Compensation at Whole Foods Market
The following message from John Mackey was distributed to all Whole Foods Market Team Members on November 2, 2006.
To All Team Members,
I want to announce a couple of significant changes regarding compensation at Whole Foods Market. First, as you know, we have a salary cap policy which limits the total cash compensation that can be paid to any Team Member. The Board of Directors has voted to raise the salary cap from 14 times the average pay to 19 times the average pay, effective immediately. Why is this change happening? We are raising the salary cap for one reason only—to make the compensation to our executives more competitive in the marketplace. With our tremendous growth and success there has been an explosion in interest from our supermarket competitors in virtually everything we are doing. From copying many aspects in the design of our stores to selling more organic foods of all types, other supermarkets are studying and emulating us in dozens of different ways in their attempt to compete more aggressively against us. One of their competitive strategies has also been to aggressively seek to hire several of the executive leaders in our company. Everyone on the Whole Foods Leadership Team (except for me) has been approached multiple times by “headhunters” (Executive Search Firms) with job offers to leave Whole Foods and go to work for our competitors. Raising the salary cap to 19 times the average pay has become necessary to help ensure the retention of our key leadership.
This will be the third time we have raised our salary cap since we created one about 20 years ago. The original salary cap was set at 8 times the average pay. It was raised to 10 times the average pay in the early 1990’s and raised again to 14 times the average pay in 2000. This increase to 19 times the average pay remains far, far below what the typical Fortune 500 company pays its executives. As you can see from the following chart, the average CEO received 431 times as much as their average employee received in 2004, while the Whole Foods Market CEO (me) received only 14 times the average employee pay in cash compensation.
Most large companies also pay their executives large amounts of stock options in addition to large salaries and cash bonuses. However, this is not the case at Whole Foods Market. As the chart below indicates, the average large corporation in the United States distributes 75% of their total stock options to only 5 top executives with the remaining 25% going to everyone else in the company (actually most of the remaining 25% goes to the next level of executives below the top 5). At Whole Foods, the exact opposite is true: the top 16 executives have received 7% of all the options granted while the other 93% of the options have been distributed throughout the entire company with all Team Members eligible for a grant after 6,000 hours of service to the company.
The second part of today’s announcement has to do with my own compensation. While it has become necessary to raise the salary cap at Whole Foods to help ensure the retention of our key leadership, this is not true in my case. The tremendous success of Whole Foods Market has provided me with far more money than I ever dreamed I’d have and far more than is necessary for either my financial security or personal happiness. I continue to work for Whole Foods not because of the money I can make but because of the pleasure I get from leading such a great company, and the ongoing passion I have to help make the world a better place, which Whole Foods is continuing to do. I am now 53 years old and I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart. Beginning on January 1, 2007, my salary will be reduced to $1 per year and I will no longer take any other cash compensation at all. I will continue to receive the same benefits that all other Team Members receive, including the food discount card and health insurance. The intention of the Board of Directors is for Whole Foods Market to donate all the future stock options I would be eligible to receive to our two company foundations — The Whole Planet Foundation and The Animal Compassion Foundation. In case there is some technical, tax, or legal reason why these stock options cannot be given to our two foundations, then I will retain future option grants and will pledge to donate 100% of the gain from those options to the foundations. This donation of future options received doesn’t apply to the stock options already issued to me prior to January 1, 2007.
One other important item to communicate to you is, in light of my decision to forego any future additional cash compensation, our Board of Directors has decided that Whole Foods Market will contribute $100,000 annually to a new Global Team Member Emergency Fund. This money will be distributed to Team Members throughout the company based on need when disasters occur (such as Hurricane Katrina last year). The money will be placed in a special account and any money not distributed in any particular year will roll over and be added to the following year’s contribution. We are still working on the exact way Team Members will be able to access this money. The first $100,000 will be deposited on January 1, 2007.
With Much Love,
John Mackey
Created on … November 01, 2006
Thanks John. I wish more CEOs saw the value of your level of transparency, let alone the egalitarian philosophy apparent in these decisions.
Mr. Mackey,
I just wanted to say “thank you” for setting such an inspiring example of philanthropy. As a team member, it is a great feeling to know you care about others.
Thanks again.
John,
Kudos on a well thought out plan and a necessary investment given the current competitive environment. I, for one, knew that the incredible success WFM has enjoyed over the past several years would eventually result in increased competition from all facets of this specialty retail sector. What I underestimated was the rapid rate at which this competition would develop and impact the company. I am a part-time team member of WFM in New Jersey (my full-time employment is in higher education-Financial Aid) and we now compete against not one, but two Wegmans within ten miles of our store. I’ve been a team member for almost a year and a half and a loyal customer and passionate believer in your mission for much longer. (I was a little late to the party on your stock, and I’m not doing so well there..lol..) I strive to carry out the core values of the company every day, whether or not I am actually working at my local WFM. I participate in the renewable energy program and preach the positive impact that natural and organic products can make in the quality of people’s lives. I’m proud to be a team member of such an incredible company with an invaluable purpose…no matter how small my contribution.
I’ll tell you a story some other time about how my Labrador Retriever, diagnosed with renal failure at age 12 and ½ lived to over 15 years on a Whole Foods diet of all natural chicken thighs, natural beef, cage free eggs, winter squash, organic whole wheat bread, blueberries, olive and fish oil etc. I removed her from commercial dog food at the time she was diagnosed and my veterinarian said the prognosis was not good, maybe 6 months tops. My breeder stated that in 25 years of breeding, she never had a dog live past 14…my dog not only lived until 15, she thrived…my vet was emailing ME with questions about her diet for other clients!!
Anyway, here’s to a prosperous 2007 and beyond…
Wow.
Talk about leading by example.
Very, very impressive, John.
I understand the need to keep talent in an organization but at some point doesn’t a company trying to be different have to make a stand on salaries? I enjoy reading your blog and watching your company grow from afar, and I like what you stand for in this world. At what point do you stop moving the salary cap and agree to lose people who aren’t satisfied and who maybe don’t have the vision for Whole Foods that is needed? Just a thought.
Thanks and please keep up the good work!
How nice that Whole Foods made such enormous profits this year…as a stockholder, my portfolio is in the toilet. How will that be fixed?
John,
Shareholders (many of them team members) are getting crushed today….absolutely crushed. I wonder what type of negative impact this will have on morale and retention going forward. Again, I understand and applaud the decision to invest in your leadership, but I can’t help but wonder what trickle down effect the sharp decline in stock price is going to have on everyone in the company. I also understand that you can’t control the stock price–up or down–I was just wondering what your feelings were on the topic since it’s relevant to retaining talent across the company.
John:
I love Whole Foods Market and the way you and your loyal team run the business. As mentioned on this morning’s CNBC program, you have created your own competition by popularizing healthy and organic foods.
Given that we don’t have a Whole Foods Market in our area (north San Diego County), I couldn’t help but wonder about the possibility of you migrating into larger stores where you could set up a presence. In other words, you might have a Whole Foods mini market within a larger store.
It might be similar to what Starbuck’s has done within many of the supermarkets. Your organic name, nourishment and philosophy could have an exponential reach.
Thanks for all you do!
Mr. Mackey,
Without a doubt you are my hero. For the last 10 minutes I have been typing/deleting what I could add as a comment, but have decided to leave it at:
“Without a doubt you are my hero.”
Dear Mr Mackey,
Good job on matters at WF and glad you took a paycut.
I do have a concern as a longtime shopper and professional. Leaving that aside, here is my issue.
I shop in all the Philadelphia stores. Each is unique in its own way….however….aside from being a true believer in the most of the WF philosophy I find that staffing/customer service runs from excellent to awful. The teams can be effective and then goofy. Since an organization/business runs from top to bottom and up again if done well, if there is anything that turns me off more, it is some of the real slackers at the stores. This is not an style/ apparel issue because this is irrelavent. It is their ‘too cool for words’ attitude. It comes accross as ‘Why are you bothering me? Can’t you see I am into myself/job -you don’t matter?’
You want to drive up comps and beat the competition??
Improve this!! No one needs to be a WF team member if they don’t reflect an attitude of service and some attention. People will remember good help and want to comback for the experience.
Otherwise, the Oats, Trader, Wegmans etc will eat your organic breakfast, then lunch and then dinner.
Thanks for your time and good efforts to address this locally and even in Mill Valley.
George
This blog was mentioned on a message board that I frequent. And, after reading it, I’m blown away by the utter sensitivity and consideration shown within. Whenever I hear about the grotesque salaries paid to people, I shake my head. No one, in my opinion, in corporate business, is worth a seven figure income. And yet, many receive just that. And then there’s the stock options ad nauseum.
I wish that there was a Whole Foods closer to where I live. But you can be sure that I will shop at your markets when I can. And, I will also build my own new business on this type of transparent honesty. Kudos to you and your entire company.
Ah, it’s a sad and strange thing that (big gulp) the stock can plunge 20% or so (yeah I’m down painfully 20% and this was 1/3 of my stock portfolio/life savings)after great earnings, increased dividends, decreased chairman salary, overall the coolest market ever (there is so much room for increased marketing - ie, distribution of private label to other venues, fast food whole food venues apart from the store, increased loyalty by card tracking programs, well there is a lot that can make in grow in new ways) and the flippin’ stock tumbles. Whole Foods is a valuable business and an example of how-to. I hate seeing 20,000. go away and need it to come back BUT THIS SWARM OF LITTLE FEARFUL MINDS TAKING IT DOWN IS ABSURD!!!!!!!! Onward.
John,
I applaude your latest pronouncements and most of all the realization of the stiffer competitive environment we face today; the organic market niche is now open for conventional retailers to flex their muscles and most of them will end up compromising the organic integrity set up by your good company Whole Foods Market.
You have a supersonic vision which i hope could trascend to all levels of team members. After listening to the call and going through the revised structure of compensation yesterday, the first thought that came to mind was “this is definately anti Wall Street”, and another team member who came from Georgia agreed with me but also added, “John thinks outside the box”, because thats untypical of CEOs. True to my words, Wall-Street like the ‘cooked books’from Enron and not the transparent Mackey’s who gives the true transparent perspective of the changing trend in his company and sticks to the truth - the stock performance today is the reward transparent CEOs get from the markets.I again, commend you for focusing more attention on long term investors and not speculators as you said on the third quarter call.
Though “Hope” is not a management tool, I truly hope all team members will rise up to the challenge, think outside the box and realize the competitive nature of the organic food sector especially in the next two years because thats when most retailers are rolling out their offerings in this niche.
Comfort days are over team, lets push for more upscale and legardary customer service,clean shopping spaces and that smile will go a long way.We can not afford to loose any customer right now, lets get it right so that we can retain our competitive position in the market.
My small region is under the leadership of very strong leaders and the growth is on time to face any competitive threats as we react torwards changing market trends.
Keep it up with that good course and we support you.
ED and Madaleine,
Not taking the questions away from John, i thought i should throw in my two cents because am a Whole Foods Market addict.This is just a one day performance of the stock; the stock like any product on the market reacts to news good or bad and it will be very unfair to judge the long term performance of the stock based on one day trading. Speculators unlike real investors react to such news.We need long term investors for the stock to be very stable.
On the contrary to your views, i heard a lot of team members vying to buy more stocks; i also urge you to buy some tomorrow at that price because thats a good bargain to buy a strong performing stock, its like buying it at a split price.
The team members where i work have every confidence in the stock and thats what makes the company strong because it has a strong base who believe in the good ways the company has ventured into and continues to pursue.I strongly feel retention has nothing to do with the performance of the stock; time has come in any given work place where money is slowing loosing its meaning but company values are taking over the place of money.
Speaking for myself, i can get a far better paying job anywhere anyday, but the question is: Will i find happiness and acceptabilty there? Its a million answer question. Whole Foods has an interesting culture and admittedly,its the only company i have worked for where i do not like to take a day off. Work at Whole Foods is addictive and a pleasure to work, its a very energizing and smile filled environment and i always look forward to going to work.
The stock will stabilize and sooner than later it will be shooting upwards, and that starts with you, have the confidence and trust in our company, you could have been worried had it been McDonalds, organic food is here to stay.
Every company can have an organic product on the shelf but its how organic that item is? Thats the distinction between Whole foods and the competition.Market entry is very easy but its market sustainability that is very difficult.
John’s salary cut is a real motivation and morale boaster for every team member and is a good role model to look up to.Making such disclosures comes with integrity just like the integrity in the food we sell and that will keep us on the market.
Do you have a company car and/or jet?
Dear John,
Could your stores afford to close on Sundays? Maybe Sundays are too traditional, how about Thursdays? Here’s my feedback: If the execs who use their brains (and I did not “quote” that, I do believe brains are key players) need extra dough to keep them competitive, your team members will need something other than fantastic benefits to keep us competitive (because we already have them) and morale might be an issue in the near future. How about one designated, consistent day off for the whole store each week? All over the world, Whole Foods team members could have Thursdays off, something consistent, just for them. That sure would be challenging to coordinate, but I’m sure the competitively-paid team leaders could figure it out. Team members would still have an additional day off during the week, but the whole store would be closed for business, resting peacefully, secure in itself and eager to support and manifest Whole Foods’ values and profits the next day.
I believe when you get right down to it, there really are people who enjoy working in service positions and you can throw money at them all day long, but if you drain them of their energy or humanity, no amount of financial benefits is going to matter. (May I suggest that the “Hit the Ground Running” “training” method be composted? Immediately.) Give them space in the week to not even go into the store - and that includes the team members in our 365 production sites and at the wheels of the freighters - and the STL’s! Incredible equality, confidence in the abundance. Rest.
I’m sure you hire the most remarkable people you can, and it’s neat to imagine that they take the values and skills they acquire in Whole Foods’ culture out into the world, but I’m tempted to believe it’s been the grass and the roots that have made the field so enticing. In the spirit of Whole Foods’ committment to community and the well being of its team members, let us all take a day off on the same day. Stand out in the crowd by giving us not only these incredible benefits, but give us time, too. It’s just an idea. It’s also a pleasure to work for you.
With profound respect,
Elizabeth
CS Team Member, MLW
You mention donating some of your stock options to the Animal Compassion Foundation. What has become of your plans to ensure that a larger proportion of your meat and poultry sales come from compassionate production systems? A couple of years ago you made a big fuss about how WFM was going to be a leader in this area, but nothing seems to be happening.
Hey CKM,
I agree and thanks for a well through out response. It’s team members like you that make this company such a success. I am also happy to hear about team members keeping the faith and vying to buy more stock—it truly is an interesting culture and it’s the company values along with that culture that make me want to do my part every day as a team member. From a psychological perspective though, I did notice a certain “buzz” amongst team members when the company overall was doing well (simply from a Wall Street perspective) versus the past couple of months. We have been hit particularly hard by competition and that probably compounds the issue, and I know people should not react one way or another to short-term fluctuations in stock price if they truly believe in the company’s mission and leadership, but I feel the psychological impact is there—even if for only a short time and at a time when the company really needs the entire team to step up and differentiate themselves from the competition. As stated previously, I am a part-time team member and also work in higher education (Financial Aid), a career that I find incredibly rewarding on a personal level, but certainly isn’t one of the higher paying careers for someone with my background.
Unfortunately, not everyone is simply motivated by personal reward or belief in company values (hence the need for John to become increasingly competitive in the marketplace with his leadership team). I guess that is what I was driving at in my question to John. Money does motivate—and having less of it—even on paper can impact a person (mood, whatever), and at a time when every team member really needs to step it up. An example I can think of without droning on…my wife is an OB/GYN Nurse Practitioner for a local practice. She has several drug reps who work for Merck. The stock plummeted during the Vioxx scare, and she would come home telling me stories of the reps coming in dejected and completely unfocused on what they were supposed to be doing. Some worried about their jobs, others worried about their kids college funds, their retirement funds etc. I don’t invest in Merck, but I’m pretty sure it has come back substantially from its fall. I understand comparing Whole Foods to Merck is like comparing organic apples to their chemically soaked counterparts, but I do wonder about the impact on the team, even if only short-term.
We could always end this Wall Street Ponzi scheme once and for all by taking the company private☺☺. This a solid company with a formidable mission. 25% swings in its stock price (either way) over a short period of time is a worthless distraction from the true value of WFM.
Ed
TM,
I do not need to have a company car or jet to believe in ethics and equity of the markets neither do you need to eat organic nor conventional food to go to heaven. Am calling a spade a spade and i have the academic faculties to back that up. Am just a simple team member who beleives in the noble cause and today i got on a public transport bus to go to work because i enjoy my work. Watch the NASA scientists in space (ISS) to see the real meaning of passion in ones work - they put risk and money aside to forge for a common goal.
Like my last post, this comments on communication from the top down. John, you say this letter was distributed to ALL team members on Nov. 2. I heard about it second hand, from a Team leader of an ajoining department. It wasn’t posted, or announced. Just letting you know…
My appreciation goes to you for your salary cut and planned philanthropy.
One thought about the reasons for the raised salary caps - Are these the same execs who fail to listen to team members? The same that are disconnected from the day to day realities of working in the stores? The same people who insist on marketing decisions that even our customers don’t understand (The new value line of chicken) and see holes in (Hey, Joe…)?
Perhaps it would be better to let some of them go.
An idea for helping upper level folks reconnect with the stakeholders in WFM: Once a month, have them work a regular shift in a store on the team they oversee from a distance.
Once again, I have been with Whole Foods for 9 years, and don’t have any intentions of leaving anytime soon. Just throwing a few thoughts out there for you to see.
Thanks for having this venue to share them.
Mikeal (from Prospect St.)
Hey There!
I’m excited to be a shareholder of Whole Foods! After the drop last week, I added it to my portfolio. It’s inspiring to be a shareholder in a company that does things just a little (or a lot) differently. Very impressive!!!
Hello sir. I heard about the announcement you made concerning your salary. I also heard that the funds would be donated to an emergency fund. Imagine my dismay. I think you are probably so distanced financially from your employees that you do not see the negative impact this kind of action has on a struggling worker. Here is their life in round figures. Their $11.00 per hour nets them about $700 every two weeks. Most aren’t getting forty work hours each week. Rent in San Ramon for a one bedroom apartment is $950 per month. A car to get them there (assuming it is paid off) requires no less that $40 per month. Insurance on that car is at least $60 per month. Utilities and phone total another $100. They can’t have a television because their dental plan costs $40 each month and they are still paying off the $2,000 root canal they had three months ago. Forget the internet, they will remain uneducated as long as they are employed due to lack of funds for education. And finally, I don’t know about you, but I’m guessing they’re hungry. Even with a whole foods discount, I’m not seeing any money left for food.
I though you weren’t giving guidance anymore after Q2…but this has proven false. You said you wouldn’t cause people buy short-term and there is over-emphasis on earnings. However, by flipping back and forth on your own policy of no guidance then issuing guidance, respect and trust are lost.
A 100M share buyback (announced today) is a good start, but remember: You are a public company and shareholders come first. I have heard in the past saying that customers are first, then team members, then shareholders.
I am not greedy, or a heartless person. I believe in people before profit, but this company’s investor relations is a joke. Its the reason that there was so much volatility in the past 6 mos in the stock, and the result is ruining people’s lives (savings, IRA, etc) Maybe the earlier posted should not have invested 1/3 of their savings into WFMI (bad diversification and weight distributon) but please take the steps to improve your IR.
Hi John,
I totally agree with you, raising the salary cap is is a great retention measure
As you say, there is an explosion in interest from the supermarket competitors in virtually everything Whole Foods is doing. But Whole Foods has to focus on its strengh in order to beat the competitors.
The following is a comments that I found on the net about Whole Foods’ moat: discerning shoppers who live in Manhattan and shop at the Whole Foods at Columbus Circle — still find that the cheese selection is far better elsewhere and that the bakery at Whole Foods is not at all up to par with some of the city’s better bakeries. Here in Denver, my own experience with the prepared foods at the Whole Foods in our neighborhood has been hit-or-miss, and the price premium on some items that are available at traditional groceries is 50% or more, driving us to make a special trip elsewhere for something that we would otherwise have simply dropped into our cart at Whole Foods.
Whole Foods is different and better, keep up the good work.
We look forward to have a Whole Foods in our area.
Dominic
Val-des-Monts (Québec) Canada
I stumbled on this blog, since I just was a guest lecturer at a local college on leadership. I searched under Whole Foods CEO, because of the experiences that our local WF (Pgh) provides. It is extremely impressive the diversity of the staff and their ability to give each customer a feeling of welcome. The store down the street is now advertising organics, but it is the EXPERIENCE that matters to me. As a professional, it is great to go to a store and feel welcome - not that I”m bothering the staff! It seems that at this store in Pittsburgh, they “get it” - that the customer is their sole responsibility! A Trader Joe just opened and went there since they advertise the same products, less pricey. It was a dreadful experience. I’ll happily pay more to go to store where the clerks, stock people, etc are kind, sweet and wonderful. ESPECIALLY the fresh fish stand. There is NOTHING like it. I’m spoiled by them! They know the product and they are wonderful. There was one crabby guy there once (no pun intended!) and I was disturbed by this. Very soon, he was not there. So it seemed his awful attitude was noted and dealt with. I’m in healthcare and committed to giving a positive experience to EVERY patient that walks thru our doors. We have a ZERO tolerance on negative, nasty workers. Let them work for the competition!! I don’t know enough about you, Mr. Mackey, but I hope you are a Level 5 leader!
I took a trip from Ashland, KY to your Columbus, OH store yesterday because I bought some WFMI stock when it got slammed the other day. I wanted to see what I had purchased. I spent three hours in the store browsing and eating.
I was told that your Columbus store is the second largest, is that correct? What an awesome experience! I would never have imagined so much in a grocery store until I saw it. Can I please have my own store in the Huntington,WV/Ashland,KY/Ironton,OH tri-state area? I’ve never been more impressed by a grocery store in my whole forty years of life. I could see WFMI expanding/growing like starbucks did. Why do you still only have less than 200 stores open? Is it because of the on-site liquor licensing? I loved drinking my belgium beer with my fresh-baked pizza in the cafe. I could see you doing for food what Border’s did for books. At Border’s you grab a book and plop down and browse and read it. I loved the ability to see something and just pay/sit down and eat it right in the store. That’s awesome, and it was cozy/comfy/healthy. As far as the previous posts are concerned, 19x pay is fine by me. The WMT people fly in a jet/I know because I saw it on a CNBC TV special; so if you need one of those, that’s cool too. Your grocery store beats them all hands down in my opinion and I will shop there many,many times per month if you will just please open one in my neck of the woods. WFMI rocks!!!
It seems to me this could have been solved by keeping the 14x multiple and increasing the average wage to ensure the Top executives could still be paid competitively. The solution you implemented is decidedly elitist and exclusionary.
I am inclined to agree with Bry Willis (above) but point out that there are probably around 5,000 “average level” employees per exec. Raising all those rates in turn is a much bigger move in total than the 35% increase to executives.
However, what are the execs doing now better than before that merits a 35% increase? Perhaps there are others that will happily work for the original 14x?
I have worked 2 1/2 years at the Whole Foods store in Fort Collins, CO. At first I did not get it, and the more I learned about the whole concept,the prouder I became about working here. What you did with your salary was incredible. Yea, you are probably worth a lot, but excutives from other big companies are worth more and just keep taking. I applaude you! Hopefully others will follow in your footsteps. I only hope I can continue to grow with your company. I am no spring chicken and I only hope that will not hold me back from advancing. I want to work here until I retire. Thanks for employing me, Dolores Emerich
John Mackey , I read all of this blog and wonder how you handle all of these message’s from people , some negative and some positive !
I also wonder like “TM” (blog above) if you have a company car or jet ? If you don’t, please buy one , car or jet and drive/fly to were ever “elizabeth” (her blog above) works and tell her that a day off for the whole company all at once is really not possible and give her part of your wage cut( which is EXTREMELY generous) to take a bussiness cource at a local collage ! Then maybe she will get it!
Then zip over to a whole food market and pick up some tissue for “sheryl” (her blog above)and try to explain to her, that she’s making way more then minimum wage and explain cost of living to her! Maybe get her a box of common sence !
These people are negative and big cry babies! I give you props for being the hard worker that started a bussiness and put his hard work ,time , money ,heart and soul and made a positive , healthy and succesful company that whole food’s is today !
Yes , stock maybe down and some people maybe upset by that, cause they like some of the people above have put alot of there money into the stock but stocks are like a yo-yo they go up and down and side to side. If you lose all your retirement on stocks and bonds, then shame on you for not making other investments with some of your money, people! I personaly will buy your stock tomorrow and be happy that I have a investment in a company with character and conchence ! I don’t care if I make or lose money on your stock and I only make $8.00 and hour at my job !!!! Thanks John and keep up the good work !!!
John,
As always, you are an inspiration. America would be a better place if all CEOs thought the way you do.
Adam
Are we ever going to get any positive news about Whole Foods, as of today stock at $47 and falling and it has been months on any kind of positive press
Hey Mr Mackey, I’m a New Member at the newly expanded Boca Raton, FL store. I love it. I feel appreciated for the first time after 15 years of working in a restaurant even though it’s a big cut in income, but that was my choice. I just wanted to comment on the compensation issue and say I think you are definitely correct regarding executive pay especially after the announcement of Mr. Nardellis’ severance compensation at Home Depot, an astounding $210 million dollars for getting fired!! $21 million of that upfront in cash!! It’s disgusting and absolutley unacceptable. However I’d like you to consider the same thing for me if I ever get separated. On a related subject that is completely unrelated but I have to say it’s related or it won’t get published and it’s regarding getting the word out to the public. My room-mate thinks organic food is poisonous! I was making a lasagna and he told me not to make it with any of that organic crap. There is a huge population out there who have this mentality and they need to be convinced that what they consider normal food is abnormal food, I know you don’t like to advertise and I’m certainly not advocating it but someway, somehow you must figure out how to do it. Sir Richard Branson recently announced that he is now in a position to make a difference concerning climate change, I feel that you are now in a position to create lifestyle change on a huge scale, can you do it?
John
I had sent in a question last evening and on subsequent reflection thought that I needed to be clearer in my question to allow you to respond more precisely. I totally support the ideas in conscious Capitalism. As a head of a company operating on conscious capitalism principles, you and the employees create a lot of value and financial wealth for the company and its investors. What is your perspective on the CEO of a company participating in some this wealth created through equity or restricted stock grants, above and beyond cash compensation and bonuses. For instance, if Mr. Yunnus had taken a small equity position in all the different for-profit Grameen companies and become personally wealthy, would that have in any way decreased his personal effectiveness and the success of his companies to have the kind of impact they have had. I understand your personal situation is different since you were the founder and had the founders equity in Whole Foods and have benefitted from the market appreciation of whole foods equity value. My question is aimed at the appropriateness of wealth creation for senior managers and CEO’s of “conscious Capitalist” companies and not just founders and investors. As on many things, I am sure you have thought deeply about this and would really appreciate your insights!!
Atul
Dear Mr. Mackey:
I read your interview in the 04DEC WSJ and loved it. I bet that I don’t agree with you on politics or on natural foods (although I like stuff to taste good). But I really DO like your candor in answering questions. Quite refreshing. Especially the comment about how you would rather have a valuable conversation than participate in corporate karioke. I think we need more of that in corporate America. It will help us work more efficiently and generate more wealth.
John,
I just read the back page article in the February issue of Fast Company. Kudos to you on your decision, but more importantly, on your values. Your actions give me hope!
Loyal WFM customer, Kathy
Mr. Mackey:
I read the letter you distributed to your Whole Foods Market employees. In an era of Enron and greedy CEOs, you are an inspiration.
Thank you.
P.S. You have gained a customer for life.
Hello John,
I just read your letter addressed to your team members. It is inspiring and encouraging. After reading your letter… “Doing the Right Thing” seems to be what you’ve done in the past, and you are now focusing on “Doing the Things Right”.
Sincerely,
Sam
Hello John,
I understand the basic reasoning of having to raise the top pay rate from 14x to 19x the average pay, but it would have been nice to read that the top executive at Whole Foods have an outlook such as you do when it comes to the new paradigm in business, with their personal compensation. The best way to maximize income is to think long term, and not make it the primary goal of working, especially at a company like yours that has given people the tools to get so much more from there job than just money. Your happiness analogy should be taken to heart by the top executives as they have the most power and potential to make others happy with their decisions. I guess it is hard to establish that entrepreneurial spirit in people, even those with the greatest potential for an impact! Either way, keep up the great work!
Best Regards,
Chris Stiner
I just read your letter to the team members, printed in the latest issue of FastCompany magazine. My most sincere congratulations to you, John! Thank you for sharing your compensation philosophy and being pro-active about it. Actions speak louder than words! I’m a 63 year old former Human Resources executive. I’ve dealt with many arrogant and egotistical upper-level executives over the years. Almost all of them have wanted more pay and associated stock options. Many of them have not cared about the employees who have made them successful. The current national executive pay practices are obscene and atrocious. I had better stop before I get upset again about the dreadful executive compensation which takes place in so many companies.
John, you are a breath of fresh air. Keep up the good work I will be a loyal customer, forever!
Karl Swensen
Dear John Mackey,
I just saw Fast Company’s Final Word…..Thank you. I hope, for the sake of future generations of American workers, that more American CEO’s will follow suit. I have torn out the page, framed it and put in on my desk. Cheers to you, and to all those you inspire.
Richard MacMillan
Massachusetts College of Art
Thank you for sharing this with us. I would like to use your comments for a paper I am writing in my MBA class. I will properly give credit where it is do.
Dear Mr. Mackey,
Along with the few other who have posted recently, I too just read an article about your decisions and am truly in awe by you. I was amazed that someone in the corporate world, which seems to be run by greed, actually did what you have done. It really touched my heart. I have only shopped at WFM a few times, but after reading the article you have just earned another loyal customer. Keep up the good work. I just wish more people though the way you do. I look forward to hearing more great things about you in the future. Good luck and God bless.
Victoria
Mr. Mackey,
The old T. Jefferson quote that ‘he who inspires others to do, dream, and think to a greater degree is a true leader’, epitomizes your person Sir.
You put the majority of corporate America to shame and heap fiery coals of character upon their heads. John, by setting the bar much higher than their single minded greed will/would ever allow them to aspire sets you apart as a man of innovation and decency.
Thank you for this contribution and may success continue to be your companion in whatever you lay claim to doing.
j. bradford
Like a few others, I, too, read your letter in the back of Fast Company and immediately tore it out to keep on my desk.
Quite an inspiration. Thank you.
A salary cap which keeps going up is not a cap, it is a short-term policy.
I have a few friends that work at Whole Foods Markets. They seem to be content in their employment. The two things I hear them mention that appear to be issues of concern within the stores they work in is some of the equipment doesn’t work properly, and they’re having to pay for their medical care upfront, then waiting to get reimbursed. Can the equipment for these working class people be maintained better, and could you change the way your medical benefit program is structured?
I just read your blog about the compensation at Whole Foods. I was very impressed with what you wrote. I shop at Whole Foods whenever I can (Fairfax and Santa Monica and Fairfax and Third); I really respect your products.
If I wasn’t so damn old, I’d apply for a job at Whole Foods. As it is, I was retired for a few years and just took a part time job as an office manager at an Architectural firm in Hollywood, CA. We have seen the flags saying Whole Foods 90028 but we can’t figure out where you plan to open your next store in this area.
Thanks for being a “mensch”. The world needs more people like you.
Best.
“Salary cap.” Sounds very NFL of you John.
So tell us why WFM is (apparently) one of the most virulently anti-union companies out there? Not very compassionate, and very Wal-mart of you!
A salary cap which keeps going up is not a cap, it is a short-term policy.
Bravo! I was wondering when someone would get that. As much as I love WFM and shop there, I don’t for one minute buy into the “we’re so much better than other companies” mantra. It’s a company run by self-indulgent yuppies that sells products to other self-indulgent yuppies at prices that in no way reflect the true meaning of “sustainable” or “fair trade”. WFM has cornered the market on ‘eco-speak’ and not much more. They’ve got the buzzwords and nothing to back it up.
But what I really want to know is WHEN ARE YOU GUYS GOING TO OFFER DELIVERY????
I came across this site because I was considering working for WF and wanted to check out salaries. Wow, I sure got a more info than I bargained for.
I have worked in the industry for 15 years. I have come to realize that there isn’t much you can do when you know it’s enevitable that your company will someday lose it’s position at the top.
When that starts happening, it’s impossible to make everybody happy. Especially with a system like the one in place where the employees are the last investment on the list. There are many bandaids distributed, but the wounds never heal and like and infection, it just spreads.
I agree with Sheryl about how it’s hard to make a living wage and that things are 10 times more expensive than they were for our parents. It quite depressing, but what I have come to realize is that we cannot depend on any of these companies to take care of us. As long as they are trading publicly, it’s not going to happen. Money and growth are the main goal and the employees and customers are the driving force.
If I work for WF, it will not be for the money, but for the education it provides, which is how all started in the first place. How will I survive? I will suplement my income by continuing to take chances (letting go of the “fear̶
and looking more into what I am longing for just like John started out doing with his own vision.
It’s easy to get sucked into a company that is so successful at first. You put in all that time and effort in and now you may feel that you are owed something in return. This is the American way.
I am so poor, but I know I am responsible for myself. I know that depending on another company to take care of me is like shooting myself in the foot over and over. I have had a direct experience and I have not seen any change and then I feel I have to settle. Yuk!
It’s a sad truth and if you want to see real change like me, you will fight the bastards at the top in Washington who rule all the strings.
Thanks for listening
John,
Even us former employees are proud to have been associated with your wonderful organization. I appreciate the opportunity. Bless you.
SP
To Lynn, Ed, & others concerned about the declining stock price,
I’m very sorry our stock price dropped. My personal paper net worth declined substantially so I wasn’t happy about it either. However, we don’t try to manage the short term stock price of the company, which is nearly impossible to do in any case. We manage the company to build value over the long-term. Sometimes that requires patience and the willingness to suffer temporary paper losses. No one who has held our stock for 5 year or longer has ever lost money on their investment. Please click on this URL to better appreciate how well Whole Foods stock has done over the long-term.
http://finance.yahoo.com/q/bc?s=WFMI&t=my&l=on&z=m&q=l&c=
To George,
Sorry you’ve had bad service experiences in our Philadelphia stores. I believe that most of the time our customer service is very good.
To Tommy,
I expect our salary cap will stay put at 19 times the average pay for several years. However, it may rise again sometime in the future if competitive circumstances warrant another increase.
To TM,
I don’t have a company car or jet. I have the exact same benefits that everyone else has at Whole Foods who works full-time (which is about 90% of all Team Members). There are slight adjustments in paid time off and the amount of money deposited annually in each Team Member’s Personal Wellness Account based on service hours to the company. Otherwise benefits are exactly the same for everyone who works at Whole Foods.
To Elizabeth,
Our stores exist to serve our customers. Closing the stores one day a week would be highly inconvenient for our customers and would upset millions of people. In addition, all our perishable foods–produce, meat, seafood, prepared foods, bakery, etc. would be one day less fresh when the store reopened after the closure.
To Alex,
We are about to launch an animal welfare rating system for all of the animal products we sell in our stores. We are currently waiting on the USDA’s “permission” which hopefully will be coming soon (the USDA apparently believes their regulatory powers trump first amendment rights). In the meantime take a look at the 5 Tier program that we are developing:
http://www.wholefoodsmarket.com/issues/animalwelfare/index.html
To Mikeal,
Thank you for your suggestion. However, almost all of the top leadership at Whole Foods who are affected by the salary cap increase have many, many years of experience working in our stores. In some cases, such as with Walter Robb, A.C. Gallo, and myself, they have worked more years in natural food stores than the great majority of our Team Members have been alive on this planet.
To Sheryl,
I’m unclear how donating some of what my salary used to be to the Team Member Emergency Fund hurts you or any other Team Member. It seems like it can only help the Team Members who have the greatest need–those who have suffered through a terrible personal crisis. I’m sorry that your life is currently such a financial struggle. However, Whole Foods pay is actually quite good for a retail food company compared to almost all of our competitors. Hopefully you’ll be able to make more money with us over the next few years through an increase in responsibilities and promotion. If not, then I encourage you seek a higher paying job with another company. Fortunately there are many job alternatives in the San Ramon area. Take care.
To Mike,
Nothing changed on our guidance. We are currently giving annual, but not quarterly guidance. Check the press release and the conference call script–nothing changed.
To Bry and Jafar,
I’m sorry that you feel like 19X the average pay is too much to pay for our top executives. However, contrary to your assertion, none of them received a 35% wage increase. The cap went up, but their salaries did not. I think if you look at what other Fortune 500 companies pay their executives you’ll find Whole Foods to be in the lowest 1% of these companies in total compensation. In addition, I’m not aware of any other Fortune 500 companies even having any kind of salary cap. If you know of any who do, please point them out. Are there people willing to work for 14 times the salary cap as top executives at Whole Foods? No doubt there are. However, I’m highly doubtful that any of them are as talented as the executive leadership team that exists at Whole Foods.
To Dave Arnold,
Whole Foods has already helped make several substantial changes in eating in the United States. Whether we can help create larger cultural changes–time will tell.
To Bill Stewart,
Our salary cap is in fact a real salary cap. Compensation gets cut off at that level and extra money for bonuses that has been earned is not paid out to the executives if it exceeds the salary cap. It has happened to me personally in the past several times. The fact that the salary cap has been raised over time to reflect the changing competitive market conditions does not negate this truth. The salary cap is real and it does limit executive compensation at Whole Foods.
To Paul,
You would need to give more detail on where and what equipment isn’t working in order to answer that question. Regarding health care–that is a very complex question and I don’t want to spend the time explaining our program in detail on our blog. I would urge you to ask your friends to share with you the printed materials they have received explaining our health care plan.
To Peter,
I don’t usually answer hostile leading questions such as the one you posed. I don’t consider Whole Foods “anti-union.” We are, however, “non-union” at this time, since in the United States employees still have the choice of whether to have union representation or not. Are you opposed to employees having this right? Do you believe workers should be forced into joining unions against their will? Non-union and anti-union aren’t synonyms. That being said I’m personally no big fan of labor unions as they currently exist in the United States, which tend to be very adversarial, creating an “us versus them” mentality which is very harmful to the business. Sometime in the next 3 or 4 months I’ll be posting a lengthy blog article about labor unions where my personal views will be articulated at length. This will be a chapter in the book I’m working on.
To Sally,
I’m sorry you dislike Yuppies so much, who seem to me as deserving of good food as anyone else. We do delivery at only a few of our stores, such as in Manhattan. Delivery is an expensive service, and in our experience, most customers aren’t willing to pay these high costs–even Yuppies.
Dear John,
As a former Team Member of WFM in the Mid-Atlantic Regional Office, I would like to say THANK YOU for everything that you’ve done for the company, not only for the shareholders but most especially for the Team Members. I have worked for WFM for about 8 years and in all those years, I’ve been blessed to work with such smart, talented and great mentors such as Ken Meyers, Julia Obici, and Chris Taylor, just to name a few.
I left WFM in late 2005 to pursue my dream of having my own business and fortunately, I have been very successful since. I credit most of my success to you, as I’ve always followed your example not only as a LEADER but as well as a HUMAN BEING who passionately cares about making a difference in the world, rather than earning a quick BUCK. Thanks to you and WFM, the money I received from my stock options when I left the company helped me through my tough times when I first started my business.
Now as a business owner, I, too, experience occasional turbulence with my company’s cash flow. However, I’m very optimistic about the future and I look for ways to solve such crises with very minimal effect on the business operation. That said, I commend you for your recent action in taking a pay cut and increasing the salary cap. Recently, I have done the same thing to my company, through your example and the results were amazing! My employees morale increased tremendously and I gained more RESPECT than what they are already giving me!
As I watch CNBC everyday, it makes me SO ILL to hear CEO’s making 7 figures in salary, stock options and bonuses, while their work environment are in shambles…IT DOESN’T MAKE SENSE!!! THANKS TO YOU, it’s great to know that future successful enterpreneurs like myself can always count on successful leaders like yourself as our mentor, idol and a hero.
John, thanks again for everything, congratulations on your acquisition of Wild Oats and I wish you all the luck and courage to continue leading WFM as the world’s largest health food supermarket! And please, ignore ADVERSITIES and keep doing a great job on what you do best!
Best regards,
Chris
To Chris Viado,
Thanks so much for sharing. I’m very happy to hear that you have gone into business yourself and that your business is flourishing. I wish you the very best going forward. Take care.
Hi John-
Was just reading through your blog and thought I would go back and really read your “Declaration of Interdependence” a little more closely.
Wow! I really understand now why Whole Foods is different and does not have a plain vanilla mission statement, like so many companies have. I found it (the Declaration of Interdependance) to be even more interesting and I really have a new found appreciation for Whole Foods Market.
John, I have a few questions about employment at WFM and maybe you can answer them for me, or at least point me in the right direction. John, if someone already has experience in the grocery business, but sees the light, so to speak, and really really wanted to work for Whole Foods Market, what is the best process to go about doing this? I know there is the online process, but I also know sometimes one does not get to see the “whole” person by just looking at a form on the computer screen. I remember watching you in an interview with Evan Smith on the show “Texas Monthly Talks” and you saying something to the effect that Whole Foods Market was always looking for people who excelled in customer service friendliness…..but I also understand that Whole Foods does a lot of hiring from within, which I perfectly understand. I know that Whole Foods continues to grow and is always looking for quality Team Members. John, does Whole Foods hire from the outside and what is the best way to get one’s foot in the door? I know your time is very valuable so I really appreciate any feedback you can give me today. Thanks again!
Sincerely,
John Maxwell
The reason a company becomes public-traded is to help the company grow with the increased investment, right?
At what point could you move substaintially forward in your already progressive ethics and share profits with employees directly as in a true cooperative? There must be some hurdles to getting back the ownership to be spread amonst your talent.
I’m sure you could come up with a hybrid cooperative-monopoly business structure that suggests a member/employee-owned setup: with dividends; term-investments; or…I’m no business person, but I see a lot of healthy, happy cooperatives and member-owned businesses around Seattle that don’t have- as one Stock Holder put it- “THIS SWARM OF LITTLE FEARFUL MINDS TAKING IT DOWN”. There are problems with public trading, and that is the game of “winning” or ‘of taking more than your share’. Someone always loses–That would be the ‘artificially’-low-paid employees and the higher consumer prices needed to makeup the losses of profit-taking.
One last thing…Grass-fed beef has been in Trader Joes over three years and in our local Puget Consumers Coop for many more. Prices are better there too. There is one reason why I don’t shop at WFC-except for convenience–but now after reading this whole blog, your business ethics deserve my “dollar vote”. hmmm, I think i’ll look into Trader Joes Business ethics-like why are their prices so low and their employees (at least in Seattle) so happy and prompt with helpfulness?–maybe someone out there can help.
Thank you John for your leadership in business modeling. It made me cry for humanity.
gil schieber
Hi John
I am a Team Member in our PRV (West Vancouver) location. I was and are thrilled to learn of your decision to cap your salary. Our location is doing very well and it could have not been done without your vision and core values.
Every competior will try to jump on our bandwagon but I know they will not be as successful as we are. If they do even a part of want we are achieving they will also help their guests to become aware of OUR core values. John ,the entire grocery “industry” is in a huge shift and it will help the entire populations of this planet to be exposed to our core values.
I have been in the Industry for 30 years and joined the PRV Team last July and I wondered why other companies just say but do not walk the talk.
P.S Peter please read our core values and that will answer your question you posted on February 22, 2007.
Best Regards
Ron
To John Maxwell,
100% of all the people hired at Whole Foods come from outside the company. Everyone who works for Whole Foods, including myself and the other co-founders, once worked outside the company. This is just common sense if you think about it. I think what you must be talking about is that a very high percentage of people in leadership positions at Whole Foods were promoted from within the company to the higher leadership positions. This is true. We seldom hire people from outside the company into high leadership positions. People must first become part of our company, embrace our culture, and prove themselves worthy of higher leadership positions. Regarding working at Whole Foods: I encourage you to read our “career” section that you can find on our home page. You can also apply for a job at any of our stores. Thanks for your interest.
To Gil Shreiber,
Your post has a number of misconceptions in it. Let me deconstruct it to clear things up:
You say: “The reason a company becomes public-traded is to help the company grow with the increased investment, right?”
Answer: Companies sell their stock to the public for 2 primary reasons–to raise capital to grow the business and to provide the opportunity for existing shareholders to sell some or all of their ownership stakes (since most people don’t want to own their investments forever).
You ask: “At what point could you move substantially forward in your already progressive ethics and share profits with employees directly as in a true cooperative?”
Answer: In 2006 Whole Foods paid out approximately 24% of all sales to the Team Members in wages and benefits equal to about $1.3 billion. The company earned slightly above $200 million in profits. The Team Members therefore received about 7 times more money than the investors earned in profits. If 100% of all the profits were taken from the investors and given to the Team Members it would only raise the average pay from a little bit above $15 an hour to about $17 an hour plus additional benefit costs. The simple truth is that the Team Members at Whole Foods receive several times more money than the investors do. Nor is there anything unethical or wrong about the money the investors earn through their investment in Whole Foods. Customers, Team Members, suppliers, and investors all freely trade with the company out of their own self-interest. No one is forced to trade against their free will. The profits for the investors are justly earned.
Before the $200 million in profits were earned most of the 42,000+ Team Members at Whole Foods Market were paid during the year various “gainsharing” bonuses based on the labor productivity of their teams. Almost everyone at Whole Foods is eligible for some kind of incentive bonus compensation.
Whole Foods Market is a “true cooperative.” It is an “investors’ cooperative”–owned and ultimately controlled by public investors (anyone can own Whole Foods Market). I see no reason to believe that an “investors’ cooperative” is any less ethical or good than a “consumers’ cooperative,” or a “producers’ cooperative” or a “workers’ cooperative.” All of these various types of cooperatives have the same stakeholders that they need to create value for–customers, employees, suppliers, investors, communities, and environment. Whichever organizational form does the best job of creating the most value will be the most successful in the competitive marketplace. The least successful at meeting stakeholders’ needs and desires, particularly customers’ needs and desires (since they are the most important stakeholder in a market economy), will fail and go out of business.
You say: “There must be some hurdles to getting back the ownership to be spread amongst your talent.
I’m sure you could come up with a hybrid cooperative-monopoly business structure that suggests a member/employee-owned setup: with dividends; term-investments; or…I’m no business person, but I see a lot of healthy, happy cooperatives and member-owned businesses around Seattle that don’t have- as one Stock Holder put it- ‘THIS SWARM OF LITTLE FEARFUL MINDS TAKING IT DOWN’.”
Answer: I’m very happy to be leading a publicly traded company. I like being an “investors cooperative.” In my youth I belonged to 3 different food “consumer cooperatives” and I lived for 2 years in a housing cooperative. They were forever squabbling internally about what political stands to take on everything and what products to boycott. They didn’t seem that interested in just selling quality food and taking care of their customers. Life is too short to spend one’s valuable time in constant political debates. I started Whole Foods as an investors cooperative because I believed then and still believe that this form of business organization has the fewest internal conflicts of interest. I’ve got nothing against other types of cooperatives. All of them have the potential to be successful, but all will need to take care of their customers, employees, suppliers, investors, communities, and environment to fully optimize their potential. I certainly don’t believe that other types of cooperatives are ethically superior to investors cooperatives (corporations). Many people believe that other types of cooperatives are ethically superior to investors cooperatives. I don’t agree with this point of view. The simple truth is that investors cooperatives have consistently outcompeted other types of cooperatives in the marketplace. I’m happy that alternative cooperative forms are flourishing in the Seattle area. However, I suspect that they aren’t flourishing nearly as well as investors’ cooperatives are. I know that Whole Foods is doing very well in the Seattle marketplace. More and more customers are voting for our stores everyday.
You say: “There are problems with public trading, and that is the game of “winning” or ‘of taking more than your share.’ Someone always loses–That would be the ‘artificially’-low-paid employees and the higher consumer prices needed to makeup the losses of profit-taking.”
Answer: Who is to determine what the “fair share” is to be for everyone? Will you make this decision Gil? Will some governmental bureaucracy, highly manipulated through politics, make these decisions as they do in socialistic/communistic economies? Yuk! I prefer competitive market processes to make the allocation decisions of who gets what. You seem to believe that competitive market processes create a zero sum game–with a winner and a loser. Nothing could be further from the truth. Market economies have increased the standard of living for billions and billions of people around the world. Capitalism is in the process of ending poverty on the planet earth. Current trendlines indicate that poverty will be eliminated before the 21st century is over and probably much sooner than that. I refer you to my blog on Conscious Capitalism for more detail on this (including the comment section).
Not only do profits not cause lower employee wages and higher consumer prices as you indicate, but the exact opposite is true. Profits are the savings, the “fuel” that the economy needs to innovate, create, and evolve. Without profits there is no progress in the world. Without profits employee wages don’t rise (and they have been steadily rising across this planet for 300 years now) and consumer prices don’t drop (on an inflation adjusted basis they have been dropping for 300 years now). Profits are the “golden goose” that is laying the “golden eggs” of progress.
You say:
“One last thing…Grass-fed beef has been in Trader Joes over three years and in our local Puget Consumers Coop for many more. Prices are better there too. There is one reason why I don’t shop at WFC-except for convenience–but now after reading this whole blog, your business ethics deserve my “dollar vote”. hmmm, I think i’ll look into Trader Joes Business ethics-like why are their prices so low and their employees (at least in Seattle) so happy and prompt with helpfulness?–maybe someone out there can help.
Thank you John for your leadership in business modeling. It made me cry for humanity.”
Answer: Whole Foods matches Trader Joe’s prices with our 365 private label line and on all exact brands. Where we are more expensive it is either an accident by store leadership or we are buying a higher quality product at a higher cost. I cannot speak to Trader Joe’s ethics. I do know that they don’t sell very much local food or have much of a commitment to animal welfare (they still sell caged eggs for example). I also know that they are 100% owned by the Albrecht brothers from Germany. Karl is worth $20 billion making him the 15th richest person in the world (according to Forbes magazine) and Theo is worth $17 billion making him the 20th richest person in the world. While Whole Foods Market is owned by tens of thousands of investors and anyone can buy our stock, Trader Joe’s is 100% owned by just 2 of the richest men in the world. As a privately owned company Trader Joe’s has zero transparency regarding their sales or profits. As a public company Whole Foods discloses sales, comp store sales, gross margins, profits, growth, strategy–virtually everything. I don’t think there is anything wrong or unethical about being privately owned or rich for that matter. I’m not happy, however, of the constant criticism Whole Foods takes in the media and in blogs about being a successful public company constantly having to defend its actions while Trader Joe’s completely flies under the radar on things like local foods, animal welfare, labor unions, profits, and ownership.
hmmmm …
not a good solution to a problem that won’t stop until the game stops getting played …
conscious capitalism cannot be played the way “competitive capitalism” is played.
increasing the margin between the upper strata and the lower strata is anything but conscious capitalism … its “more of the same” capitalism.
but then again, i stopped shopping at whole foods years ago. but, i actually went into one of your stores for the first time in about 2 years to see if i could spend my money there once again, and, nope. then, i see a link on the zaadz site to your store and this blog … obviously, you are still using ‘consciousness’ as a marketing tool rather than a way of being … lots of talk, very little of it in the walk.
i am watching you though, i used to shop at whole foods exclusively, and well, i miss it.
peace & harmony,
elaine
‘freedom must be exercised to stay in shape!’
As a WFMI shareholder, I wanted to touch on a few comments I read.
I noticed several people are complaining about the stock price decline. All too often I feel people inapproperately blame management for a stock’s decline, when what they really need to do is look into a mirror.
No matter how effective a company’s management is or how dedicated its employees are, they cannot protect an investor from overpaying for its stock. I am an investor in WFMI, and in my opinion, management is doing an extraordinary job. I expect shareholders who purchase WFMI’s stock at reasonable levels to be greatly rewarded via growing revenue & expanding margins.
To anyone complaining about the 19x salary cap:
I don’t think you know much about industry standards or average executive pay. I actually think the salary cap may be too low and could result in the loss of key employees to competitors willing to pay more…and given the preformance of WFMI management, I’d say many of them are being paid less than what they could get elsewhere.
Of course Mackey has done a great job creating a company culture that rewards employees in non-monitary ways. The fact that many executives have not left despite being approached with better offers is testament to how great of a company WFMI is to work for. I am pleased with the salary cap and would also be pleased if the board of directors raised it further. There are some companies I invest in that I wish had a salary cap equal to 100x avg employee pay.
Elaine wrote: “conscious capitalism cannot be played the way “competitive capitalism” is played.”
and “obviously, you are still using ‘consciousness’ as a marketing tool rather than a way of being … lots of talk, very little of it in the walk.”
–In your above comment you seem to imply that “conscious capitalism” cannot compete with “competitive capitalism”–where profit is the sole goal. I disgree with this premise & feel that WFMI is an example of how conscious company can outpreform one with the sole goal of profit. Clearly it can be done.
Later in your comment, you critize WFMI for using “consiousness” as a marketing tool…
If a company is being socially responsible should it not be allowed to market it’s social responsiblity so that customers who wish to shop at social responsiblity companies? In my opinion being socially responsible produces a public image that gives “consious” companies a competitive advantage over the corperations you seem to think are evil–those that only seek profit, why wouldn’t you want this advantage to be marketed so that other companies are also encouraged to be responsible?
It seems to me as though people from the “green Meme” have difficulty using logic, and draw absurd conslusions that have no basis in reality. You people just hate capitalism because you don’t understand it–you see it as some big conspiricy among the “haves” to screw over the “have-nots”. In reality, capitalism has greatly benifited both the “haves” & “have-nots”…consider the standard of living of a have-not now to a have-not 100 years ago…
Regards,
Lord Westfall
Hello everyone,
I am working on a project for Penn State involving Whole Foods Market and I must say that I’m very impressed with the business model it has created and Mr. Mackey’s ideas on the free market. I’m an economics major and a Libertarian of the Austrian school of economics. I do understand Elaine’s pessimism, even if I think it is exaggerated. I think that competitiveness has become so fierce in our culture (not just in business) that ethics and social responsibility are often tossed by the wayside in our mad dash for the top of the junk heap. We can see this evident even in sports. As a father of four boys, I simply refuse to take my children to any sports games. The people playing today are often the worst models any child could follow and, regretably, I think the same can be said of businessmen in general. On the otherhand, Elaine, I think you fail to give credit to Mr. Mackey and Whole Foods for pursuing a very risky strategy to reinject ethics, social responsibility and compassion into this great economic game. Many critics have been calling for the demise of “conscious” business models for a long time now and brave people like those at Whole Foods faced that challenged and are succeeding.
It is easy to spot those companies that pay homage to “consciousness” but don’t practice what they preach or have not internalized it as an institutional culture. They’re obvious frauds and their schemes simply don’t work in the long-run. Contrary to some economists’ views, consumers are not blind sheep led to the slaughter by creative marketers. Most people will fall for creative marketing in the short-run, but most catch on in the long-run and get back to maximizing their utility.
Like sports games, business enterprises can be run competitively, ethically, responsibly, compassionately, etc and we would all be much better off for it. In fact, also like sports, the very game of business itself can serve to build strong character, dignity, and honor…if only it is played by the higher set of principles companies like Whole Foods are trying to establish.
I do not work for Whole Foods. I have never even been inside of a Whole Foods store, but I have a friend who has and he assures me that it was an experience he didn’t otherwise believe he could get from any large company. From what I’ve researched about the company, it seems to me that he didn’t exaggerate. Attempts by zealots to destroy corporations as human institutions will fail. They serve a role in modern society that is indispensible, and anyone who believes otherwise should take their heads out of the clouds and get a hard look at the horrors of deprivation that engulf the majority of the world where such institutions are underdeveloped. We think the lives of so called “Third World” people is so very romantic. I’m quite certain THEY don’t think so! It is the material success of this country that enables us to concern ourselves with such lofty ideals as, say, humane treatment of animals, because the overwhelming majority of us here don’t have starving children to provide for. Indeed, a large portion of the world’s population could live off of what we Americans waste every year, but this is not an excuse to brow-beat corporate boogiemen. It’s a calling for us to use those institutions that have served our needs so well to uplift those less fortunate rather than to simply further feed our wasteful gluttony.
Consumers in the United States love to leave all of the blame for environmental pollution, social side-effects of business enterprise, etc to the human institutions of business, but we neglect to acknowledge the role we play in it. If we refuse to consume wastefully, corporations would have no choice but to change their tactics. It’s about time there are some companies like Whole Foods that cater to the higher standards of a growing number of consumers these days, rather than to the vanity of the masses.
With that thought in mind, I would also like to say that I empathize with issues such as Whole Food’s opposition to the mistreatment of animals in large production farms, but, I have to ask, could businesses like Whole Foods match the levels of production of those sorts of firms to serve an ever growing population? I think that is a very noble challenge and I look forward to seeing how your company handles it.
With Regards,
Dennis
I work for Whole Foods and don’t make alot of money, but I make alot more than I ever have before and certainly alot more than my mom did at my age. I wake up every day for the last seven years excited to go to work. My kids are in the store almost everyday of their lives, and we are happy. I feel I am paid more than fairly, and I appreciate my benefits, bonuses, paid time off, and stock options. Any team member that has a complaint about anything, also has a voice at WFM. Or they should find employment elswhere if they aren’t happy. Anyone who doesn’t work for WFM and has a complaint STILL has a voice and people that will listen, but they continue to critisize one of the best things this earth has going for it. Whole Foods Market is the best thing that has happened to me. Thank you John Mackey, for changing my and my children’s lives for the better! You are awesome!
Oh and I forgot for a minute what this blog was all about! Thank you, John for the cap increase. The top exects deserve it. And as for you only receiving $1 a year….wow. You are truly an amazing human being. I will always remember how selfless you are and try to mimic this behavior in my own life. Thank you.
$19 FOR EVERY $1 A TEAM MEMBER MAKES?
$14 FOR EVERY $1 A TEAM MEMBER MAKES WASN’T ENOUGH?
JEEZE!
WHAT IS WRONG WITH AMERICA?
THAT MEANS THAT WHILE THE CHECKOUT GIRL AT WHOLE FOODS IS MAKING $8 AN HOUR (WHICH I WOULD BE SURPRISED IF SHE WAS MAKING THAT MUCH!)….
THE CEO’S ARE BRINGING HOME $152 HOUR? $300K A YEAR? PLEASE!!! THAT CHECKOUT GIRL PROBABLY WORKS HARDER!!!
GIVE ME A BREAK.
MOST OF THE TEAM MEMBER HAVE FAMILIES TO SUPPORT, ARE YOU GIVING THEM A $38 PER HOUR RAISE???
BTW, I HAVE NOTHING TO DO WITH WHOLE FOODS, I AM JUST A CONSUMER….BUT I WILL NEVER SET FOOT IN ONE AGAIN, THAT’S FOR SURE.
While I do not work at Whole Foods, as a customer I have noticed a difference in the friendliness of your employees over the past year or so - maybe some of the compensation changes are to blame.
I understand that it is a delicate balance to continue to grow a more mature company, while retaining your corporate culture and values - but your focus on executives rather than the front line is an unfortunate trend.
As a customer, I used to love the chicken/feta/kalamata sausage. When I asked at the deli, they told me that it is too expensive to make anymore. When I said I would be willing to pay more (it isn’t really a cost conscious shopping experience after all) - the nice man at the counter said that corporate wouldn’t listen to their requests and said that all of the chicken sausages had to be the same price.
Maybe it wouldn’t hurt if some of your executives left, and you promoted some people out of the stores to replace them.
Just a thought.
Regards,
Laura
M Patrick:
What’s wrong with America?
Every team member at Whole Foods has the opportunity to advance. It is, afterall, the land of opportunity. Team members are given the opportunity to innovate and grow with the company. John Mackey didn’t open Whole Foods making $152 an hour neither did other successful and wealthy team members.
Steve Jobs said: “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
There is no shortcut to excellence. You will have to make the commitment to make excellence your priority. Use your talents, abilities, and skills in the best way possible and get ahead of others by giving that little extra. Live by a higher standard and pay attention to the details that really do make the difference. Excellence is not difficult - simply decide right now to give it your best shot - and you will be amazed with what life gives you back.
I don’t even work there full-time, yet I show up for work every day just as enthusiastic as the last day I worked…..for $10/hour. It isn’t always about money, it’s about having a passion and a purpose. I volunteer for committees and use my lunch hour from my full-time job to attend. I believe in the mission of the company and I am thankful to be a small part of a company that has already changed the face of business in this country. I know many people who have chosen a modest lifestyle over a certain “standard” of living and they are loving life–it’s not always about money.
Just wanted to join the chorus of thanks to John Mackey for his honesty, integrity and consciousness. There’s always room for improvement and debate about the details of feta sausages or health plans. But we shouldn’t forget the bottom line, which is that Jo