What Would John Galt Do ... About Global Warming? Deny It.

Illustration by Leah Lovise

Just before Christmas, in the latest chapter of the ongoing sprouts opera that is John Mackey's relationship with Whole Foods Market Inc., the CEO announced that he is stepping down from the chairmanship of the company's board while staying on as CEO and board member. In a statement posted on his blog Christmas Eve, Mackey described the move as essentially symbolic. "I have held the Chairman title since Whole Foods Mar­ket's beginning in 1978, but the reality is that today it is merely a title with no authority or responsibilities. The authority and responsibilities normally associated with the Chair­man position were all shifted over time to John Elstrott, after he became our Lead Director back in January 2001. Despite this shift in responsibilities, Whole Foods, along with many other companies with combined CEO/Chairman roles, has been targeted by corporate governance activists for several years now seeking a separation of these roles."

The loudest of those activists have been associated with the CtW Investment Group, which has lobbied the board against Mack­ey's chairmanship for some time. "CtW" means "Change to Win," and the group works with the pension funds of national unions in the CtW alliance that split from the AFL-CIO in 2005. As an investment group, CtW says it focuses on "organizing workers' capital into an effective voice for corporate accountability and retirement security." (According to financial initiatives manager Per Olstad, CtW funds hold approximately 885,000 shares of WFMI stock, with a market value last week of about $24.4 million.) Last August, when Mackey's Wall Street Journal op-ed opposing the proposed national health care reform generated widespread publicity and a boycott of Whole Foods, CtW President Bill Patterson said, "Mr. Mackey attempted to capitalize on the brand reputation of Whole Foods to champion his personal political views, but has instead deeply offended a key segment of Whole Foods consumer base."

Asked last week about Mackey's decision to step down from the chairmanship, CtW research director Richard Clayton called the move "long overdue," but said it is unlikely to end CtW's pressure to replace Mackey as CEO. "As long as Mr. Mackey continues to behave this way, and continues to seize opportunities to publicly speak out in ways that seem bound to aggravate Whole Foods customers, and potentially damage the company's reputation, I think we and other shareholders are going to continue calling on the board to address the problem." Mackey's disdain for unions is longstanding and returned in kind, but Clayton rejected speculation that the investors' concerns are simply a political dispute between the CEO and union interests. "It would be a lot more plausible if there were active organizing campaigns [at Whole Foods], which I'm not aware of," Clayton said, "or if the company's performance was more sterling ... due to Mackey's strategic decisions."

Mackey's outspoken opinions aren't confined to health care. A few days after his chairmanship announcement, the Jan. 4 New Yorker published a lengthy Mackey profile by Nick Paumgarten likely to add fuel to the controversy. Amid bemusing reflections about spiritual epiphanies, deep-breathing exercises, and his own rebirthing, Mackey declares his belief that "'no scientific consensus exists' regarding the causes of climate change," dismisses "hysteria about global warming" and international efforts to mitigate its effects, and argues, "Historically, prosperity tends to correlate to warmer temperatures." At a minimum, that would seem to make pointless – or even counterproductive – his company's earnestly helpful website enabling customers to calculate their "household carbon footprint." Moreover, the company proudly emphasizes its Green Mission and promotes many programs aimed at environmental action and awareness; Mackey's statements on climate change would seem to have the potential to undermine that work.

In response, Whole Foods spokeswoman Libba Letton said: "I think most of our regular shoppers understand the difference between John Mackey making a personal statement of his opinion about an issue ... versus the corporate policies that govern our organization across almost 300 stores. ... There all sorts of things that we do, day in and day out, that speak to how we care for the environment," reflecting one of the company's "core values." As for shareholder concerns that Mackey's statements might undermine consumer confidence in the Whole Foods brand, Letton said, "I don't sense anything except confidence in Mackey's abilities as CEO of this company and his vision and leadership."

Clayton argues that Mackey's eccentric outspokenness is offending core customers, hurting the Whole Foods brand, and undermining the company's bottom line. "Mackey continues to look for opportunities to publicly tweak Whole Foods' core customer base," he said. "It makes very little sense from a business point of view for the CEO of a company to put his personal beliefs and his partisan commitments ahead of the reputation of his company, and its appeal to consumers.

"The guy's got a John Galt complex," Clay­ton continued, referring to the pouting hero of Ayn Rand's libertarian cult novel Atlas Shrug­ged. "It's unfortunate that he keeps indulging in it, rather than putting his obligations to the company ahead of his personal preferences." Indeed, Mackey told Paumgart­en that Rand was mistaken in describing her own philosophy as based on "selfishness" and that he's a better marketer. "And, by telling people that it's all about selfishness, you're alienating a huge potential part of the market unnecessarily," Mackey said. "She really meant self-interest. Enlightened self-interest. So why use 'selfishness'? It's a bad brand."

On matters of public policy, some shareholders argue, Mackey needs to heed his own advice.