NEW YORK — An investment firm affiliated with a union federation last week called for Whole Foods Market to replace the embattled John Mackey as its chairman.
CtW Investment Group here, which manages pension funds for the collection of unions called Change to Win, wrote a letter to Whole Foods' board of directors saying that Mackey's pseudonymous postings on online stock message boards have “damaged his credibility, jeopardized the proposed Wild Oats acquisition and triggered a Securities and Exchange Commission Investigation.”
Earlier this month, the SEC launched an informal investigation into Mackey's posts, while Whole Foods' board said it had appointed a special committee to investigate the matter. Mackey admitted to making the posts on the Yahoo! message boards for both Whole Foods and Wild Oats Markets under the name “rahodeb” during a nearly eight-year span.
“With Whole Foods under mounting legal and regulatory scrutiny, its share price down 37% in two years, and Mr. Mackey's leadership in question, we do not believe the creation of a special committee alone is sufficient to restore investor and regulatory confidence in the company and its management,” the CtW letter stated. “We therefore urge the board to immediately name an independent board chair who can quickly establish credibility with regulatory authorities and shareholders.”
The letter went on to detail Mackey's postings in chronological relation to the stock performance of both companies, saying that the writings “raise a number of legal and ethical issues.”
CtW said its pension funds own about 900,000 shares of Whole Foods stock, or less than 1% of the shares outstanding. Michael Garland, director of value strategies for CtW, told SN that the group had shared the letter with other investors.
Although no other investors as of late last week had publicly called for Mackey's removal as chairman, Garland said the initiative “speaks to a premise that a lot of shareholders believe, which is that public companies should have an independent chairman.”
Removing Mackey from his position as chief executive officer is another matter that could be taken up later, Garland told SN.
The call for Mackey's ouster as chairman comes as the Federal Trade Commission this week is expected to present its antitrust case against the acquisition of Wild Oats by Whole Foods. A decision could be announced by this Friday, according to court documents.