If you’ve spent way too much money on free-range carrots at Whole Paycheck, you’ll be interested to read this New Yorker article on John Mackey, the co-founder and CEO. Mackey was last in the news for opposing Congress’s $1 trillion health care bonfire, leading off a Wall Street Journal op-ed with “The problem with socialism is that eventually you run out of other people’s money.” Despite Mackey’s lack of fondness for socialism, he does not practice modern American-style corporate capitalism, i.e., paying all of the profits to executives rather than public shareholders. The company is run with a 19:1 maximum ratio in salary between the highest paid employees and the average.
Whole Foods is strictly non-union, according to the article: “Unions have picketed store openings and, as activist investors in Whole Foods stock, have called for Mackey’s firing.” Mackey is famous for having said “The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient, and it stops a lot of people from becoming your lover.”
Though rich, Mackey does not have an Al Gore-size energy footprint. He eats vegan, “flies commercial and drives a Honda Civic hybrid”. The article describes various spiritual movements to which he has subscribed; his wife of eighteen years is currently a Sufi Muslim (Sufism is very important in Afghanistan as well). They have no children. Mackey is an expert on ultralight backpacking, having reduced his non-food kit to 7 lbs. and hiked the entire Appalachian Trail during a 5-month sabbatical in 2001.
More: read the article.
Disclaimer: I deleted Whole Foods from my car GPS during the Crash of 2008; now I shop at Costco.
The limit on executive pay and outlook on unions sounds a good deal like a friend of my grandfather who ran a local lumbermill. He knew all his employees and his customers, kept pay scales and benefits marginally higher than any competing operation in the area (including the large corporate mills which were often unionized), invested in technology upgrades such as computer and laser sizing/cutting of lumber years ahead of most, understood the industry well and consequently ran a very successful business as an involved, thinking person for many years.
Contrast this with many multinational corporate structures that treat employees as expendable assets to be disposed of in exchange for a larger annual bonus, who don’t keep pace with technology (losing the best and brightest new staff who prefer to work where they have these tools) and treating the health care of their employees as an annoyance. Add to this a distant and distorted view of their customer, an insular country club mentality and an unwillingness to interact and you have a recipe for disaster. My wife works for a Fortune 50 corporation (not GM) which is all this and less, and which is foundering in trying to understand why it’s losing market share year after year. Although they continue to make money for the moment, I would not call them successful and their future is often very uncertain although they manage to pump stock prices up nicely.
Mackey appears to be one of involved thinkers – a philosophy student from a wealthy family with a commercial pedestal to work from. Although hardly a saint — his antics in trying to drive down the price of a buyout of Wild Oats Markets by badmouthing them via pseudonymous Yahoo Finance postings seems quixotic, if not completely daft — it appears that he is putting his money (considerable stock holding notwithstanding) where his mouth is. The problem, and perhaps his denouement will be when his personal philosophy overshadows listening to his customers and when he begins to assume that being a predominant market share (which he no longer is in many segments) is the same as having a quality product. General Motors showed the folly of that approach, and even an auteur CEO (other than maybe Steve Jobs) can’t charm people forever — particularly in the grocery business.
The 19:1 ratio, like much of the information dispersed by Whole Foods, promotes sales, not truth. If we include Mackey’s stock and non-cash compensation, around $2.7 million in 2005, he took home about 96 times more than the average worker. (http://tinyurl.com/ya8l5px). And who cares about average? The more meaningful measure would be the ratio of highest paid to lowest paid. A ratio based on the average inflates the denominator with high rollers that were not the highest. This is only one of several Mackey deceptions (http://wholeboycott.com/).