems were out of whack, and we spent the first year plugging up holes in the dike," Mackey said. "But we've seen same-store sales turn positive at one of the three stores, and move close to positive at the other two. We said we'd turn that operation around in two years, and a year and a half into it, we're right on schedule."

In other meeting business, a shareholder proposal for the company to resume declassifying its board and putting all members up for election every year was approved. The vote in favor was close, Mackey said, although he did not disclose vote totals at the meeting, and he indicated the board would "strongly consider" making a change "because we're very committed to following the will of our shareholders, and they have spoken."

With the formal part of the meeting over, Mackey took the first question from a Viva spokeswoman, who said ducks supplied to Whole Foods by a particular supplier were raised in "deplorable conditions," including tight living spaces, with inadequate hydration and clipped beaks.

"We've contacted several grocery stores, and some have made changes," she said, "including Trader Joe's, Wild Oats and Earthforce. We implore you to follow their lead and discontinue the sale of factory-farmed duck meat. Why do you stand by this farmer?"

In response, Mackey said, "We do more than any advocacy group and more than any food retailer [to ensure animal welfare], and we've done our own inspections [of the supplier's operation] and determined that the producer is more progressive about animal welfare and more sensitive to it than any other supplier.

"As for Trader Joe's and Wild Oats, their business is their business. Maybe they are more susceptible to coercion. If we stop selling an item, we're just angering customers and sending them to buy from someone else. So if we don't sell ducks, it harms our customers and it doesn't help the ducks."

He then turned the podium over to Wittenberg, who cited studies by independent authorities and her own visits to the supplier's facilities that indicated the ducks were raised under adequate, sanitary conditions.

When the next questioner, who said he was representing PETA, began to read his statement, Mackey asked how many shares he represented, and the speaker said he was not sure. "Probably one share," Mackey said into the microphone, "and we'd be willing to buy it back."

The PETA spokesman said his group and Viva were not trying to coerce Whole Foods. "Coercion occurs when someone has a gun to your head. This is a matter of conscientious objection," he said.

"No, you're trying to force us to do something against our will," Mackey fired back, then exited the room, leaving the podium to Wittenberg. After Wittenberg had replied to PETA and called on the next questioner, that questioner said he preferred to direct his question to Mackey and wondered when he would be back at the podium.

Mackey was already walking back into the room and resumed his spot to answer the question.