Whole Foods Market (WFM) is one of the stocks in my portfolio. Their annual meeting is on 3/9/2012. By the time I post this, voting will have ended on MoxyVote.com‘s platform. However, you can still vote at proxyvote.com and you can still visit MoxyVote.com for recommendations from eight “good causes,” which included three consolidations. ProxyDemocracy.org had four fund families voting, including the pension giant CalSTRS, and is easier to view.
WFM’s SummaryCompensation Table shows that Walter Robb, a Co-CEO, was the highest paid named executive officer (NEO) at about $917,000. According to the United States Proxy Exchange (USPX) guidelines, the median CEO compensation for large-cap corporations was $9 million in 2010. I see Domini is voting against the compensation package but I don’t know why. It seems reasonable to me, so I’m voting in favor of it and also to ratify the auditors.
CalSTRS is voting against several directors but most funds are not. In the absence of additional information, I voted for all the company’s nominees. CalSTRS also voted against an increase in the number of authorized shares of our common stock from 300,000,000 to 600,000,000. I’m joining CalSTRS in voting against that. Reasons given for the request are stock splits, stock dividends, grants under equity compensation plans, financings, potential strategic transactions, including mergers, acquisitions, and business combinations. In other words, they’ll do as they please without further consultation. This move could easily end up costing shareowners a fortune through dilution or otherwise. Vote against it.
I’m voting in favor of John Chevedden’s proposal to restore our ability to remove an unqualified Director. At the 2010 annual meeting, we as shareholders adopted this proposal, with 53% of the “yes” and “no” votes cast in favor. Despite that level of shareholder support, our board of directors has failed to implement the proposal.
Background: For years, Whole Foods followed the good governance practice of allowing the removal of a director either with or without cause. This principle was embodied in our Company’s bylaws and gave shareowners the flexibility to deal with situations where a director is not acting in our best interests.
In August 2008 our board unilaterally and without advance notice amended our bylaw to limit our power to remove directors only to situations where there is “cause,” and narrowly defined “cause” as covering only a criminal indictment or a judicial finding that a director had breached his or her fiduciary duties to the company or was not capable of performing a director’s responsibility.
Our board’s action came four months after the SEC closed an investigation into the actions of our Company’s Chairman and CEO, who used a false name to post comments on a Yahoo! chat room for investors, including me, as Mackey disparaged the future prospects of Wild Oats Markets and told me that shareowner proposals gave their AGM a “circus” atmosphere.
The 2008 amendments also required additional notice to our board when shareholders nominate director candidates and mandated certain steps when shareholders seek to act by written consent.
Another new bylaw specified how our board may advance legal expenses to a director or officer covered by an indemnification agreement. If our board wants to limit our rights, we should have a say in the process. Accordingly, our board should repeal the 2008 bylaw amendment on director removal and re-instate the prior “with or without cause” provisions.
Last, I am of course, voting in favor of my own proposal requesting that our board adopt a policy that, whenever possible, the chairman of our board of directors shall be an independent director (by the standard of the New York Stock Exchange), who has not previously served as an executive officer of our Company. This policy should be implemented so as not to violate any contractual obligations in effect when this resolution is adopted. The policy should also specify how to select a new independent chairman if a current chairman ceases to be independent between annual shareholder meetings.
A policy to maintain this governance structure at least indefinitely will enhance investor confidence in our Company and strengthen the integrity of our Board.
If we reverted to a CEO serving as our Board Chairman, this could hinder our board’s ability to monitor our CEO’s performance. An independent Chairman is the prevailing practice in the United Kingdom and other international markets where our company may wish to expand into in the future.
Here’s how I marked my ballot at MoxyVote.com:
|Director Elections||Your Vote|
|DR. JOHN ELSTROTT|
|SHAHID (HASS) HASSAN|
|MORRIS (MO) SIEGEL|
|DR. RALPH SORENSON|
|W. (KIP) TINDELL, III|
|Board Proposals||Your Vote|
|RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG, LLP AS INDEPENDENT AUDITOR FOR THE COMPANY FOR FISCAL YEAR 2012.|
|RATIFICATION OF THE COMPENSATION PACKAGE GRANTED TO OUR NAMED EXECUTIVE OFFICERS.|
|ADOPTION OF THE AMENDMENT TO INCREASE THE COMPANY S AUTHORIZED SHARES OF COMMON STOCK TO 600 MILLION.|
|SHAREHOLDER PROPOSAL TO AMEND THE COMPANY S BYLAWS TO PERMIT REMOVAL OF DIRECTORS WITH OR WITHOUT CAUSE.|
|SHAREHOLDER PROPOSAL TO REQUIRE THE COMPANY TO HAVE, WHENEVER POSSIBLE, AN INDEPENDENT CHAIRMAN OF THE BOARD OF DIRECTORS WHO HAS NOT PREVIOUSLY SERVED AS AN EXECUTIVE OFFICER OF THE COMPANY.|