Whole Foods, Pressured by Restless Investors, Shakes Up Board

Among those joining the Whole Foods board is Ronald Shaich, the founder, chairman and co-chief executive of Panera Bread Company. The others are Ken Hicks, a former chief executive of Foot Locker; Joe Mansueto, the founder and chairman of Morningstar; Sharon McCollam, a former chief financial officer of Best Buy; and Scott Powers, a former vice president of State Street Corporation.

Gabrielle Sulzberger, a private equity executive, will become the company’s chairwoman, Whole Foods said in a statement. Ms. Sulzberger is married to Arthur O. Sulzberger Jr., the chairman and publisher of The New York Times. John B. Elstrott Jr., who has served as chairman of the Whole Foods board since 2009, will step down.

Keith Manbeck, a former vice president of Kohl’s, will become the company’s new chief financial officer.

The moves by Whole Foods came after Jana Partners, an $8.5 billion hedge fund, announced a major investment and proposed four nominees to the company’s board.

Neuberger Berman, another major shareholder, has also pushed for change at Whole Foods over the past year, at one point even turning to activist hedge funds for help.

Jana went public with its fight against Whole Foods last month. Its targets included customer service and brand development at the company, which has faced added competition from traditional grocers in recent years.

The hedge fund, arguing that the board was stale and in need of fresh blood, proposed a slate of directors that included Glenn Murphy, a former chief executive of Gap Inc., and Mark Bittman, a former food columnist for The New York Times. The potential directors bought their own stakes in the company.

Whole Foods tried to broker a peace with Jana, offering to accept two of the hedge fund’s nominees if Jana would refrain from publicly agitating for change for two years. Jana refused, a spokesman for the hedge fund said.

On Wednesday, Whole Food unveiled its own new picks for the board, foreshadowing what could be a showdown with some shareholders.

“If Jana wants to have their own directors on the board, then they ought to be willing to sign a cooperation agreement,” Mr. Mackey said.

Jana, for its part, said it wanted to remain nimble rather than strike a compromise with the company.

“We decided we’d rather keep all options on the table,” the Jana spokesman said in a statement. “Now we’ll be waiting to see if the newly reconstituted board can show a real commitment to fixing the operations at Whole Foods and pursuing all avenues to shareholder value creation.”

Photo

Whole Foods is replacing several of the company’s directors and naming a new chairman.

Credit
John Taggart…

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