Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than
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Check the appropriate
box: |
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Preliminary Proxy
Statement |
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy
Statement |
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Definitive Additional
Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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Whole Foods Market, Inc. |
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(Name of Registrant as
Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement, if other than the
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Table of Contents
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
Notice is hereby given that a
meeting of the Shareholders of Whole Foods Market, Inc. will be held at the
Fairmont San Francisco, 950 Mason Street, San Francisco, California 94108, on
March 9, 2016 at 8:00 a.m. local time for the following purposes:
1. |
To elect the eleven
nominees named in the attached Proxy Statement to the Board of Directors
of Whole Foods Market, Inc. to serve one-year terms expiring at the later
of the Annual Meeting of Shareholders in 2017 or upon a successor being
elected and qualified; |
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2. |
To conduct an
advisory vote to approve the compensation of the named executive
officers; |
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3. |
To ratify the
appointment of Ernst & Young LLP as independent auditor for the fiscal
year ending September 25, 2016; |
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4. |
To ratify the amendment of our team member stock purchase plan to increase the number of shares of common stock authorized for issuance pursuant to such plan by an additional 1,000,000 shares; |
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5. |
To consider three
shareholder proposals, described in the accompanying Proxy Statement, if
properly presented at the Annual Meeting of Shareholders; and |
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6. |
To transact such
other business as may properly come before the meeting or any adjournments
or postponements thereof. |
Only shareholders of record at
the close of business on January 11, 2016 are entitled to notice of, and to vote
at, the meeting. All shareholders are requested to be present in person or by
proxy. Any shareholder who later finds that he or she can be present at the
meeting, or for any reason desires to do so, may revoke the proxy at any time
before it is voted.
Important Notice Regarding
the Availability of Proxy Materials for the 2016 Annual Shareholders Meeting:
We are mailing to many of our
shareholders a Notice of Internet Availability of Proxy Materials (which we
refer to as a Notice), rather than mailing a full paper set of the materials.
The Notice contains instructions on how to access our proxy materials on the
Internet, as well as instructions on obtaining a paper copy of the proxy
materials. This process is more environmentally friendly and reduces our costs
to print and distribute these materials. All shareholders who do not receive
such a Notice, including shareholders who have previously requested to receive a
paper copy of the materials, will receive a full set of paper proxy materials by
U.S. mail.
Voting by the Internet or
telephone is fast and convenient, and your vote is immediately confirmed and
tabulated. If you receive a paper copy of the proxy materials, you may also vote
by completing, signing, dating and returning the accompanying proxy card in the
enclosed return envelope furnished for that purpose. By using the Internet or
telephone, you help us reduce postage and proxy tabulation costs. Please do not
return the enclosed paper ballot if you are voting over the Internet or by
telephone.
Record Date: January 11,
2016
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By Order of the Board of
Directors, |
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Executive Vice
President and Chief Financial Officer |
January 21, 2016
YOUR VOTE IS IMPORTANT!
Whether or not you plan
to attend the meeting, please cast your vote as promptly as possible by
Internet, telephone or U.S. mail.
Table of Contents
WHOLE FOODS MARKET,
INC.
PROXY STATEMENT
Table of Contents
Table of Contents
Whole Foods Market
550
Bowie Street
Austin, Texas 78703
PROXY
STATEMENT
Annual Meeting of
Shareholders of the Company to be held on March 9, 2016
Questions and Answers
Regarding This Proxy Statement
Q: |
Why am I
being asked to review these materials? |
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A: |
The
accompanying proxy is solicited on behalf of the Board of Directors of
Whole Foods Market, Inc., a Texas corporation (which we refer to as the
Company, we, us or our). We are providing these proxy materials to
you in connection with our Annual Meeting of Shareholders to be held at
the Fairmont San Francisco, 950 Mason Street, San Francisco, California
94108, on March 9, 2016 at 8:00 a.m. local time. As a Company shareholder,
you are invited to attend the Annual Meeting and are entitled and
encouraged to vote on the proposals described in this Proxy
Statement. |
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Q: |
Why am I
being asked to review materials online? |
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A: |
Under rules
adopted by the U.S. Securities and Exchange Commission, we are furnishing
proxy materials to many of our shareholders on the Internet rather than
mailing printed copies of those materials to each shareholder. If you
received a Notice by mail, you will not receive a printed copy of the
proxy materials unless you request one. Instead, the Notice will instruct
you as to how you may access and review the proxy materials on the
Internet. If you received a Notice and would like to receive a printed
copy of our proxy materials, please follow the instructions included in
the Notice. We anticipate the Notice will be mailed to shareholders on or
about January 21, 2016. |
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Q: |
Who may
vote at the meeting? |
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A: |
You may
vote all of the shares of our common stock that you owned at the close of
business on January 11, 2016, the record date. On the record date, the
Company had 328,039,911 shares of common stock outstanding and entitled to
vote at the meeting. You may cast one vote for each share of common stock
held by you on each of the matters presented at the meeting. |
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Q: |
What
proposals will be voted on at the meeting and how does the Board of
Directors recommend I vote? |
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A: |
There are
seven proposals to be considered and voted on at the meeting, including four Company proposals and three shareholder proposals. Please see the
information included in the Proxy Statement relating to these proposals.
The proposals to be voted on and related recommendations from the Board of
Directors are as follows: |
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Company
Proposals |
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1. |
To elect the eleven
nominees named herein to the Board of Directors of Whole Foods Market,
Inc., each to serve a term expiring at the later of the Annual Meeting of
Shareholders in 2017 or upon a successor being elected and qualified. Our
Board of Directors unanimously recommends that you vote FOR each
of the nominees to the Board of Directors. |
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2. |
To conduct an
advisory vote to approve the compensation of the named executive officers.
Our Board of Directors unanimously recommends that you vote FOR
approval of the compensation of the named executive
officers. |
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3. |
To ratify the appointment of
Ernst & Young LLP as independent auditor for the Company for the
fiscal year ending September 25, 2016. Our Board of Directors unanimously
recommends that you vote FOR ratification of Ernst & Young
LLP as our independent auditor. |
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4. |
To ratify the amendment of our team member stock purchase plan to increase the number of shares of common stock authorized for issuance pursuant to such plan by an additional 1,000,000 shares. Our Board of Directors unanimously recommends that you vote “FOR” ratification of the amendment of our team member stock purchase plan to increase the number of shares authorized for issuance under our team member stock purchase plan. |
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Shareholder Proposals |
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5. |
To ask
that our Board of Directors adopt and present for shareholder approval
revisions to the Companys proxy access bylaw. Our Board of Directors
unanimously recommends that you vote AGAINST this
proposal |
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6. |
To ask
that our Board of Directors adopt a policy related to limiting
acceleration of vesting of equity upon a change in control. Our Board of
Directors unanimously recommends that you vote AGAINST this
proposal. |
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7. |
To ask the
Company to issue a report regarding our food waste efforts. Our Board of
Directors unanimously recommends that you vote AGAINST this proposal. |
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We will also consider other business that properly comes before the
meeting in accordance with Texas law and our Bylaws. |
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Q: |
How do I vote? |
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A: |
You may vote your shares
in advance using any of the following voting
alternatives: |
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VIA INTERNET at www.ProxyVote.com. |
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BY TELEPHONE by viewing
the proxy materials at www.ProxyVote.com and using a touch-tone phone and
the toll-free number provided at that time. You can also use a telephone
to request a paper copy of the proxy materials. |
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BY MAIL by completing
and mailing in a paper proxy card, as outlined in the Notice. |
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Alternatively, you may
vote your shares in person at the meeting. If, like most shareholders of
the Company, you hold your shares in street name through a stockbroker,
bank or other nominee rather than directly in your own name, you are
considered the beneficial owner of those shares. To vote at the meeting,
beneficial owners will need to contact the broker, trustee or nominee that
holds their shares to obtain a legal proxy to bring to the
meeting.
You are encouraged to
read all of the proxy materials before voting your shares as they contain
important information necessary to make an informed decision.
If your shares are
registered directly in your name with our transfer agent, Securities
Transfer Corporation, you are considered a shareholder of record with
respect to those shares, and the Notice has been sent directly to you by
Broadridge Financial Solutions, Inc. If you are the beneficial owner of
those shares, the Notice is being forwarded to you.
Please carefully
consider the information contained in the Proxy Statement and, whether or
not you plan to attend the meeting, vote by Internet, telephone or mail so
that we can be assured of having a quorum present at the meeting and so
that your shares may be voted in accordance with your wishes. Even if you
plan on attending the meeting but later decide not to attend, your vote
will be counted if you vote by Internet, telephone or mail.
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We encourage you to
register your vote via the Internet at www.ProxyVote.com. If you attend
the meeting, you may also submit your vote in person, in which case any
votes that you previously submitted (whether via the Internet, by
telephone or by mail) will be superseded by the vote that you cast at the
meeting. Whether your proxy is submitted by the
Internet, by telephone or by
mail, if it is properly completed and submitted and if you do not revoke
it prior to the meeting, your shares will be voted at the meeting in the
manner set forth in this Proxy Statement or as otherwise specified by you.
To vote at the meeting, beneficial owners will need to contact the broker,
trustee or nominee that holds their shares to obtain a legal proxy to
bring to the meeting. |
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Unless you hold your
shares through the Companys 401(k) plan, you may vote via the Internet or
by telephone until 11:59 p.m., Eastern Time, on March 8, 2016, or the
Companys agent must receive your paper proxy card on or before March 8,
2016. If you participate in the Companys 401(k) plan, your proxy card
includes shares that the plan has credited to this account. To allow
sufficient time for the Companys 401(k) plan trustee to vote, the trustee
must receive your voting instructions via Internet or by telephone by
11:59 p.m., Eastern Time, on March 4, 2016, or the Companys agent must
receive your paper proxy card on or before March 4, 2016. If the trustee
does not receive your instructions by that date, the trustee will vote the
shares in the same proportion of votes that the trustee receives from
other plan participants who did vote. |
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Q: |
If I do provide
voting instructions and/or grant my proxy, who will vote my shares at the
meeting and how will they vote my shares? |
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A: |
John Mackey and
Walter Robb are officers of the Company and were named by our Board of
Directors as proxy holders. They will vote all proxies, or record an
abstention or withholding, in accordance with the directions on the proxy.
If no contrary direction is given, the shares will be voted as recommended
by the Board of Directors. |
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Q: |
What happens if
additional matters are presented at the Annual Meeting? |
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A: |
Other than the items
of business described in this Proxy Statement, we are unaware of any other
business to be acted upon at the Annual Meeting. If you grant a proxy, the
persons named as proxy holders, John Mackey and Walter Robb, will have the
discretion to vote your shares on any additional matters properly
presented for a vote at the meeting in accordance with Texas law and our
Bylaws. |
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Q: |
If my shares are held
in street name by my broker, will my broker vote my shares for
me? |
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A: |
Your broker is
allowed to vote your shares only on certain routine proposals or if you
provide your broker with instructions on how to vote. Under applicable
stock exchange rules, only Proposal 3 (ratification of the appointment of
Ernst & Young LLP as independent auditors) is routine. Brokers are
prohibited from voting uninstructed shares on non-routine proposals,
including proposals for elections of directors and all other proposals
except Proposal 3. If you do not give your broker or nominee specific
instructions, your shares may not be voted on certain matters and will not
be considered as present and entitled to vote with respect to those
matters. |
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Q: |
What constitutes a
quorum? Why is a quorum required? |
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A: |
Return of your proxy
is important because a quorum is required for the Company shareholders to
conduct business at the meeting. The presence at the meeting, in person or
by proxy, of the holders of shares having a majority of the voting power
represented by all issued and outstanding shares entitled to vote on the
record date will constitute a quorum, permitting us to conduct the
business of the meeting. Proxies received but marked as abstentions, if
any, will be included in the calculation of the number of shares
considered to be present at the meeting for quorum purposes. Because this
proxy includes a routine management proposal, shares represented by such
broker non-votes will be counted in determining whether there is a
quorum present. If we do not have a quorum, we will be forced to reconvene
the Annual Meeting of Shareholders at a later
date. |
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Q: |
What if I
abstain? |
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A: |
Abstentions are
included in the determination of shares present for quorum purposes;
however, except as required by applicable law or regulations, votes
submitted as abstentions will not be counted as votes FOR or AGAINST any
matter presented for shareholder approval. |
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Q: |
Can I change my vote
after I have delivered my proxy? |
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A: |
Yes. You may revoke
your proxy at any time before its exercise. You may also revoke your proxy
by voting in person at the Annual Meeting. If you are a beneficial
shareholder, you must contact your brokerage firm or bank to change your
vote or obtain a proxy to vote your shares if you wish to cast your vote
in person at the meeting. |
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Q: |
Who will count the
votes? |
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A: |
We hired Carl T.
Hagberg and Associates to judge voting and be responsible for determining
whether or not a quorum is present. We hired Broadridge Financial
Services, Inc. to tabulate votes cast by proxy or in person at the Annual
Meeting. |
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Q: |
Where can I find
voting results of the meeting? |
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A: |
We will announce
preliminary general voting results at the meeting and publish final
detailed voting results on a Current Report on Form 8-K that we will file
within four business days after the meeting. |
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Q: |
Who will bear the
cost for soliciting votes for the meeting? |
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A: |
We will bear all
expenses in conjunction with the solicitation of the enclosed proxy,
including the charges of brokerage houses and other custodians, nominees
or fiduciaries for forwarding documents to security owners and the fee to
Georgeson Inc., who will help us solicit proxies. We anticipate that the
fee to Georgeson Inc. will be $8,500, plus expenses. In addition, proxies
may be solicited by mail, email, in person, or by telephone or fax by
certain of our directors, officers and other team members. |
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Q: |
Whom should I call
with other questions? |
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A: |
If you have
additional questions about this Proxy Statement or the meeting or would
like additional copies of this document or our 2015 Annual Report on Form
10-K, please contact: Whole Foods Market, 550 Bowie Street, Austin, TX
78703, Attention: Investor Relations Dept., Telephone: (512)
542-0204. |
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Q: |
How can I communicate
with the Companys Board of Directors? |
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A: |
Shareholders may send
communications in care of the Director of Internal Audit, Whole Foods
Market, 550 Bowie Street, Austin, TX 78703, or via email to:
shareholder.communications@wholefoods.com. Please indicate whether your message is for the Board of Directors
as a whole, a particular group or committee of directors, or an individual
director. The Board of Directors has implemented procedures for processing
shareholder communications and a description of these procedures can be
found on our website at
http://www.wholefoodsmarket.com/company-info/investor-relations/corporate-governance. |
Web links throughout this
document are provided for convenience only, and the content on the referenced
websites does not constitute a part of this Proxy Statement.
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PROPOSAL 1 ELECTION
OF DIRECTORS |
Size of Board of
Directors
Our Board of Directors
currently consists of eleven members. All eleven members of the Board of
Directors are elected by the holders of our common stock.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS
SET FORTH IN THIS PROPOSAL 1.
Vote
Required
Election of each director
requires the affirmative vote of a majority of the votes cast by the holders of
shares represented at the meeting and entitled to vote.
Current
Nominees
The director nominees are Dr.
John Elstrott, Shahid (Hass) Hassan, Stephanie Kugelman, John Mackey, Walter
Robb, Jonathan Seiffer, Morris (Mo) Siegel, Jonathan Sokoloff, Dr. Ralph
Sorenson, Gabrielle Sulzberger and William (Kip) Tindell, III. Each of the
nominees is currently a member of the Board of Directors and each has been
nominated for election at the Annual Meeting to hold office until the later of
the next annual meeting or the election of his/her respective successor. Our
director nomination process is discussed below where we describe the purpose of
our Nominating and Governance Committee.
The Board of Directors, upon
the advice of the Nominating and Governance Committee, has determined that all
of the director nominees, other than Mr. Mackey and Mr. Robb, are independent
directors as defined in Rule 5605 of the NASDAQ Listing Rules. This
independence question is analyzed annually in both fact and appearance to
promote arms-length oversight. The Board of Directors considered the following
information in determining whether or not our directors are independent. Mr.
Mackey and Mr. Robb are current Company officers, and accordingly the Board of
Directors has concluded that neither is currently an independent director. With
respect to our other directors, some serve on the boards of or have an ownership
interest in privately held companies, including some companies that are vendors
of the Company. Several of these directors have been entrepreneurs in the
organic-foods industry for a number of years and our Board of Directors believes
that their industry experience is valuable to the Company. As reported to us by
our directors, in many cases the ownership interest of any board member in a
vendor amounted to less than 2% of the vendors outstanding ownership interests,
and in all cases amounted to less than 5% of the vendors outstanding ownership
interests. Collectively, the Companys purchases of product from all vendors in
which any of our directors noted a fiscal year 2015 ownership interest and/or
noted service as a director represented approximately 0.02% of the Companys
purchases during fiscal year 2015. Furthermore, Jonathan Seiffer and Jonathan
Sokoloff are both partners of Leonard Green & Partners, L.P., which is an
affiliate of Beacon Holding Inc. During 2011, Beacon Holding Inc. purchased BJs
Wholesale Club, Inc., which is a leading warehouse club operator in the eastern
United States. Messrs. Seiffer and Sokoloff are each a director of BJs
Wholesale Club, Inc.
Further discussion concerning
director independence is available on our website at:
http://assets.wholefoodsmarket.com/www/company-info/investor-relations/corporate-governance/Governance_Principles_Nov4_2014.pdf.
The information provided below
is biographical information about each of the nominees, including other public
company board memberships. Age and other information in each nominees biography
are as of January 21, 2016.
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Dr. John
Elstrott, 67, has served as the
Chairman of the Board since 2009 and has served as a director of the Company
since 1995, serving as Lead Director from 2001 to 2009. Dr. Elstrott is an
Emeritus Professor of Entrepreneurship and the founding director of the
Levy-Rosenblum Institute for Entrepreneurship at Tulane Universitys Freeman
School of Business, which he started in 1991. Dr. Elstrott served as a director
and member of the audit, compensation and nominating and governance committees
of the board of directors of Stewart Enterprises, Inc. from April 2011 to
December 2013; Dr. Elstrott served as Stewarts lead independent director from
January 2012 to December 2013. Dr. Elstrott has a PhD in Economics and
significant business experience, including over 40 years of experience as an
entrepreneur and investor. Dr. Elstrott brings to our Board of Directors
leadership, financial and risk assessment experience as well as his
entrepreneurial experience and history with the Company.
Shahid (Hass)
Hassan, 67, has served as a
director of the Company since 2005. Mr. Hassan has been a General Partner of
Greenmont Capital, an investment firm, since 2006. Mr. Hassan was a co-founder,
President and CEO of Alfalfas Market and President of Wild Oats Marketplace and
founded Fresh & Wild, Ltd., an organic food retailer in the United Kingdom,
in 1999. Mr. Hassan served as President and Executive Chairman of Fresh &
Wild from 1999 until 2004, when it was acquired by the Company. Mr. Hassan has
over 35 years of experience in the retail grocery business in both public
company and private company settings. Mr. Hassan brings to our Board of
Directors financial and risk assessment experience as well as his grocery
retail, entrepreneurial and leadership experience and history with the
Company.
Stephanie
Kugelman, 68, has served as a
director of the Company since November 2008. Ms. Kugelman serves as a principal
of A.S.O., A Second Opinion, a strategy and branding consultancy she founded in
2007, and since January 2015 as Vice Chairman at Solera Capital, a private
equity firm. She was previously Vice Chairman and Chief Strategic Officer of
Young & Rubicam Brands, a worldwide marketing communications company, where
she held positions of increasing responsibility commencing in 1971. Ms. Kugelman
also serves on the board of directors of HSNi. Ms. Kugelman brings to our Board
of Directors entrepreneurial, leadership, financial and risk assessment
experience as well as her marketing strategy and branding
experience.
John Mackey, 62, co-founder of the Company, has served as
Co-Chief Executive Officer since May 2010, was the Chief Executive Officer from
1978 to May 2010 and was President from 2001 to 2004. Mr. Mackey has served as a
director of the Company since 1978 and served as Chairman of the Board from 1978
through December 2009. Mr. Mackey brings to our Board of Directors financial and
risk assessment experience as well as his grocery retail, entrepreneurial and
leadership experience and history with the Company.
Walter Robb, 62, has served as Co-Chief Executive Officer
since May 2010. Mr. Robb also served as the Co-President and Co-Chief Operating
Officer from 2004 to May 2010, as Chief Operating Officer from 2001 to 2004, and
as Executive Vice President from 2000 to 2001. Since joining the Company in
1991, Mr. Robb has also served as Store Team Leader and President of the
Northern California Region. Mr. Robb has served as a director of the Company
since May 2010. Mr. Robb also serves on the board of directors of The Container
Store. Mr. Robb brings to our Board of Directors financial and risk assessment
experience as well as his grocery retail, entrepreneurial and leadership
experience and history with the Company.
Jonathan
Seiffer, 44, has served as a
director of the Company since December 2008. He is a Senior Partner of Leonard
Green & Partners, L.P. and joined Leonard Green & Partners, L.P. in
1994. Mr. Seiffer has over 20 years of experience in investment banking and
private equity. Mr. Seiffer brings to our Board of Directors investment banking,
financial, leadership and risk assessment experience.
Morris (Mo)
Siegel, 66, has served as a
director of the Company since 2003. Mr. Siegel is currently self-employed,
having operated Capital Peaks Investments, an investment firm, since 2002. Mr.
Siegel was the co-founder of Celestial Seasonings, Inc., serving as Chairman and
CEO from 1970 until 2002. Celestial Seasonings merged with The Hain Food Group,
forming The Hain Celestial Group of which Mr. Siegel served as Vice Chairman
from 2000 until retiring in 2002. Mr. Siegel also served on the board of
directors of Spicy Pickle Franchising, Inc. until September 2011. Mr. Siegel
brings to our Board of
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Directors financial and risk
assessment experience as well as his food products, entrepreneurial and
leadership experience and history with the Company.
Jonathan
Sokoloff, 57, has served as a
director of the Company since December 2008. He is Managing Partner of Leonard
Green & Partners, L.P., which he joined in 1990. Mr. Sokoloff served on the
board of directors of Rite Aid Corporation until May 2011 and currently serves
on the board of directors of The Container Store and Shake Shack Inc. Mr.
Sokoloff brings to our Board of Directors investment banking, financial,
leadership and risk assessment experience.
Dr. Ralph
Sorenson, 82, has served as a
director of the Company since 1994. Dr. Sorenson is the Managing General Partner
of the Sorenson Limited Partnership, which focuses on venture capital
investments in a diverse range of entrepreneurial startups. Dr. Sorenson is
President Emeritus of Babson College (1974-1981); Professor Emeritus and former
Dean of the University of Colorado Business School (1992-present); former
Chairman and CEO of Barry Wright Corporation, a NYSE company (1981-1989); and a
former professor at the Harvard Business School (1964-1974, 1989-1992). Dr.
Sorenson is a former director of the Federal Reserve Bank of Boston, a Life
Trustee and former Chairman of the Board of the Boston Museum of Science,
Trustee Emeritus of Babson College, a member of the Presidents Council of Olin
College of Engineering, and a director of the Toyota Mobility Foundation. Over
the years he has served on the boards of directors of more than a dozen public
companies. Dr. Sorenson brings to our Board of Directors leadership, financial
and risk assessment experience as well as his entrepreneurial experience and
expertise and history with the Company.
Gabrielle
Sulzberger, 55, has served as a
director of the Company since 2003. Ms. Sulzberger has served as a Principal of
a diversified investment fund, Rustic Canyon/Fontis Partners, LP, since its
inception in October 2005. In addition, Ms. Sulzberger served as Chief Financial
Officer of the Villanueva Companies, a private holding company with diverse
investment interests, from 2002 through 2005. Ms. Sulzberger also serves on the
boards of directors of Teva Pharmaceutical Industries Ltd. and Brixmor Property
Group Inc. Ms. Sulzberger served on the board of directors of Stage Stores, Inc.
until June 2015. Ms. Sulzberger brings to our Board of Directors financial,
leadership and risk assessment experience as well as her entrepreneurial
experience and history with the Company.
William (Kip) Tindell,
III, 62, has served as a director
of the Company since November 2008. He co-founded The Container Store in 1978
and is its Chairman and CEO. Mr. Tindell serves as the Chairman of the Board of
the National Retail Federation, and was inducted into the Retailing Hall of Fame
in 2006. Mr. Tindell brings to our Board of Directors financial and risk
assessment experience as well as his entrepreneurial and retail leadership
experience.
The Nominating and Governance
Committee, consisting solely of independent directors as defined in Rule 5605
of the NASDAQ Listing Rules, recommended the eleven directors set forth in
Proposal 1 for nomination by our full Board of Directors. Based on this
recommendation and each nominees credentials and experience outlined above, the
Board of Directors has determined that each such nominee can make a significant
contribution to the Board of Directors and should serve as a director of the
Company. Our Board of Directors nominated such directors for election at the
Annual Meeting. All nominees are currently directors, and each nominee has
agreed to be named in this Proxy Statement and to serve if elected. Although we
know of no reason why any of the nominees would not be able to serve, if any
nominee is unavailable for election, the proxy holders may vote for another
nominee proposed by the Board of Directors. The Board of Directors may also
choose to reduce the number of directors to be elected, as permitted by our
Bylaws.
- 7
-
Table of Contents
CORPORATE
GOVERNANCE
Corporate Governance
Highlights
We have long supported strong
corporate governance practices. Our Board of Directors continually reviews our
practices and ensures that they evolve to appropriately balance the interests of
our stakeholders. Set forth below are examples of practices that demonstrate
this commitment to our stakeholders.
Practice |
|
Explanation |
Director Independence |
|
We have an independent Chairman of the
Board. |
|
|
Nine of 11 director nominees are
independent. |
|
|
All committee members are
independent. |
|
|
Independent directors regularly meet in executive
sessions. |
Practices of our Board of Directors and Committees |
|
Our directors conduct annual self-evaluations. |
|
|
All of our Audit Committee members are audit committee financial
experts. |
|
|
We have a diversity policy that our Nominating & Governance
Committee considers in selecting and recommending candidates for
election. |
|
|
None of our directors serve on more than three public company
boards. |
|
|
We have a director stock
ownership policy in place. |
Shareholder Rights |
|
Directors are elected annually. |
|
|
Directors must be elected by a majority vote
standard in uncontested elections. |
|
|
An incumbent director who is not re-elected
must promptly offer to resign. |
|
|
Our bylaws contain simple majority vote
requirements. |
|
|
Our proxy
access bylaw provides that a single shareholder or groups of up to 20
shareholders collectively owning at least 3% of our relevant voting power
for at least three continuous years can include nominees in our proxy
statement, up to a total number of such nominees not to exceed 20% of the
number of directors then serving, subject to the eligibility, procedural
and disclosure requirements set forth in the bylaws. |
Shareholder
Outreach |
|
We have a strong
shareholder engagement program. We engage with our shareholders to ensure
that both management and the board are made aware of issues that matter
most to our investors so that these issues are addressed on a timely
basis. We engage regularly with our largest shareholders to hear their
views on both general and company specific governance
matters. |
Compensation |
|
See the
Summary of Compensation Practices for Fiscal Year 2015 section of this
Proxy Statement for a discussion of our leading compensation
practices. |
- 8
-
Table of Contents
Directors and Committee
Assignments
Assuming election of all
eleven nominees listed above, the following is a list of persons who will
constitute the Companys Board of Directors following the meeting, including
their current committee assignments.
|
|
Audit |
|
Compensation |
|
Nominating and |
Name |
|
Committee |
|
Committee |
|
Governance Committee |
Dr. John Elstrott * |
|
|
✓ |
|
|
|
|
|
|
|
|
|
|
|
|
Hass Hassan |
|
|
✓ |
|
|
|
|
|
|
|
|
|
|
|
|
Stephanie Kugelman |
|
|
|
|
|
|
|
|
|
|
|
|
✓ |
|
|
John Mackey |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walter Robb |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Seiffer |
|
|
✓ |
|
|
|
|
|
|
|
|
|
|
|
|
Mo Siegel |
|
|
✓ |
|
|
|
|
✓ |
** |
|
|
|
|
|
|
Jonathan Sokoloff |
|
|
|
|
|
|
|
✓ |
|
|
|
|
|
|
|
Dr. Ralph Sorenson |
|
|
|
|
|
|
|
✓ |
|
|
|
|
✓ |
** |
|
Gabrielle Sulzberger |
|
|
✓ |
** |
|
|
|
✓ |
|
|
|
|
|
|
|
Kip Tindell |
|
|
|
|
|
|
|
|
|
|
|
|
✓ |
|
|
* Chairman of the Board
**
Chair of Committee
Committees and
Meetings
Committees
The Board of Directors
maintains the following three standing committees: the Audit Committee, the
Compensation Committee and the Nominating and Governance Committee. The members
of the various committees are identified in the preceding table. The charter of
each committee can be found in the Corporate Governance section of our website
at
http://www.wholefoodsmarket.com/company-info/investor-relations/corporate-governance.
The duties of each committee are set forth in its charter.
Audit
Committee. The purpose of the Audit Committee is to assist
the Board of Directors in fulfilling its responsibility for monitoring risks and
the Companys internal control system, overseeing the quality and integrity of
the accounting, auditing and reporting practices of the Company and the audits
of the Companys financial statements, and other such duties as directed by the
Board of Directors.
The Committee is expected to
maintain free and open communication with the independent auditors, the Director
of Internal Audit and the management of the Company. In discharging this
oversight role, the Committee is empowered to investigate any matter brought to
its attention, with full power to retain outside counsel or other experts for
this purpose.
The Audit Committees
responsibilities include: (i) selecting, hiring and evaluating our independent
auditor; (ii) reviewing and discussing the adequacy and effectiveness of the
Companys internal control over financial reporting; (iii) overseeing the
integrity of our financial statements and monitoring our compliance with legal
and regulatory requirements as they relate to financial statements or accounting
matters; (iv) overseeing internal auditing processes; (v) reviewing with
management our audited financial statements, earnings announcements, regulatory
filings and other public announcements regarding our results of operations; (vi)
inquiring about significant risks, reviewing our risk assessment and management
policies, and assessing steps taken to control these risks; (vii) establishing
procedures for receipt, retention and treatment of complaints regarding
accounting, internal accounting controls and auditing matters; and (viii)
overseeing and reviewing the Companys internal audit function.
- 9 -
Table of Contents
The Board of Directors has
determined that all Audit Committee members are audit committee financial
experts under the regulations promulgated by the Securities and Exchange
Commission. The Board of Directors has also determined that each of the
directors serving on our Audit Committee is independent within the meaning of
the applicable rules of the Securities and Exchange Commission and the NASDAQ
Listing Rules.
Compensation
Committee. The purpose of the
Compensation Committee is to assist the Board of Directors in carrying out its
responsibilities with respect to overseeing the Companys compensation policies
and practices, review and approve annual compensation and compensation
procedures for the Companys executive officers, and oversee and recommend
director compensation to the Board of Directors.
The Compensation Committees
responsibilities include: (i) overseeing the Companys overall compensation
structure, policies and programs, and assessing whether the Companys
compensation structure establishes appropriate incentives for management and
employees; (ii) making recommendations to the Board of Directors with respect
to, and administering, the Companys incentive compensation and equity-based
compensation plans, including the Companys stock option plans and team member
stock purchase plan; (iii) reviewing and approving compensation procedures for
the Companys executive officers; (iv) recommending to the independent directors
for approval the compensation of the Co-Chief Executive Officers based on
relevant corporate goals and objectives and the Board of Directors performance
evaluation of the Co-Chief Executive Officers; (v) reviewing and approving the
compensation of executive officers other than the Co-Chief Executive Officers;
(vi) reviewing and recommending to the Board of Directors employment and
retention agreements and severance arrangements for executive officers,
including change-in-control provisions, plans or agreements; (vii) annually
reviewing the compensation of directors for service on the Board of Directors
and its committees and recommending changes in compensation to the Board of
Directors; (viii) monitoring directors compliance with the Companys stock
ownership guidelines; (ix) at least annually, reviewing and assessing the
adequacy of the charter and participating in an evaluation of the Committee; (x)
and working with Company management to address any conflict of interest with any
compensation adviser engaged by the Compensation Committee. The Compensation
Committee Charter does not provide for any delegation of these duties.
Regarding most compensation
matters, including executive and director compensation, the Companys executive
team provides recommendations to the Compensation Committee.
The Board of Directors has
determined that each of the directors serving on our Compensation Committee is
independent within the meaning of the applicable rules of the Securities and
Exchange Commission and the NASDAQ Listing Rules.
Neither the Compensation
Committee nor Company management engaged any outside consultants regarding
fiscal year 2015 executive compensation.
Nominating and Governance
Committee. The Nominating and
Governance Committees purpose is to monitor and oversee matters of corporate
governance, including the evaluation of the Board of Directors performance and
processes and the independence of directors, and select, evaluate and
recommend to the Board of Directors qualified candidates for election or
appointment to the Board of Directors.
The Nominating and Governance
Committee identifies director candidates through recommendations made by members
of the Board of Directors, management, shareholders and others, including the
possibility of a search firm. At a minimum, a Board of Directors nominee should
have significant management or leadership experience which is relevant to the
Companys business, as well as personal and professional integrity. The Board of
Directors believes it is in the best interest of the Company and its
shareholders to identify and select highly qualified candidates to serve as
directors and for the Board of Directors to be comprised of a diverse group of
individuals with different backgrounds and perspectives. Recommendations are
developed based on the nominees knowledge and experience in a variety of
fields, and research conducted by the Companys staff at the Nominating and
Governance Committees direction. In addition, the Nominating and Governance
Committee considers the Companys Corporate Governance Principles provisions on
diversity when reviewing director
- 10 -
Table of Contents
candidates and recommending
candidates to the Board for election. The Corporate Governance Principles
provide that, in performing candidate review responsibilities, the Nominating
and Governance Committee should (i) ensure that candidates with a diversity of
ethnicity and gender are included in each pool of candidates from which Board
nominees are chosen; (ii) seek diverse candidates by ensuring director searches
include nominees from both non-executive corporate positions and non-traditional
environments; and (iii) review periodically the composition of the Board to
ensure it reflects the knowledge, experience, skills and diversity required for
the Board to fulfill its duties.
Any shareholder recommendation
should be directed to the attention of the Company Secretary and should include
the candidates name, home and business contact information, detailed
biographical data, relevant qualifications for Board of Directors membership,
information regarding any relationships between the candidate and the Company
within the last three years, and a written indication by the recommended
candidate of his or her willingness to serve.
In determining whether to
nominate a candidate, whether from an internally generated or shareholder
recommendation, the Nominating and Governance Committee will consider the
current composition and capabilities of serving board members, as well as
additional capabilities considered necessary or desirable in light of existing
and future Company needs. The Nominating and Governance Committee also exercises
its independent business judgment and discretion in evaluating the suitability
of any recommended candidate for nomination.
The Board of Directors has
determined that each of the directors serving on our Nominating and Governance
Committee is independent within the meaning of the applicable NASDAQ Listing
Rules.
Fiscal Year 2015 Meetings
During fiscal year 2015, the
Board of Directors and the various committees held the following number of
meetings: Board of Directors, seven meetings; Audit Committee, nine meetings;
Compensation Committee, three meetings; and Nominating and Governance Committee,
three meetings. No director attended fewer than 75% of the meetings of the Board
of Directors (and any committees thereof) that he or she was required to attend.
It is a policy of the Board of Directors to encourage directors to attend each
Annual Meeting of Shareholders. All members of the Board of Directors attended
the Companys 2015 Annual Meeting of Shareholders.
Board Oversight of
Enterprise Risk
Risk management is primarily
the responsibility of the Companys management team. However, our Board of
Directors oversees the management teams assessment of the material risks faced
by the Company at both the full Board of Directors level and at the committee
level. In accordance with our Audit Committee charter, the Audit Committee is
responsible for assisting the Board of Directors in fulfilling its
responsibility for monitoring Company risk and the Companys internal control
system and for assisting the Board of Directors in fulfilling its responsibility
for oversight of the quality and integrity of the accounting, auditing and
reporting practices of the Company. To assist the Audit Committee in assessing
the Companys approach to risk management, the management team prepares a list
of what it perceives to be the most significant risks facing the Company, along
with a statement reflecting any associated action the Company is taking to
mitigate each type of risk. The Audit Committee reports on risk to the full
Board of Directors as necessary.
In addition, each quarterly
board report from management addresses matters of particular importance or
concern including any significant areas of risk that require Board of Directors
and/or committee attention. Throughout the year the Board of Directors and
committees receive a variety of management presentations on different business
topics that include discussion of associated significant risks.
- 11 -
Table of Contents
Risk Considerations in our
Compensation Programs
As part of our regular review
of compensation practices, management conducted a comprehensive review of our
compensation policies and practices for all team members for fiscal year 2015 in
order to determine whether risks arising from any of those policies and
practices are reasonably likely to have a material adverse effect on the
Company. Managements conclusion was
presented to and discussed with the Compensation Committee.
In its review, management
analyzed each of our compensation policies and practices, including any
potential risks arising from the policies and practices and factors that
mitigate risk. Based on its review, management concluded that the Company does
not have compensation policies or practices that create risks that are
reasonably likely to have a material effect on the Company. Factors that
management believes mitigate risks include the following:
● |
As a food retailer, we are not engaged in
activities that present a high risk related to our team member
compensation relative to other businesses; |
● |
Our executives compensation mix of base salary
and short-term and long-term incentives provides compensation
opportunities measured by a variety of time horizons to balance our
short-term and long-term strategic goals; |
● |
The relationship between the incremental
achievement levels and corresponding payouts in our incentive plans is
appropriate; |
● |
Our incentive bonus payouts are effectively
capped due to our salary cap; |
● |
Our bonuses for our executive officers and the
rest of our leadership network employ a reasonable mix of performance
metrics and are not concentrated on a single metric; |
● |
Criteria for payments to our executive officers
and the rest of our leadership network under our annual bonus are closely
aligned with our strategic goals and shareholder interests; |
● |
Payout curves are reasonable and do not contain
steep cliffs that might encourage unreasonable short-term business
decisions to achieve payment thresholds; |
● |
For our executive officers and the rest of our
leadership network, a significant portion of variable pay is delivered
through long-term incentives which carry vesting schedules over multiple
years; |
● |
Equity awards for team members are subject to
service-based vesting schedules over multiple years; |
● |
Our Code of Business Conduct, our internal
controls and other measures implemented by us help mitigate risk; |
● |
We have a recoupment policy for our executive
officers with respect to financial restatements; and |
● |
We have a policy against hedging and pledging
arrangements by Section 16 officers entered into after January 24,
2013. |
Leadership Structure
The Company currently
separates the roles of Chairman of the Board of Directors and Chief Executive
Officer. These roles were previously combined, with all of the powers
traditionally granted to a Chairman of the Board instead held by our lead
director. However, in multiple years, shareholder activist groups focused on the
Company in an attempt to have our shareholders vote to separate the roles of
Chairman of the Board and Chief Executive Officer. Although our shareholders
declined to separate these roles, to avoid unnecessary distraction and protect
the Companys corporate governance profile, Mr. Mackey voluntarily gave up the
Chairman of the Board title, effective December 2009. The Company is currently
fortunate to be able to draw on the talents and visionary skills of its Co-Chief
Executive Officers, John Mackey and Walter Robb, and its Chairman of the Board,
Dr. John Elstrott. Given the above facts, we currently believe that a structure
which separates the roles of Chairman of the Board and Chief Executive Officer
is in the best interests of the Company and its stakeholders.
Compensation Committee
Interlocks and Insider Participation
The following individuals
served as members of our Board of Directors Compensation Committee during
fiscal year 2015: Mo Siegel (Chair), Jonathan Sokoloff, Dr. Ralph Sorenson and
Gabrielle Sulzberger. No member of the Compensation
- 12 -
Table of Contents
Committee has served as one of
our officers or employees at any time. During fiscal year 2015, none of our
executive officers served as a member of the compensation committee of any other
company that had an executive officer serving as a member of our Board of
Directors or our Compensation Committee. During fiscal year 2015, none of our
executive officers served as a member of the board of directors of any other
company that had an executive officer serving as a member of our Board of
Directors Compensation Committee.
Code of Business Conduct
The Company expects all of its
team members and directors to act in accordance with the highest standards of
personal and professional integrity at all times, and to comply with the
Companys policies and procedures and all laws, rules and regulations of any
applicable international, federal, provincial, state or local government. The
Board of Directors has adopted a Code of Business Conduct, which is posted on
the Companys website at http://assets.wholefoodsmarket.com/www/company-info/investor-relations/corporate-governance/CodeofBusinessConduct2015.pdf.
The Code of Business Conduct applies to the Companys principal executive
officers, principal financial officer, principal accounting officer, controller
and other persons who perform similar functions for the Company, in addition to
the corporate directors and employees of the Company.
DIRECTOR COMPENSATION
Director Compensation
Program for Fiscal Year 2015
For fiscal year 2015, each of
our non-employee directors received the following: a $9,945 quarterly retainer;
$7,317 for each Board of Directors meeting attended in person; $1,340 for each
Committee meeting attended in person in conjunction with a Board of Directors
meeting; $5,361 for each Committee meeting attended in person apart from a Board
of Directors meeting; $1,787 for each Board of Directors/Committee meeting
greater than two hours in length attended by telephone in which a majority of
directors/committee members participated; $1,340 for each Board of
Directors/Committee meeting between one and two hours in length attended by
telephone in which a majority of directors/committee members participated; and
$671 for each Board of Directors/Committee meeting between fifteen minutes and
one hour in length attended by telephone in which a majority of
directors/committee members participated. Each quarter a retainer was paid to
the Chairman of the Board in the amount of $11,374. Finally, each quarter the
Board of Directors Committee Chairs received the following retainers: $4,259 for
the Audit Committee Chair; $2,233 for the Compensation Committee Chair; and
$2,233 for the Nominating and Governance Committee Chair.
We strive to promote an
ownership mentality among key leadership and our Board of Directors. Our
Corporate Governance Principles provide that it is the policy of the Board of
Directors to encourage each director to maintain a stock ownership investment in
the Company equal to the estimated cash compensation received by each such
director for the first full year of service on the Board of Directors. As of
December 4, 2015, all directors were in compliance with this policy. See the
Other Information Beneficial Ownership section of this Proxy Statement for
information regarding the Company ownership interests of each member of our
Board of Directors. The members of our Board of Directors receive regular grants
of options and restricted stock. Options and restricted stock become exercisable
in four equal installments (or three equal installments for restricted stock
granted November 16, 2011) each year beginning on the first anniversary of the
grant date.
- 13 -
Table of Contents
Director Compensation Table
for Fiscal Year 2015
The following table provides
compensation information for the fiscal year ended September 27, 2015 for each
non-employee member of our Board of Directors. The Summary Compensation Table in
the Executive Compensation section of this Proxy Statement contains
compensation disclosure for Mr. Mackey and Mr. Robb, who are also executive
officers of the Company. Neither Mr. Mackey nor Mr. Robb receives any
compensation for serving as a member of the Board of Directors.
|
|
Fees Earned or |
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
Paid in Cash |
|
Stock Awards |
|
Option Awards |
|
Compensation |
|
Total |
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
|
Dr. John
Elstrott |
|
$ |
141,384 |
|
$ |
117,979 |
|
$
|
140,992 |
|
$ |
2,519 |
|
$ |
402,874 |
Hass Hassan |
|
|
94,546 |
|
|
117,979 |
|
|
140,992 |
|
|
2,519 |
|
|
356,036 |
Stephanie
Kugelman |
|
|
95,217 |
|
|
117,979 |
|
|
140,992 |
|
|
2,519 |
|
|
356,707 |
Jonathan Seiffer |
|
|
95,888 |
|
|
117,979 |
|
|
140,992 |
|
|
2,474 |
|
|
357,333 |
Mo Siegel |
|
|
104,149 |
|
|
117,979 |
|
|
140,992 |
|
|
3,664 |
|
|
366,784 |
Jonathan
Sokoloff |
|
|
87,252 |
|
|
117,979 |
|
|
140,992 |
|
|
2,474 |
|
|
348,697 |
Dr. Ralph
Sorenson |
|
|
102,827 |
|
|
117,979 |
|
|
140,992 |
|
|
3,638 |
|
|
365,436 |
Gabrielle
Sulzberger |
|
|
112,924 |
|
|
117,979 |
|
|
140,992 |
|
|
2,519 |
|
|
374,414 |
Kip Tindell |
|
|
82,577 |
|
|
117,979 |
|
|
140,992 |
|
|
2,519 |
|
|
344,067 |
(1) Amounts represent the grant date fair value of
stock awards granted in fiscal year 2015. See Note 13 to the consolidated
financial statements in the Companys Annual Report for the fiscal year ended
September 27, 2015 regarding assumptions underlying the valuation of equity
awards. The total number of shares granted to each specified director during
fiscal year 2015 was 2,269. At fiscal year end the aggregate number of stock
awards outstanding for each director was 5,204.
(2) Amounts
represent the aggregate grant date fair value of option awards granted in fiscal
year 2015 (consisting of two awards valued at $114,036 and $26,956,
respectively, per director). See Note 13 to the consolidated financial
statements in the Companys Annual Report for the fiscal year ended September
27, 2015 regarding assumptions underlying the valuation of equity awards. The
total number of options granted to each specified director during fiscal year
2015 was 8,250. At fiscal year end the aggregate number of option awards
outstanding for each director was as follows: Dr. John Elstrott 48,374; Hass
Hassan 41,250; Stephanie Kugelman 53,750; Jonathan Seiffer 32,250; Mo Siegel
53,750; Jonathan Sokoloff 32,250; Dr. Ralph Sorenson 52,750; Gabrielle
Sulzberger 53,750; and Kip Tindell 41,250. Leonard Green & Partners, L.P.
had 18,000 options outstanding which were granted in respect of Mr. Seiffers
and Mr. Sokoloffs service on our Board of Directors. These options may be
considered beneficially owned by Mr. Seiffer and Mr. Sokoloff.
(3) Amounts represent only dividends on restricted
stock paid in fiscal year 2015 for all directors other than Mo Siegel and Dr.
Ralph Sorenson. For Mr. Siegel, the amount represents $2,519 in dividends on
restricted stock paid in fiscal year 2015 and $1,145 in reimbursement payments
for continuing board education. For Dr. Sorenson, the amount represents $2,519
in dividends on restricted stock paid in fiscal year 2015 and $1,119 in
reimbursement payments for continuing board education. The Companys policy with
respect to continuing board education reimbursement is that, upon request from a
director, the Company will reimburse the director for travel and meal expenses
incurred during their travel for Company business, and for approved continuing
board education, including related travel and meal expenses, up to $7,500 in any
calendar year.
- 14 -
Table of Contents
PROPOSAL 2 ADVISORY VOTE TO APPROVE THE COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS |
Pursuant to Section 14A of the
Securities Exchange Act of 1934, shareholders have an opportunity to cast an
advisory vote to approve the compensation of our named executive officers as
disclosed in this Proxy Statement. This proposal, commonly known as a
say-on-pay proposal, gives shareholders the opportunity to approve on an
advisory basis our fiscal year 2015 executive compensation programs and policies
and the compensation paid to the named executive officers. At the Companys 2011
Annual Meeting, the majority of our shareholders voted to advise us to include a
say-on-pay proposal every year, and the Board of Directors determined that the
Company will hold an advisory shareholder vote on the compensation of our named
executive officers every year. This non-binding, advisory vote on the frequency
of say-on-pay proposals must be held at least once every six years.
As discussed in the following
Compensation Discussion and Analysis section of this Proxy Statement, the
primary objective of our compensation program, including our executive
compensation program, is to attract and retain qualified, energetic team members
who are enthusiastic about the Companys mission and culture in order to achieve
our corporate objectives and increase shareholder value.
This proposal allows our
shareholders to express their opinions regarding the decisions of our
Compensation Committee on the prior years annual compensation to the named
executive officers. Your advisory vote will serve as an additional tool to guide
our Board of Directors and Compensation Committee in continuing to improve the
alignment of the Companys executive compensation programs with the interests of
the Company and its shareholders, and is consistent with our commitment to high
standards of corporate governance.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF THE FOLLOWING ADVISORY RESOLUTION:
RESOLVED, that the Companys shareholders approve,
on an advisory basis, the compensation paid to the Companys named executive
officers as disclosed in this Proxy Statement pursuant to the Securities and
Exchange Commissions compensation disclosure rules, including the Compensation
Discussion and Analysis section, the compensation tables and the related
narrative discussion.
Vote Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on, and who vote for or against, the proposal.
Because the vote on this
proposal is advisory in nature, it will not affect any compensation already paid
or awarded to any named executive officer and will not be binding on or overrule
any decisions by the Board of Directors, and it will not create or imply any
additional fiduciary duty on the part of the Board of Directors. The
Compensation Committee will take into account the outcome of this advisory vote
when considering future compensation arrangements for our named executive
officers.
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EXECUTIVE COMPENSATION
Compensation Discussion and
Analysis
Overview
The following section explains
our compensation programs, with an emphasis on the compensation of our eight
executive officers, each of whom we refer as our named executive officers for
discussion purposes in this document only:
● |
John Mackey and Walter Robb, our Co-Chief
Executive Officers |
● |
A.C. Gallo, our President and Chief Operating
Officer |
● |
Glenda Flanagan, our Executive Vice President
and Chief Financial Officer |
● |
Jim Sud, our Executive Vice President of Growth
and Business Development |
● |
David Lannon and Ken Meyer, our Executive Vice
Presidents of Operations |
● |
Jason Buechel, our Executive Vice President and
Chief Information Officer |
Securities and Exchange
Commission rules require us to disclose the compensation of our principal
executive officers (John Mackey and Walter Robb), our principal financial
officer (Glenda Flanagan) and the three most highly compensated executive
officers other than the principal executive officers and principal financial
officer. We have included two additional executive officers in order to present
compensation information for all of our executive officers. In this respect, we
do not represent that these two additional executive officers referred to herein
as named executive officers are named executive officers as defined by Item
402 of Regulation S-K for purposes of the federal securities laws.
2015 Shareholder Advisory
Vote on Executive Compensation
At our 2015 Annual Meeting, a
substantial majority of our shareholders approved the compensation of our named
executive officers, with approximately 95% of the votes cast in favor of our
executive compensation proposal. Our Compensation Committee took this strong
approval into account as one of many factors it considered in connection with
the discharge of its responsibilities.
Our Compensation Committee
implemented one change to our executive compensation program for 2015.
Historically, as a guideline, our Compensation Committee has sought to limit the
total number of shares issuable under equity grants to the 32 members of the
Whole Foods Leadership Network (which we refer to as WFLN), which includes our
named executive officers, to a percentage of all shares issuable under equity
grants made to all team members in such fiscal year. Prior to fiscal year 2015,
this percentage was 10%. The Compensation Committee increased this percentage to
20% in fiscal year 2015 in order to increase its flexibility to determine the
amount of equity to grant to the Companys leadership, while keeping the
percentage relatively low in order to continue to align our compensation
philosophy with our core values.
Our Compensation Committee did
not implement any other changes to our executive compensation program for 2015,
partly because it believed that the shareholder vote demonstrated that our
shareholders support the overall design of the program.
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Summary of Compensation
Practices for Fiscal Year 2015
We continually evaluate our
compensation practices to ensure that they help us to achieve our compensation
goals and align with our core values. Set forth below are some examples of
practices that demonstrate our commitment to our goals and values.
Compensation
Practice |
|
Explanation |
Salary cap
|
|
As further described in
the section entitled Cash Compensation, our compensation philosophy
emphasizes internal pay equity. In this regard, we have generally limited
the cash compensation of any team member (including our executive
officers) to a certain multiple of the average annual wage of all
full-time team members, with limited exceptions described below. For 2015,
this multiple was 19 times the average annual wage. |
Guideline on executive
officers annual equity grants |
|
As a guideline, we
generally seek to limit the total number of shares issuable under our
stock incentive plan to the 32 members of the Whole Foods Leadership
Network (which includes our executive officers) to approximately 20% of
all shares issuable under equity grants made to all team members in a
fiscal year. This guideline is part of our internal pay equity
considerations when we set executive compensation. |
Recoupment policy
|
|
We adopted a recoupment
policy that applies to compensation paid in fiscal year 2014 and going
forward. Under the policy, our Compensation Committee may seek to recoup
from our current and former named executive officers any excess incentive
based cash compensation awarded as a result of an accounting restatement
due to material noncompliance with financial reporting requirements under
the U.S. federal securities laws. Although we may need to revise our
policy depending on the final recoupment rules under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, we believe this policy is a
good governance practice that would be beneficial for our Company even
ahead of the final rules. |
Benchmarking
|
|
While our Compensation
Committee may review practices of other companies to have a point of
reference when making compensation decisions, we do not benchmark our
executive officers compensation so that it must equal a certain
percentage of compensation awarded by other companies. We believe that
such benchmarking has been a factor in the exponential growth in executive
compensation that is common at other companies, and that it is not the
best practice for our own Companys stakeholders. |
Pay equity among
executive officers |
|
Except as noted below,
each of our executive officers generally receives the same base salary and
annual bonus (before any reductions due to the salary cap) and the same
size annual leadership grant of stock options, although we from time to
time award additional equity grants which may vary in size among the
executives. Our executive officers act as a team, and we believe this pay
equity emphasizes their teamwork and is fair to them and our stakeholders.
Effective January 1, 2007, Mr. Mackey voluntarily reduced his salary to $1
and elected to forgo any future bonus and equity awards. As Mr. Buechel
became an executive officer during fiscal year 2015, his compensation
differed from the other executive officers. |
Egalitarian welfare
benefit structure with limited perquisites |
|
Our executive officers
generally receive the same benefits that other full-time team members
receive, including a team member purchase discount card and health
insurance. |
No Section 280G tax
gross ups |
|
We do not provide
Internal Revenue Code Section 280G golden parachute tax gross ups.
|
No new hedging or
pledging arrangements by executive officers |
|
Since January 2013, our
insider trading policy has prohibited our executive officers (and other
Section 16 insiders) from entering into any new hedging or pledging
arrangements involving our stock. |
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Objectives of Our
Compensation Programs
Our compensation and benefit
programs reflect our philosophy of egalitarianism. While the programs and
individual pay levels will always reflect differences in job responsibilities,
geographies and marketplace considerations, the overall structure of
compensation and benefit programs should be broadly similar across the
organization.
The primary objective of our
compensation programs, including our executive compensation program, is to
attract and retain over the long term qualified and energetic team members who
are enthusiastic about our mission and culture, providing them with sufficient
income and other benefits to keep them focused on the Company as their employer.
A further objective of our compensation programs is to reward each of our team
members for their contribution to the Company. Finally, we endeavor to ensure
that our compensation programs are perceived as fundamentally fair to all
stakeholders.
Our Compensation Committee is
empowered to review and approve, or in some cases recommend for the approval of
the full Board of Directors, the annual compensation and compensation procedures
for our executive officers.
Elements of Executive
Compensation Program
The elements of our executive
compensation program are similar to the elements used by many companies and are
as follows:
|
1. |
|
Cash Compensation including base salary and
bonus |
|
2. |
|
Equity
Compensation including
stock option grants and, in some years, restricted share
issuances |
|
3. |
|
Executive
Retention Plan and Non-Compete Arrangement |
The exact base pay, bonus
formulas, equity grants, cash salary cap, and agreement terms are chosen in an
attempt to balance our competing objectives of fairness to all stakeholders and
attracting/retaining team members who may have other attractive employment
opportunities. Other than benefit hours pool balances (described below), cash
compensation generally is paid as earned.
Cash
Compensation: What Our
Compensation Program Is Designed to Reward
Annual executive officer cash
compensation consists of a base salary component and the incentive component
discussed below. Our cash compensation program is designed to reward teamwork
and each team members contribution to the Company.
Our executive officers (other
than Mr. Mackey, who voluntarily reduced his salary to $1 and elected to forgo
future cash compensation and equity awards effective January 1, 2007, and Mr.
Buechel, who became an executive officer during the fiscal year and whose 2015
bonus is described below) participated in our Bonus Plan in fiscal year 2015.
Under this plan, in measuring the executive officers contribution to the
Company, our Compensation Committee considers numerous factors, including the
Companys growth and financial performance through reference to the metrics set
forth below and general marketplace conditions. The Bonus Plan includes
qualitative and quantitative components.
The qualitative bonus amount
is determined at the end of each fiscal year by our Compensation Committee in
its discretion, provided this amount is limited to no more than 30% of the
applicable executive officers annual base salary. Historically, the committee
has determined the quantitative and qualitative portions of the bonus for the
executive officers as a group, and has not differentiated among the officers
based on personal performance. In determining the qualitative bonus amount, our
Compensation Committee attempts to reward specific accomplishments that are
important to the long-term health of the Company. For example, the committee may
consider subjective factors such as long-term strategy development, future
company leader development, product differentiation plans, vendor relationships,
and generally how smoothly the executive team is working together. Our
Compensation Committee believes that such factors may not be reflected in a
single years
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quantitative results. The
qualitative portion of the Bonus Plan also may be used to recognize and reward
the role of the executive officers in meeting other challenges that are not
reflected in the quantitative bonus criteria, either because they are
unanticipated or because they are due to general economic conditions. For
example, if the Companys results of operations were below expectations as a
result of an unexpectedly weak U.S. economy, but the Company significantly
outperformed most other food retailers and/or our own revised expectations due
to the management teams appropriate strategic adjustments, the quantitative
bonus might not function as intended and the qualitative portion of the bonus
would reward performance.
The following five
quantitative bonus criteria were selected at the beginning of the fiscal year by
the Compensation Committee in its discretion, which are the same criteria used
in fiscal year 2014:
1. |
Comparable store sales growth the year-over-year sales growth at
existing stores, calculated on a store-by-store basis. Sales of a store
are calculated on a constant currency basis and deemed to be comparable
commencing in the 57th full week after the store opened or was
acquired. |
2. |
Year-over-year improvement in earnings
before interest, taxes and non-cash expenses (EBITANCE) the year-over-year increase in earnings before interest, taxes and non-cash expenses.
Non-cash expenses include depreciation, amortization, fixed asset
impairment charges, non-cash share-based payment expenses, deferred rent
and last-in, first-out (LIFO) charge. |
3. |
Return on invested
capital (ROIC) the result of dividing net income by average invested
capital. Invested capital reflects a trailing four-quarter
average. |
4. |
Year-over-year improvement in Economic Value
Added (EVA) the year-over-year increase in net operating profits after
taxes minus a charge on the cost of invested capital necessary to generate
those profits. |
5. |
Positive free cash
flow the Companys net cash provided by operating activities minus
capital expenditures. |
In selecting bonus criteria,
associated amounts and weightings, the Compensation Committee attempts to
determine which factors will better measure the executive officers performance,
taking into consideration the Companys current major goals and financial
forecast, as well as general economic conditions. For example, if the Company
were to dramatically increase its growth plan, positive free cash flow would be
negatively impacted and the Compensation Committee might choose a different
amount/weighting of this metric or choose a completely different metric. For
fiscal year 2015, with regard to the selected criteria, the following formulas
and relative weightings were also approved at the beginning of the fiscal year
by the Compensation Committee:
1. |
|
Comparable store sales growth |
|
$5,000 is earned for
every 10 basis points of improvement, and the total is multiplied by 20%
to weight this portion of the quantitative bonus amount. |
2. |
|
Year-over-year
improvement in EBITANCE |
|
For every dollar of
results, $0.005 (or 0.50%) is earned, and the total is multiplied by 20%
to weight this portion of the quantitative bonus amount. |
3. |
|
ROIC |
|
$8,000 is earned for
every 10 basis points of return, and the total is multiplied by 20% to
weight this portion of the quantitative bonus amount. |
4. |
|
Year-over-year
improvement in EVA |
|
For every dollar of
results, $0.0175 (or 1.75%) is earned, and the total is multiplied by 20%
to weight this portion of the quantitative bonus amount. |
5. |
|
Positive free cash
flow |
|
For every dollar of
results, $0.0015 (or 0.15%) is earned, and the total is multiplied by 20%
to weight this portion of the quantitative bonus
amount. |
All criteria are adjusted for
inflation. Comparable store sales growth, year-over-year improvement in
EBITANCE, and year-over-year improvement in EVA were also adjusted in fiscal
year 2013 to be on a 52-week to 52-week basis. These incentive compensation
elements are designed to be attainable and collectively intended to increase the
executives overall compensation for a fiscal year. With regard to the
performance criteria selected for fiscal year 2015, all performance criteria
resulted in positive dollar amounts except the performance criterion,
Year-over-year improvement in EVA. All performance criteria that resulted in
positive dollar amounts were summed to determine the quantitative bonus amount.
The performance criterion that resulted in a negative dollar amount was not
subtracted from or otherwise had any impact on the quantitative bonus amount.
Stock price performance has not been a factor in determining annual cash
compensation because
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the price of the Companys
common stock is subject to a variety of factors, many of which are outside the
control of our executive officers.
Mr. Buechel, who became an
executive officer during the fiscal year, received $241,520 in bonus. The amount
received by Mr. Buechel was prorated for prior position achievement and his
current executive officer position.
As Mr. Buechel will be an
executive officer for all of fiscal year 2016, we expect that his bonus will be
subject to the same metrics as the other executive officers for 2016.
Cash
Compensation: How We Choose
Amounts and/or Formulas for Each Element
Our Compensation Committee
intends to set total executive cash compensation sufficiently high to attract
and retain a strongly motivated leadership team, but not so high that it has a
long-term negative impact on our other stakeholders. Each executives current
and prior compensation is considered in setting future compensation. The
incentive bonus under the Bonus Plan is included in compensation to help align
the financial incentives with the financial interests of our shareholders,
primarily growth and return on invested capital. The criteria used to calculate
the quantitative portion of the Bonus Plan were chosen because we believe they
are currently the best objective measures of our overall financial performance.
The smaller qualitative portion of the Bonus Plan is included to provide the
committee with some level of planned discretion in granting executive bonuses.
For Mr. Buechels fiscal year 2015 bonus, the amount received is prorated and
reflects his prior position achievement and his current executive officer
position.
We review the compensation
practices of other companies generally to better understand the market and the
spectrum of compensation philosophies and options across the United States. To
some extent, our compensation plan is based on the market and companies against
which we compete for team members, including executives, and we must remain
competitive; however, our compensation philosophy emphasizes internal pay equity
and fair treatment of all stakeholders.
We are committed to
stakeholder equity as a principle. This principle has led us to generally limit
the maximum cash compensation we pay team members in relation to any fiscal
year, which we refer to as the salary cap. Cash payments, including base
salary and amounts paid under our incentive compensation plan, fall within the
scope of our salary cap.1
The salary cap is set each
fiscal year by our Compensation Committee through use of a multiple of our
full-time team members average annual wage. In reviewing the multiple for a
fiscal year, our Compensation Committee looks to general marketplace conditions
and the compensation levels it believes to be required to attract and retain
outstanding team members. We have increased this multiple three times since the
salary cap policy was first adopted approximately 29 years ago. Each of these
increases was made to keep the compensation paid to our executives competitive
in the marketplace.
____________________
1 Team members may
take time off without pay in order to reduce their salary earned and increase
the amount of bonus that can be paid within the cap. Additionally, any team
member may elect to receive a cash payment in exchange for their unused paid
time off at 75% of the value otherwise due, to which amount the salary cap does
not apply. Employee benefits, equity awards and any other form of non-cash
compensation, such as the 401(k) match, are not included in determining and
applying the salary cap. The salary cap does not apply in the team members year
of termination or retirement, at which time he or she may receive a cash payment
in exchange for unused paid time off at 100% of the value otherwise due. In
addition, the salary cap may not apply to compensation arrangements found in
agreements related to change of control or termination of employment, nor does
it apply to dividends paid on any of the Companys common stock held by any team
member.
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The following is the salary
cap calculation for the past five fiscal years:
|
|
Average |
|
Average |
|
|
|
|
|
Fiscal Year |
|
Hourly Wage (1) |
|
Annual Wage (2) |
|
Multiple |
|
Salary Cap |
2015 |
|
$
|
19.70 |
|
$
|
40,976 |
|
19 |
|
$
|
778,500 |
2014 |
|
|
19.16 |
|
|
39,853 |
|
19 |
|
|
757,200 |
2013 |
|
|
18.89 |
|
|
39,289 |
|
19 |
|
|
746,500 |
2012 |
|
|
18.63 |
|
|
38,747 |
|
19 |
|
|
736,200 |
2011 |
|
|
18.24 |
|
|
37,947 |
|
19 |
|
|
721,000 |
(1) Average Hourly
Wage is the total cash compensation of all full-time team members in a fiscal
year divided by the total hours worked by all such team members in that
year.
(2) Average Annual
Wage is the product of the Average Hourly Wage and 2,080 hours. The Company uses
2,080 hours in the calculation as it represents the product of 40 hours per week
and a 52-week year.
Equity
Compensation: What Our
Compensation Program Is Designed to Reward
As previously stated, stock
price performance has not been a factor in determining annual cash compensation.
However, because we believe a relationship exists between our stock price and
our team members performancethrough driving sales and improving earningsour
compensation program is designed to reward team members, including our executive
officers, for positive stock price performance, through equity grants pursuant
to our broad-based plan. We believe this strategy helps to more closely align
the economic interest of our team members and our shareholders.
All of our full-time and
part-time team members are eligible to receive stock options through annual
leadership grants or through service hour grants once they have accumulated
6,000 service hours (approximately three years of full-time employment). We
believe that stock options are a beneficial compensation tool because they link
our team members interests with those of our shareholders, they are well suited
to broad-based grants, they are easy to understand, and team members can control
the timing of their taxable event. As of 2015 fiscal year end, approximately 94%
of all equity awards granted pursuant to our stock plan since its inception in
1992 have been granted to team members who are not executive officers. Except as
described below, each of our executive officers receives stock option grants
under the Companys stock incentive plan. Service hour grants are allocated to
each eligible team member (including our executive officers) based on the
proportion of their total accumulated service hours. With respect to annual
leadership grants, our Compensation Committee provides a discretionary award of
a similar number of options to each executive officer. Two of our executive
officers voluntarily did not receive annual leadership or service hour grants in
fiscal year 2015: Mr. Mackey has elected not to receive future equity grants
effective January 1, 2007, and Mr. Robb elected not to receive his annual
leadership or service hour grant in fiscal year 2015.
From time to time, our
Compensation Committee may determine that additional equity grants, including
possible restricted share issuances, are warranted in order to reward
exceptional performance, motivate future strong performance, retain valuable
team members and keep the Company competitive.
Equity
Compensation: How We Choose
Amounts and/or Formulas for Each Element
Our Compensation Committee
does not have an exact formula for allocating between cash and non-cash
compensation, and its allocation may change from year to year. In determining
the amount of such awards, our Compensation Committee considers a number of
factors, including historic practice such as the amount of prior grants, our
recent performance, general market conditions, the need to retain and motivate
team members, the pool of discretionary grants for all team members, and our
philosophy of fairness to all stakeholders.
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Our Compensation Committee
intends to limit the number of shares granted to all team members in any one
fiscal year so that annual earnings dilution from share-based payment expense
will not exceed 10%. The Companys actual dilution from share-based payment
expense for each fiscal year since 2006 has been less than 10%.
Historically, as a guideline,
our Compensation Committee has sought to limit the total number of shares
issuable under equity grants to the 32 members of the Whole Foods Leadership
Network (which we refer to as WFLN), which includes our named executive
officers, to a percentage of all shares issuable under equity grants made to all
team members in such fiscal year, which for fiscal year 2015 was 20%. The
Company grants to WFLN have been under 20% of all equity grants for the fiscal
year in each fiscal year since WFLN was established more than a decade
ago.
For fiscal year 2015, all
equity grants were recommended by the executive team, and the final
determination was made by our Compensation Committee after discussions among the
executive team and the committee, taking into consideration: (1) our usual
broad-based grants, (2) our recent performance, (3) the proportion of awards
granted to WFLN, and (4) our stakeholder fairness philosophy, including the
requirement to expense equity grants and our current intent to limit the number
of shares granted in any one year so that annual earnings dilution from
share-based payment expenses will not exceed 10%.
In each fiscal year, we
establish a pool of grants based on prior year grants to all team members with a
growth factor. We then estimate earnings dilution from share-based payment
expense (to set the dilution guideline for our Compensation Committee) and
determine the portion that should be granted to WFLN. As necessary, the
Compensation Committee reviews whether or not circumstances exist that suggest a
deviation from our general practices.
Subject to certain exceptions,
we schedule equity grant dates well in advance of any actual grant. The grant
date is established when our Compensation Committee approves the grant, and all
key terms have been determined and are expected to be communicated to recipients
within a relatively short period of time. The exercise price of each of our
stock option grants is the market closing price on the grant date. Our general
policy is for the primary annual grant to occur within two weeks after the
official announcement of our second quarter results so that the stock option
exercise price reflects a fully informed market price. At times we make grants
that are in addition to the primary annual grant, including the February 2015
grants, which were approved by our Compensation Committee in December 2014 and
granted when our trading window opened in February 2015 and are described below.
If at the time of any planned equity grant date any member of our Board of
Directors or executive team is aware of material non-public information, we
would not generally make the planned grant. In such event, as soon as practical
after material information is made public, our Compensation Committee generally
would have a special meeting and/or otherwise take all necessary steps to
authorize the delayed grant. Executives are not treated differently from other
team members in the grant process. Our Compensation Committee has delegated to
our executive team the power to administer, subject to and within the
limitations of the express provisions of our stock incentive plan, all aspects
of outstanding and future grants of equity under the plan. This delegation,
however, does not include the authority to (i) determine when and how each award
will be granted; what type or combination of types of awards will be granted;
the time or times when an award may be exercised; the number of shares with
respect to which an award will be granted to each participant; the exercise
price or the purchase price for shares under an award; or the terms, performance
criteria or other similar conditions, vesting periods or any restrictions for an
award or any restrictions on shares acquired pursuant to an award; (ii) change
the name of participant for whose benefit an award is or will be granted under
the plan; (iii) accelerate or defer the vesting of any rights under an award
(except that such authority exists with respect to participants other than
directors and executive officers); or (iv) amend any award agreement with
respect to the foregoing provisions, other than to correct any defect, omission,
or inconsistency in any award agreement granted to persons who are not executive
officers.
On December 23, 2014, our
Compensation Committee awarded special grants of stock options and restricted
stock to our executive officers (or, in the case of Jason Buechel, who was a
member of WFLN but not an executive officer at that time, a special grant of
stock options). Because our trading window was closed at the time, the committee
determined that the grants would be made on February 13, 2015, when our trading
window was open. One purpose of the grants was to reward the executives
contributions to our Companys performance. The other purpose of the grants was
to encourage continued stability on our leadership team, which the Compensation
Committee believed would help our Companys performance in
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future years. The committee
also believed that these grants were tools that would create further long-term
alignment between our executives and our shareholders.
Executive Retention Plan
and Non-Compete Arrangement: What
Our Compensation Program Is Designed to Reward
Through use of our Executive
Retention Plan and Non-Compete Arrangement, we reward each executives long-term
service with the Company and set forth the terms under which the Company and
each executive, other than Mr. Mackey, may agree to protect our confidential
information and market position after any such executives employment is
terminated. Through this arrangement, we also encourage our executives
continued services in the event a change in control becomes likely and/or
occurs.
We believe this arrangement
will protect our market position by discouraging our executives seeking
employment with our competitors and by protecting our confidential information.
In the case of a change of control, we believe the arrangement strikes a balance
between incentive and executive retention without providing the benefits to an
executive who continues to be employed by an acquiring company.
Executive Retention Plan
and Non-Compete Arrangement: How
We Choose Amounts and/or Formulas for Each Element
The elements of this
arrangement were determined by generally studying the compensation arrangements
of other companies within the United States, specifically non-compete agreements
and change-of-control agreements. In applying these types of arrangements to the
Company, our Compensation Committee considered the need to protect our market
position, our current compensation programs and the need to motivate compliance
with the arrangement through sufficiently high payments.
This arrangement is discussed
in detail under the Potential Payments on Termination/Change of Control 2010
Executive Retention Plan and Non-Compete Arrangement section of this Proxy
Statement.
Tax and Certain Other
Factors Considered by the Compensation Committee
In structuring our
compensation programs, we take into account Internal Revenue Code Section
162(m). Under Internal Revenue Code Section 162(m), a limitation is placed on
tax deductions of any publicly held corporation for individual compensation to
certain executives exceeding $1,000,000 in any taxable year, unless the
compensation is performance-based. Although our salary cap usually causes
non-performance-based compensation to be below the $1,000,000 threshold, in
certain years our executives may have compensation which results in
non-deductibility under Internal Revenue Code Section 162(m).
Regarding most compensation
matters, including the form and amount of executive and director compensation,
our executive team provides recommendations to our Compensation Committee. These
recommendations include recommendations with respect to changes to executive
team salaries, changes to the bonus plan, annual stock option grants, restricted
stock grants, discretionary bonuses, other incentive awards and the fees paid to
directors. Our Compensation Committee considers a number of factors in
establishing executive compensation, including executive team recommendations,
general marketplace conditions and the Companys growth and financial
performance. However, the committee does not delegate any of its functions to
others in setting compensation.
Neither our Compensation
Committee nor Company management engaged any outside consultants regarding
fiscal year 2015 executive compensation.
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Review of 2015 Compensation
John Mackey
Effective January 1, 2007,
John Mackey, our Co-Chief Executive Officer, voluntarily reduced his salary to
$1 and elected to forgo any future bonus and equity awards. In 2013, Mr. Mackey
extended this election so that he would accrue no additional paid time off. For
fiscal year 2015, Mr. Mackey earned $1 in base salary. Mr. Mackey will continue
to receive the same non-cash benefits that other full-time team members receive,
including a team member purchase discount card and health insurance.
Members of the Executive
Team Other Than John Mackey
Cash
compensation. For fiscal year
2015, the Compensation Committee increased the salary of each of our named
executive officers, other than Mr. Mackey and Mr. Buechel, to $486,510. For each
member of the executive team other than Mr. Mackey and Mr. Buechel, the
quantitative portion of the bonus was calculated to be $325,080 for fiscal year
2015. Although the Compensation Committee gave the executive team high marks for
its long-term company strategy development, future company leader development
and most other relevant metrics, based on the Compensation Committees
determination that the Companys financial performance was an overriding factor
this fiscal year, no qualitative bonus was awarded for fiscal year 2015. The
actual amount paid to these executive officers under the Bonus Plan was limited
by the salary cap. The salary cap caused our executive officers other than Mr.
Mackey and Mr. Buechel to forfeit $33,090 in cash compensation that they
otherwise earned. Each member of the executive team, other than Mr. Mackey and
Mr. Sud, also received a matching contribution to his or her 401(k) plan in the
amount of $155, which is calculated according to a formula consistent with the
matching contribution available to all participating team members. Mr. Buechel,
who became an executive officer during the fiscal year, received a $241,520
bonus. The amount received by Mr. Buechel was prorated for prior position
achievement and his current executive officer position.
Benefit hours (paid time
off) bank. Our executive
officers, other than Mr. Mackey, received additional compensation during the
fiscal year in relation to their benefit hours in the following amounts: Mr.
Robb received $72,684; Mr. Gallo received $51,398; Mr. Sud received $52,618; Mr.
Lannon received $76,339; Mr. Meyer received $41,637; and Mr. Buechel received
$75,048. Ms. Flanagan used 100% of her benefit hours earned during fiscal year
2015, and also used an additional $37,356 of paid time off, resulting in an
aggregate withdrawal or distribution of $37,356 reflected in the associated
table.
Equity
incentives. Each of our executive
officers, other than Mr. Mackey (who voluntarily elected to forgo future equity
awards) and Mr. Robb (who voluntarily elected to forgo his annual leadership and
service hour grant in 2015), received a leadership grant of stock options to
purchase 4,500 shares in connection with our annual grant process on May 15,
2015. Also in connection with our annual grant process, our executives other
than Mr. Mackey and Mr. Robb, and other than Mr. Buechel, who had not been with
the Company long enough to qualify for a service hour grant, received a grant of
options on May 15, 2015 based on his or her years of service with the Company in
the following amounts; Mr. Gallo received options to purchase 231 shares; Ms.
Flanagan received options to purchase 301 shares; Mr. Sud received options to
purchase 254 shares; Mr. Lannon received options to purchase 238 shares; Mr.
Meyer received options to purchase 184 shares. In addition to the annual grant
of stock options, on February 13, 2015, our executive officers received special
stock option and restricted stock grants in the following amounts: Mr. Robb and
Mr. Gallo received 10,687 restricted shares and options to purchase 30,000
shares; and our other executive officers, other than Mr. Mackey and Mr. Buechel,
received 5,344 restricted shares and options to purchase 21,000 shares. On
February 13, 2015, Mr. Buechel, who was not a member of the executive team at
that time, received options to purchase 4,500 shares. Additionally, Mr. Buechel
received options to purchase 200 shares in May 2015 as part of a special award
made to a number of team members in the Company who were selected as All-Stars
for the year.
- 24 -
Table of
Contents
Compensation Committee Report
The following Report of the
Compensation Committee is not to be deemed to be soliciting material or to be
filed with the Securities and Exchange Commission or subject to Regulation 14A
or 14C or to the liabilities of Section 18 of the Securities Exchange Act of
1934, except to the extent we specifically request that such information be
treated as soliciting material or we specifically incorporate it by reference
into any filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934.
We have reviewed and discussed
with management the forgoing Compensation Discussion and Analysis to be included
in this Proxy Statement for the Companys 2016 Annual Meeting of Shareholders,
filed pursuant to Section 14(a) of the Securities Exchange Act of 1934. Based on
the review and discussion referred to above, we recommend to the Board of
Directors that the Compensation Discussion and Analysis referred to above be
included in this Proxy Statement.
Compensation
Committee
Mo Siegel
(Chair)
Jonathan Sokoloff
Dr. Ralph Sorenson
Gabrielle
Sulzberger
Summary Compensation Table for Fiscal Year 2015
The following table includes
information concerning compensation for the one-year periods ended September 27,
2015, September 28, 2014 and September 29, 2013 in reference to our named
executive officers. Cash compensation received by the named executive officer is
found in the Salary, Bonus or Non-Equity Incentive Plan Compensation columns of
this table. Total cash compensation received for each named executive officer in
relation to each fiscal year is limited to the Companys salary cap for such
fiscal year, with some exceptions2, none of which have occurred in
the last three years. For fiscal years 2015, 2014 and 2013, the salary cap was
$778,500, $757,200 and $746,500, respectively.
____________________
2 See footnote 1 on
page 20 for a discussion of salary cap exceptions.
- 25 -
Table of
Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
Incentive Plan |
|
All Other |
|
|
|
Fiscal Year |
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
|
Compensation |
|
Compensation |
|
Total |
|
|
(1)(2) |
|
(3)(4) |
|
(5) |
|
(5) |
|
(6)(7)(8) |
|
(9) |
|
|
|
John Mackey Co-Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1 |
2014 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
2013 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Walter Robb Co-Chief Executive
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
600,022 |
|
|
570,177 |
|
|
291,990 |
|
|
102,223 |
|
|
2,050,922 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
1,000,013 |
|
|
968,161 |
|
|
225,010 |
|
|
38,207 |
|
|
2,763,581 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
1,520,426 |
|
|
895,230 |
|
|
242,700 |
|
|
74,342 |
|
|
3,236,498 |
A.C. Gallo President and Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
600,022 |
|
|
626,857 |
|
|
291,990 |
|
|
81,037 |
|
|
2,086,416 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
1,000,013 |
|
|
967,817 |
|
|
225,010 |
|
|
87,021 |
|
|
2,812,051 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
1,537,414 |
|
|
898,632 |
|
|
242,700 |
|
|
69,394 |
|
|
3,251,940 |
Glenda Flanagan Executive
Vice President and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
300,039 |
|
|
456,642 |
|
|
291,990 |
|
|
5,803 |
|
|
1,540,984 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,837 |
|
|
225,010 |
|
|
67,174 |
|
|
2,020,244 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
|
|
|
413,172 |
|
|
242,700 |
|
|
19,091 |
|
|
1,178,763 |
Jim Sud Executive Vice President of Growth and Business
Development |
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
300,039 |
|
|
456,079 |
|
|
291,990 |
|
|
58,266 |
|
|
1,592,884 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,225 |
|
|
225,010 |
|
|
33,644 |
|
|
1,986,102 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
|
|
|
412,277 |
|
|
242,700 |
|
|
58,051 |
|
|
1,216,828 |
David Lannon Executive Vice
President of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
300,039 |
|
|
455,888 |
|
|
291,990 |
|
|
82,142 |
|
|
1,616,569 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,620 |
|
|
225,010 |
|
|
58,793 |
|
|
2,011,646 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
|
|
|
413,628 |
|
|
242,700 |
|
|
68,876 |
|
|
1,229,004 |
Ken Meyer Executive Vice President of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
486,510 |
|
|
|
|
|
300,039 |
|
|
455,241 |
|
|
291,990 |
|
|
47,440 |
|
|
1,581,220 |
2014 |
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
694,932 |
|
|
225,010 |
|
|
38,204 |
|
|
1,990,369 |
2013 |
|
458,600 |
|
|
45,200 |
|
|
|
|
|
412,698 |
|
|
242,700 |
|
|
57,187 |
|
|
1,216,385 |
Jason Buechel Executive Vice
President and Chief Information Officer |
|
|
|
|
|
|
|
|
|
2015 |
|
362,920 |
|
|
|
|
|
|
|
|
202,199 |
|
|
241,520 |
|
|
77,332 |
|
|
883,971 |
(1) Amounts shown in the Salary column of this table
for fiscal year 2015 reflect each named executive officers annual rate of
pay.
(2) Effective January 1, 2007, Mr. Mackey voluntarily
reduced his annual salary to $1 and elected to forgo earning any future cash
compensation, stock awards and/or option awards. In 2013, Mr. Mackey extended
this election so that he would accrue no additional paid time
off.
(3) Under the Bonus Plan for named executive officers,
excluding Mr. Mackey, and subject to the salary cap, related amounts were earned
and paid to the named executive officer for the fiscal year. Based on the
elements of this compensation structure and applicable disclosure rules, only
the qualitative portion of the Bonus Plan compensation is disclosed in this
column (see the Non-Equity Incentive Plan Compensation column of this table for
additional compensation under the quantitative portion of the Bonus
Plan).
(4) For fiscal year 2015, the Compensation Committee
did not award a qualitative portion of the bonus.
(5) Amounts represent grant date fair value. See Note
13 to the consolidated financial statements in the Companys Annual Report for
the fiscal year ended September 27, 2015 regarding assumptions underlying the
valuation of equity awards. The 2013 option award amount for Mr. Robb was
inadvertently reported for Mr. Gallo (and vice versa) in the Companys last two
Proxy Statements, causing the Option Awards value to be $3,402 too high for
Mr. Robb and $3,402 too low for Mr. Gallo. Those amounts have been corrected in
the Summary Compensation Table of this Proxy Statement.
- 26 -
Table of
Contents
(6) Pursuant to the bonus
awarded to Mr. Buechel for fiscal year 2015 and under the Bonus Plan for named executive officers, excluding Mr. Mackey,
and subject to the salary cap, related amounts were earned and paid to the named executive officer for the fiscal year.
Based on the elements of this compensation structure and applicable disclosure rules, only the quantitative portion of the
Bonus Plan compensation is disclosed in this column (see the Bonus
column of this table for additional compensation under the qualitative portion of the Bonus Plan, if any).
(7) The amount shown in this column for each named
executive officer, other than Mr. Mackey, is the total amount paid under the
Bonus Plan, less the amount disclosed in the Bonus column of this table.
(8) For fiscal year 2015, for executive officers other
than Mr. Mackey and Mr. Buechel, the quantitative portion of the Bonus Plan was
calculated to be $325,080. The portion of the Bonus Plan bonus disclosed in this
column is the actual total cash paid under the Bonus Plan (see also the Bonus
column of this table) after the application of the salary cap for Mr. Robb, Mr.
Gallo, Ms. Flanagan, Mr. Sud, Mr. Lannon and Mr. Meyer. Mr. Buechel, who became
an executive officer during fiscal year 2015, received a $241,520 bonus. The
amount received by Mr. Buechel was prorated for both his prior position
achievement and his current executive officer position.
(9) The amounts in this column related to benefit
hours accumulated by the executive during the fiscal year (see the Registrant
Contributions in Last Fiscal Year column of the Non-Qualified Deferred
Compensation Table); 401(k) match payments, which are available to all team
members; and, in fiscal years 2013 and 2014, dividends on restricted stock paid
in the fiscal year. For fiscal year 2015, the amounts in this column represent
(i) dividends on restricted stock paid in the fiscal year in the following
amounts: $29,384 for Mr. Robb, $29,484 for Mr. Gallo, $5,648 for each of Ms.
Flanagan, Mr. Sud, Mr. Lannon and Mr. Meyer and $2,129 for Mr. Buechel; (ii)
benefit hours accumulated by the executive during the fiscal year in the
following amounts: $72,684 for Mr. Robb, $51,398 for Mr. Gallo, $52,618 for Mr.
Sud, $76,339 for Mr. Lannon, $41,637 for Mr. Meyer and $75,048 for Mr. Buechel;
and (iii) $155 in 401(k) match payments for each executive other than Mr. Mackey
and Mr. Sud. Ms. Flanagan used 100% of the benefit hours earned during fiscal
year 2015, thus the amount in this column does not reflect any increase for
accumulated benefit hours.
- 27 -
Table of
Contents
Grants of
Plan-Based Awards for Fiscal Year 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
Option Awards: |
|
Exercise |
|
Grant Date Fair |
|
|
|
|
Estimated Future Payouts Under |
|
Stock Awards: |
|
Number of |
|
or |
|
Value |
|
|
|
|
Non-Equity Incentive Plan Awards |
|
Number of |
|
Securities |
|
Base
Price |
|
of
Stock |
|
|
Grant |
|
|
|
|
|
|
|
|
Shares of |
|
Underlying |
|
of
Option |
|
and
Option |
Name |
|
Date |
|
Threshold |
|
Target |
|
Maximum |
|
Stock or Units |
|
Options |
|
Awards |
|
Awards |
|
|
|
|
|
|
(2) |
|
|
|
(3) |
|
(4) |
|
|
|
|
(5) |
John Mackey (1) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
Walter Robb |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
56.15 |
|
|
570,177 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
10,687 |
|
|
|
|
|
|
|
600,022 |
A.C.
Gallo |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
56.15 |
|
|
570,177 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
10,687 |
|
|
|
|
|
|
|
600,022 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,731 |
|
|
43.08 |
|
|
56,680 |
Glenda
Flanagan |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
21,000 |
|
|
56.15 |
|
|
399,124 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
5,344 |
|
|
|
|
|
|
|
300,039 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,801 |
|
|
43.08 |
|
|
57,519 |
Jim
Sud |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
21,000 |
|
|
56.15 |
|
|
399,124 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
5,344 |
|
|
|
|
|
|
|
300,039 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,754 |
|
|
43.08 |
|
|
56,955 |
David
Lannon |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
21,000 |
|
|
56.15 |
|
|
399,124 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
5,344 |
|
|
|
|
|
|
|
300,039 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,738 |
|
|
43.08 |
|
|
56,764 |
Ken
Meyer |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
21,000 |
|
|
56.15 |
|
|
399,124 |
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
5,344 |
|
|
|
|
|
|
|
300,039 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,684 |
|
|
43.08 |
|
|
56,117 |
Jason
Buechel |
|
|
|
|
|
|
291,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
56.15 |
|
|
156,972 |
|
|
5/15/2015 |
|
|
|
|
|
|
|
|
|
|
4,700 |
|
|
43.08 |
|
|
45,227 |
(1) Effective January 1, 2007, Mr. Mackey voluntarily
reduced his salary to $1 and elected to forgo earning any future cash
compensation, stock awards and/or option awards.
(2) The Bonus Plan
has a qualitative discretionary component (see the Bonus column of the Summary
Compensation Table) and a quantitative component which is described here. The
quantitative component of the Bonus Plan does not provide for threshold or
maximum payment amounts, except that the payment may be limited due to the
salary cap. Specified targets under the quantitative portion of the Bonus Plan
are described above under the heading Cash Compensation: What
Our Compensation Program Is Designed to Reward. Other than for Mr. Mackey and
Mr. Buechel, the amount disclosed as each named executive officers target
under the quantitative portion of the Bonus Plan for fiscal year 2015 is a
representative amount. This disclosed figure was determined by calculating the
difference between their base salary and the salary cap. Each named executive
officers compensation under the Bonus Plan for fiscal year 2015 is subject,
together with base salary, to the salary cap described in the Compensation
Discussion and Analysis section above. Mr. Buechel became an executive officer
during fiscal year 2015, thus his disclosed target tracks the targets of the
other named executive officers, other than Mr. Mackey.
(3) The restricted
stock vests in four equal installments each year beginning on the first
anniversary of the grant date.
(4) Options become exercisable in four equal
installments each year beginning on the first anniversary of the grant
date.
(5) See Note 13 to
the consolidated financial statements in the Companys Annual Report for the
fiscal year ended September 27, 2015 regarding assumptions underlying the
valuation of equity awards.
- 28 -
Table of Contents
Outstanding Equity Awards
Value at Fiscal Year-End 2015
The following table includes certain information with respect to the
value of all restricted stock and unexercised options previously awarded to the
named executive officers as of the fiscal year ended September 27, 2015. The
number of restricted stock and options held at September 27, 2015 includes
awards granted under the Whole Foods Market, Inc. 2009 Stock Incentive Plan.
|
|
|
|
Option Awards
|
|
Stock Awards |
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
|
|
|
|
|
|
Shares or Units of Stock |
|
|
|
|
Options |
|
|
|
|
|
|
|
That Have Not Vested |
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
Expiration |
|
|
|
|
|
Market |
Name |
|
Grant Date |
|
Exercisable |
|
Unexercisable |
|
Exercise Price |
|
Date |
|
|
|
Number |
|
Value |
|
|
|
|
|
|
(1) |
|
|
|
|
|
|
|
|
(2) |
|
|
|
John Mackey |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
Walter Robb |
|
5/14/2010 |
|
72,700 |
|
|
|
|
20.42 |
|
5/14/2020 |
|
(3) |
|
|
|
|
|
|
|
5/13/2011 |
|
9,442 |
|
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
15,000 |
|
5,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
7,026 |
|
2,342 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
2/21/2013 |
|
650 |
|
30,950 |
|
|
42.47 |
|
2/21/2020 |
|
|
|
35,150 |
|
1,093,165 |
|
|
5/31/2013 |
|
2,348 |
|
2,346 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
12,500 |
|
37,500 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
14,354 |
|
|
446,409 |
|
|
5/16/2014 |
|
1,188 |
|
3,561 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
30,000 |
|
|
56.15 |
|
2/13/2022 |
|
|
|
10,687 |
|
|
332,366 |
A.C. Gallo |
|
5/14/2010 |
|
94 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
43,054 |
|
|
|
|
20.42 |
|
5/14/2020 |
|
(3) |
|
|
|
|
|
|
|
5/13/2011 |
|
9,392 |
|
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
15,000 |
|
5,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
7,060 |
|
2,352 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
2/21/2013 |
|
850 |
|
30,950 |
|
|
42.47 |
|
2/21/2020 |
|
|
|
35,150 |
|
1,093,165 |
|
|
5/31/2013 |
|
2,358 |
|
2,356 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
12,500 |
|
37,500 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
14,354 |
|
|
446,409 |
|
|
5/16/2014 |
|
1,181 |
|
3,541 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
30,000 |
|
|
56.15 |
|
2/13/2022 |
|
|
|
10,687 |
|
|
332,366 |
|
|
5/15/2015 |
|
|
|
4,731 |
|
|
43.08 |
|
5/15/2022 |
|
|
|
|
|
|
|
Glenda Flanagan |
|
5/14/2010 |
|
8,842 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
28,000 |
|
22,000 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
9,450 |
|
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
15,000 |
|
5,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
7,030 |
|
2,342 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
2,348 |
|
2,346 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
8,750 |
|
26,250 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
7,177 |
|
|
223,205 |
|
|
5/16/2014 |
|
1,187 |
|
3,559 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
21,000 |
|
|
56.15 |
|
2/13/2022 |
|
|
|
5,344 |
|
|
166,198 |
|
|
5/15/2015 |
|
|
|
4,801 |
|
|
43.08 |
|
5/15/5022 |
|
|
|
|
|
|
|
Jim Sud |
|
5/14/2010 |
|
21,000 |
|
22,000 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
9,342 |
|
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
15,000 |
|
5,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
6,952 |
|
2,316 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
2,322 |
|
2,321 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
8,750 |
|
26,250 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
7,177 |
|
|
223,205 |
|
|
5/16/2014 |
|
1,175 |
|
3,523 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
|
|
2/13/2015 |
|
|
|
21,000 |
|
|
56.15 |
|
2/13/2022 |
|
|
|
5,344 |
|
|
166,198 |
|
|
5/15/2015 |
|
|
|
4,754 |
|
|
43.08 |
|
5/15/2022 |
|
|
|
|
|
|
|
- 29 -
Table of Contents
David Lannon |
|
5/14/2010 |
|
2,200 |
|
8,800 |
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
5/13/2011 |
|
4,702 |
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
5/11/2012 |
|
44,568 |
|
14,854 |
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
5/31/2013 |
|
2,360 |
|
2,360 |
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
2/14/2014 |
|
8,750 |
|
26,250 |
|
52.25 |
|
2/14/2021 |
|
7,177 |
|
223,205 |
|
|
5/16/2014 |
|
1,183 |
|
3,546 |
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
2/13/2015 |
|
|
|
21,000 |
|
56.15 |
|
2/13/2022 |
|
5,344 |
|
166,198 |
|
|
5/15/2015 |
|
|
|
4,738 |
|
43.08 |
|
5/15/2022 |
|
|
|
|
Ken
Meyer |
|
5/14/2010 |
|
2,200 |
|
8,800 |
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
5/13/2011 |
|
9,296 |
|
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
5/11/2012 |
|
44,488 |
|
14,828 |
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
12/4/2012 |
|
10,000 |
|
10,000 |
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
5/31/2013 |
|
2,334 |
|
2,333 |
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
2/14/2014 |
|
8,750 |
|
26,250 |
|
52.25 |
|
2/14/2021 |
|
7,177 |
|
223,205 |
|
|
5/16/2014 |
|
1,169 |
|
3,506 |
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
2/13/2015 |
|
|
|
21,000 |
|
56.15 |
|
2/13/2022 |
|
5,344 |
|
166,198 |
|
|
5/15/2015 |
|
|
|
4,684 |
|
43.08 |
|
5/15/2022 |
|
|
|
|
Jason Buechel |
|
5/31/2013 |
|
27,250 |
|
27,250 |
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
2/14/2014 |
|
5,000 |
|
15,000 |
|
52.25 |
|
2/14/2021 |
|
3,588 |
|
111,587 |
|
|
5/16/2014 |
|
1,125 |
|
3,375 |
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
2/13/2015 |
|
|
|
12,000 |
|
56.15 |
|
2/13/2022 |
|
|
|
|
|
|
5/15/2015 |
|
|
|
4,700 |
|
43.08 |
|
5/15/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other
than grants made on May 14, 2010 that expire in 2020 and the grants made on
February 21, 2013, options become exercisable in four equal installments each
year beginning on the first anniversary of the grant date. Grants made on May
14, 2010 that expire in 2020 become exercisable in nine equal installments each
year beginning on the first anniversary of the grant date. The February 21, 2013
grant to Mr. Robb becomes exercisable as follows: the options became exercisable
with respect to 650 shares on the second anniversary of the date of grant; and
become exercisable with respect to 7,738 shares on each of third, fourth and
fifth anniversaries of the date of grant and 7,736 shares on the sixth
anniversary of the date of grant. The February 21, 2013 grant to Mr. Gallo
becomes exercisable as follows: the options became exercisable with respect to
850 shares on the second anniversary of the date of grant; and become
exercisable with respect to 7,738 shares on each of third, fourth and fifth
anniversaries of the date of grant and 7,736 shares on the sixth anniversary of
the date of grant.
(2) Other than with respect to the February 21, 2013
grant to Mr. Robb and Mr. Gallo, restricted stock vests in four equal
installments each year beginning on the first anniversary of the grant date. Mr.
Robbs February 21, 2013 restricted stock grant vests as follows: 650 shares
vested on the second anniversary of the date of grant; 8,788 shares vest on each
of the third, fourth and fifth anniversaries of the date of grant; and 8,786
shares vest on the sixth anniversary of the date of grant. Mr. Gallos February
21, 2013 restricted stock grant vests as follows: 1,050 shares vested on the
second anniversary of the date of grant; 8,788 shares vest on each of the third,
fourth and fifth anniversaries of the date of grant; and 8,786 shares vest on
the sixth anniversary of the date of grant.
(3) In February 2013, Mr. Robb and Mr. Gallo rescinded
a portion of these options in the following amounts: options with respect to
67,300 shares for Mr. Robb and options with respect to 67,946 shares for Mr.
Gallo. The rescinded portions are not included in the amounts shown in the
table.
- 30 -
Table of Contents
Option Exercises and Stock
Vested for Fiscal Year 2015
The following table includes
certain information with respect to the options exercised by the named executive
officers and restricted stock awards vesting during the fiscal year ended
September 27, 2015.
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
Value |
|
Number of |
|
Value |
|
|
Shares |
|
Realized on |
|
Shares |
|
Realized on |
Name |
|
Acquired on |
|
Exercise |
|
Acquired on |
|
Vesting |
|
|
Exercise |
|
(1) |
|
Vesting |
|
|
|
John Mackey |
|
|
|
$
|
|
|
|
|
$ |
|
Walter Robb |
|
18,300 |
|
|
640,979 |
|
5,435 |
|
|
305,519 |
A.C. Gallo |
|
21,150 |
|
|
754,632 |
|
5,835 |
|
|
328,205 |
Glenda Flanagan |
|
|
|
|
|
|
2,393 |
|
|
134,355 |
Jim Sud |
|
2,232 |
|
|
82,417 |
|
2,393 |
|
|
134,355 |
David Lannon |
|
4,546 |
|
|
164,464 |
|
2,393 |
|
|
134,355 |
Ken Meyer |
|
11,320 |
|
|
407,925 |
|
2,393 |
|
|
134,355 |
Jason Buechel |
|
|
|
|
|
|
1,197 |
|
|
67,206 |
(1) Value Realized
on Exercise is calculated as the difference between the total fair market value
of the shares on the date of exercise (using the closing market price on the
exercise date), less the total option price paid for the shares, regardless of
whether or not the shares were sold on the date of exercise, sold subsequently,
or held.
Non-Qualified Deferred
Compensation for Fiscal Year 2015
The table below provides
information concerning the benefit hours related to accrued paid vacation and
other personal time for each of our named executive officers during the fiscal
year ended September 27, 2015.
Upon termination of employment, all team members are entitled to receive a
lump sum payment for unused benefit hours, and in such year of termination of employment, total cash compensation received
may be in excess of the salary cap. If a termination of employment had occurred as of September 27, 2015, in addition to
other benefits discussed herein, each executive would have been entitled to receive the amount specified in the Aggregate
Balance at Last Fiscal Year End column of
this table.
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions in |
|
Contributions in |
|
Earnings in Last |
|
Withdrawals |
|
Balance at Last |
Name |
|
Last Fiscal Year |
|
Last Fiscal Year |
|
Fiscal Year |
|
Distributions |
|
Fiscal Year End |
|
|
|
|
|
(1) |
|
|
|
|
(2) |
|
(3) |
John Mackey |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
456,269 |
Walter Robb |
|
|
|
|
|
72,684 |
|
|
|
|
|
|
|
|
686,520 |
A.C. Gallo |
|
|
|
|
|
51,398 |
|
|
|
|
|
|
|
|
540,777 |
Glenda Flanagan |
|
|
|
|
|
|
|
|
|
|
|
37,356 |
|
|
549,899 |
Jim Sud |
|
|
|
|
|
52,618 |
|
|
|
|
|
|
|
|
372,135 |
David Lannon |
|
|
|
|
|
76,339 |
|
|
|
|
|
|
|
|
375,643 |
Ken Meyer |
|
|
|
|
|
41,637 |
|
|
|
|
|
|
|
|
330,501 |
Jason Buechel |
|
|
|
|
|
75,048 |
|
|
|
|
|
|
|
|
113,208 |
- 31 -
Table of Contents
(1) Reflects the
net increase in amount from last fiscal year, including: (a) any paid time off
hours earned this year in excess of hours used; and (b) any increase in
executives rates of pay during the fiscal year applied to paid time off hours
earned but not yet used from prior years. Amounts reported in this column are
also reported in the All Other Compensation column of the Summary Compensation
Table.
(2) Reflects the
net decrease from last fiscal year in paid time off used in excess of hours
earned.
(3) Amounts are
calculated using paid time off hours earned at the executives 2015 rate of pay
of $233.90 per hour ($214.06 per hour for Mr. Mackey, who in fiscal year 2013
elected to accrue no additional paid time off, and $174.48 per hour for Mr.
Buechel), as follows: Mr. Mackey 2,132 hours paid time off; Mr. Robb 2,935
hours; Mr. Gallo 2,312 hours; Ms. Flanagan 2,351 hours; Mr. Sud 1,591 hours; Mr.
Lannon 1,606 hours; Mr. Meyer 1,413 hours; and Mr. Buechel 484 hours. Amounts in
this column were also reported in the All Other Compensation column of the
Summary Compensation Table in previous fiscal years.
Potential Payments on
Termination/Change of Control
2010 Executive Retention
Plan and Non-Compete Arrangement
During fiscal year 2010, the
Company entered into agreements pursuant to our Executive Retention Plan (which
we refer to as the Plan) with Mr. Robb, Mr. Gallo, Ms. Flanagan, Mr. Sud, Mr.
Lannon and Mr. Meyer. During fiscal year 2015, the Company entered into an
agreement pursuant to the Plan with Mr. Buechel. In keeping with his voluntary
decision to reduce his annual salary to $1 and forgo earning any future cash
compensation, stock awards and options awards, John Mackey, Co-Chief Executive
Officer, opted not to execute such agreement.
Non-Compete and
Non-Solicitation Portion of Arrangement
Pursuant to these agreements,
if at any time one of the above-named executives employment is terminated other
than for cause (as defined in the Plan) and if within 45 days of such
termination, the named executive signs a release and continues compliance with
the confidentiality, non-compete, non-solicitation, non-disparagement and other
restrictions of the Plan, then the named executive will receive the following
from the Company:
● |
up to a designated
amount, for a maximum of five years, paid in equal semiannual
installments; |
● |
all stock options will
vest and become immediately exercisable and remain exercisable until the
earlier of the fifth anniversary of termination or the original expiration
date of the stock option and all restricted stock will vest; and
|
● |
reimbursement by the
Company of COBRA premiums paid by the named executive.
|
The confidentiality and
non-disparagement restrictions are of unlimited duration. The non-compete and
non-solicitation restrictions apply for a period of five years following the
termination of the named executives employment.
If one of the above-named
executives (other than Walter Robb) employment is voluntarily terminated by
such person for a reason other than a good reason (as defined in the Plan),
disability (as defined in the Plan) or death, the benefits described in the
bullets above shall not be paid, but instead are subject to future negotiation
between either one of the two Co-Chief Executive Officers of the Company and the
named executive except as follows. In the event either of the two Co-Chief
Executive Officers of the Company are involuntarily terminated or if both of the
Co-Chief Executive Officers die and/or otherwise terminate employment with the
Company within 45 days of each other and the named executive subsequently
terminates employment with the Company, the benefits described in the bullets
above will be payable. In the case of the negotiation of benefits due to a
voluntary termination without good reason, the semiannual non-compete payment
shall not exceed $800,000 for A.C. Gallo, nor $600,000 for Glenda Flanagan or
Jim Sud, nor $400,000 for David Lannon, Ken Meyer or Jason Buechel, adjusted to
reflect the increase, if any, in the Consumer Price Index. In the case of the
negotiated benefits due to a voluntary termination without good reason, as of
the following dates, the amount of the semiannual non-compete payment negotiated
for each executive officer, other than Mr. Robb and Mr. Buechel, shall not be
- 32 -
Table of Contents
less than the specified
percentage of the maximum amount set forth in the preceding sentence: as of
October 1, 2012, 20%; as of October 1, 2013, 40%; as of October 1, 2014, 60%; as
of October 1, 2015, 80%; and as of October 1, 2016, 100%. In the case of the
negotiated benefits due to a voluntary termination without good reason, as of
the following dates, the amount of the semiannual non-compete payment negotiated
for Mr. Buechel shall not be less than the specified percentage of the $400,000
maximum amount set forth above: as of October 1, 2016, 20%; as of October 1,
2017, 40%; as of October 1, 2018, 60%; as of October 1, 2019, 80%; and as of
October 1, 2020, 100%.
If Walter Robbs employment is
voluntarily terminated by him for a reason other than a good reason, disability
or death, the benefits described in the bullets above shall not be paid, but
instead are subject to future negotiation between him and the other Co-Chief
Executive Officer of the Company except as follows. In the event that John
Mackey dies or terminates employment with the Company for any reason and Walter
Robb subsequently terminates his employment with the Company, the benefits
described in the bullets above will be payable. In the case of the negotiation
of benefits due to a voluntary termination without good reason, the semiannual
non-compete payment, if any, shall not exceed $800,000 for Walter Robb, adjusted
to reflect the increase, if any, in the Consumer Price Index. In the case of the
negotiated benefits due to a voluntary termination without good reason, as of
the following dates, the amount of the semiannual non-compete payment negotiated
shall not be less than the specified percentage of the maximum amount set forth
in the preceding sentence: as of October 1, 2012, 20%; as of October 1, 2013,
40%; as of October 1, 2014, 60%; as of October 1, 2015, 80%; and as of October
1, 2016, 100%.
If a termination of the
executives employment, not by the executive and other than for cause, had
occurred as of September 27, 2015,
and if the executive elected to comply with non-compete and other material
provisions, we estimate the value of the benefits described above would have
been as follows:
|
|
|
|
|
|
|
|
|
|
|
Monthly |
|
|
Semiannual |
|
Accelerated |
|
Accelerated |
|
Reimbursement |
|
|
Payment |
|
Vesting of Stock |
|
Vesting of |
|
of COBRA |
Named Executive Officer |
|
Amount |
|
Options |
|
Restricted Stock |
|
Premiums |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
Walter Robb |
|
$ |
800,000 |
|
$ |
|
|
$ |
1,871,940 |
|
$ |
270 |
A.C. Gallo |
|
|
800,000 |
|
|
|
|
|
1,871,940 |
|
|
971 |
Glenda
Flanagan |
|
|
600,000 |
|
|
234,960 |
|
|
389,403 |
|
|
231 |
Jim Sud |
|
|
600,000 |
|
|
234,960 |
|
|
389,403 |
|
|
737 |
David Lannon |
|
|
400,000 |
|
|
93,984 |
|
|
389,403 |
|
|
1,100 |
Ken Meyer |
|
|
400,000 |
|
|
93,984 |
|
|
389,403 |
|
|
1,100 |
Jason
Buechel |
|
|
400,000 |
|
|
|
|
|
111,587 |
|
|
259 |
(1) Paid in equal
semiannual installments for a maximum of five years, subject to executives
continued compliance with non-compete and other material provisions of the Plan.
Assuming the executive complied with such restrictions for the entire five-year
period, the total amount payable would be: $8,000,000 for Mr. Robb; $8,000,000
for Mr. Gallo; $6,000,000 for Ms. Flanagan; $6,000,000 for Mr. Sud; $4,000,000
for Mr. Lannon; $4,000,000 for Mr. Meyer; and $4,000,000 for Mr. Buechel. The
executives would receive an additional semiannual payment reflecting the
increase in the Consumer Price Index between the date of the executives
agreement under the Plan and the month preceding his or her termination date.
For a September 27, 2015 termination date, each additional semiannual payment
would range in amount from $14,796 to $29,592 for executive officers other than
Mr. Buechel. Mr. Buechel entered into an agreement which was effective on
September 26, 2015.
(2) Reflects the
value of options that would accelerate and vest based upon the Companys stock
price on the last trading day of the fiscal year of $31.10 minus the exercise
price of such options.
(3) Reflects the
value of restricted stock that would accelerate and vest based upon the
Companys stock price on the last trading day of the fiscal year of
$31.10.
- 33 -
Table of Contents
(4) Paid monthly
for a maximum of 18 months, subject to the executives continued compliance with
non-compete and other material provisions of the Plan. Assuming the executive
complied with such restrictions for the entire 18-month period, the total amount
payable would be: $4,860 for Mr. Robb; $17,478 for Mr. Gallo; $4,158 for Ms.
Flanagan; $13,266 for Mr. Sud; $19,800 for Mr. Lannon; $19,800 for Mr. Meyer;
and $4,662 for Mr. Buechel.
Change of Control Portion
of Arrangement
These agreements also provide
that for the two-year period following a change of control:
● |
the named executives annual base salary will be at least equal to
26 times the highest bi-weekly base salary rate applicable to the named
executive in the one-year period immediately preceding the month in which
the change of control occurs; |
● |
the named executives
annual bonus will be calculated according to the formula used to calculate
the named executives last annual bonus paid prior to the change of
control (unless any comparable bonus under the Companys successor plan
would result in a higher payment to the named executive);
|
● |
the named executive will
be entitled to participate in all long-term cash incentive, equity
incentive, savings and retirement plans, practices, policies and programs
applicable generally to similarly titled persons of the Company or
affiliated companies, in each case not less favorable, in the aggregate,
than the most favorable of those provided by the Company and affiliated
companies for such persons under such plans, practices, policies and
programs as in effect prior to the change of control or, if more
favorable, those provided generally at any time after the date of the
change of control; |
● |
the named executive will
be eligible to participate in the Companys medical, dental, disability,
life and other insurance programs, in each case not less favorable, in the
aggregate, than the most favorable of those provided by the Company and
affiliated companies for such persons under such programs as in effect
prior to the change of control or, if more favorable, those provided
generally at any time after the date of the change of control; and
|
● |
the named executive will
receive certain other benefits consistent with those provided prior to the
change of control or, if more favorable, such benefits as provided
generally at any time after the date of the change of control.
|
If a change of control had
occurred as of September 27, 2015 and the executives continued in the employ of
the Company for the two-year period, we estimate the value of the benefits
described above would have been as follows:
|
|
|
|
|
|
|
|
Participation in |
|
Participation in |
|
|
|
|
|
|
|
|
Incentive and |
|
Insurance |
|
|
Named Executive
Officer |
|
Salary |
|
Bonus |
|
Retirement Plans |
|
Programs |
|
Other Benefits |
|
|
(1) |
|
(2) |
|
|
|
|
|
|
|
(3) |
Walter Robb |
|
$ |
973,020 |
|
$ |
583,980 |
|
$ |
|
|
$ |
6,598 |
|
$ |
5,938 |
A.C. Gallo |
|
|
973,020 |
|
|
583,980 |
|
|
|
|
|
27,402 |
|
|
5,938 |
Glenda
Flanagan |
|
|
973,020 |
|
|
583,980 |
|
|
|
|
|
5,548 |
|
|
5,938 |
Jim Sud |
|
|
973,020 |
|
|
583,980 |
|
|
|
|
|
17,398 |
|
|
5,938 |
David Lannon |
|
|
973,020 |
|
|
583,980 |
|
|
|
|
|
31,488 |
|
|
5,938 |
Ken Meyer |
|
|
973,020 |
|
|
583,980 |
|
|
|
|
|
31,488 |
|
|
5,938 |
Jason
Buechel |
|
|
973,020 |
|
|
483,040 |
|
|
|
|
|
6,211 |
|
|
5,938 |
(1) Calculated as
two times the current base salary.
(2) Calculated as
approximately two times the bonus amount payable under the Bonus Plan for fiscal
year 2015, starting with the salary cap and deducting the fiscal year 2015 base
salary amount.
- 34 -
Table of Contents
(3) Figure
represents an estimate of certain other benefits that might be provided after
the date of the change of control. In addition, during such two-year period, if
a named executive officer is terminated other than for cause or if a named
executive officer voluntarily terminates employment with good reason
(collectively an involuntary termination) or dies, then the named executive
officer or his or her estate or beneficiaries, as applicable, will be entitled
to receive from the Company a lump sum amount equal to three times the sum of
(a) the executives annual base salary and (b) the average of the last three
bonuses paid to the executive. If a change of control and involuntary
termination or death of the named executive officers had occurred as of
September 27, 2015, we estimate the value of this lump sum amount would have
been as follows:
|
|
Lump
Sum |
|
|
Severance |
Named Executive Officer |
|
Payment |
|
|
(1) |
Walter Robb |
|
$
|
2,324,300 |
A.C. Gallo |
|
|
2,324,300 |
Glenda Flanagan |
|
|
2,324,300 |
Jim Sud |
|
|
2,324,300 |
David Lannon |
|
|
2,324,300 |
Ken Meyer |
|
|
2,324,300 |
Jason Buechel |
|
|
1,852,600 |
(1) Payment is
based on three times the sum of (a) the named executives annual base salary and
(b) the average of the last three bonuses paid to the executive calculated by
starting with the applicable salary cap in each year and deducting the
executives annual base salary for the year.
In addition to the payments
above, each of the named executive officers is entitled to a payout of his or
her balance found in the Non-Qualified Deferred Compensation table in the
Aggregate Balance at Last Fiscal Year End column.
1991 Retention Agreement
In 1991, the Company entered
into a retention agreement with Mr. Mackey. This agreement provides for certain
benefits upon an involuntary termination of employment, other than for cause,
after a Triggering Event. A Triggering Event includes (1) a merger of the
Company with and into an unaffiliated corporation if the Company is not the
surviving corporation or (2) the sale of all or substantially all of the
Companys assets. The benefits to be received by Mr. Mackey if his employment is
terminated after a Triggering Event occurs include: receipt of a lump sum
severance payment equal to the executives then-current annual salary and prior
years bonus; continuation of life, health and disability benefits for one year
after the termination of employment; and the immediate vesting of any
outstanding stock options granted to such executive officer with up to six
months to exercise.
If a Triggering Event and an
involuntary termination of employment other than for cause had occurred as of
September 27, 2015, we estimate the value of the benefits under the Retention
Agreement would have been as follows:
|
|
Lump
Sum |
|
Continuation of |
|
Accelerated |
|
|
Severance |
|
Insurance |
|
Vesting
of Stock |
Named Executive
Officer |
|
Payment |
|
Benefit |
|
Options |
|
|
(1) |
|
|
|
|
John Mackey |
|
$ |
1 |
|
$ |
7,767 |
|
$ |
|
(1) Payment based
on Mr. Mackeys fiscal year 2015 salary of $1 plus receipt of no bonus under the
Bonus Plan.
In addition to the payments
above, Mr. Mackey is entitled to a payout of his balance found in the
Non-Qualified Deferred Compensation table in the Aggregate Balance at Last
Fiscal Year End column.
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Table of Contents
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITOR |
General Information
The Audit Committee of the
Board of Directors has appointed Ernst & Young LLP as the Companys
independent auditor for fiscal year 2016. The submission of this matter for
ratification by shareholders is not required by current law, rules or
regulations; however, the Board of Directors believes that such submission is
consistent with best practices in corporate governance and is an opportunity for
shareholders to provide direct feedback to the Board of Directors on an
important issue of corporate governance. If the selection is not ratified, the
Audit Committee will consider whether it is appropriate to select another
independent registered public accounting firm. Even if the selection is
ratified, the Audit Committee in its discretion may select a different
independent registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
our shareholders.
Representatives of Ernst &
Young will be present at the 2016 Annual Meeting of Shareholders, will have the
opportunity to make a statement at the meeting if they so desire, and will be
available to respond to appropriate questions.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF ERNST & YOUNG LLP AS OUR
INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING SEPTEMBER 25, 2016.
Vote Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on, and who vote for or against, the proposal.
Independent Public
Accountants
Ernst & Young LLP has
served as our independent auditor since April 2001. Ernst & Young has issued
its reports, included in the Companys Form 10-K, on the audited consolidated
financial statements of the Company and internal control over financial
reporting for the fiscal year ended September 27, 2015. Our Audit Committee has
appointed Ernst & Young as our independent auditor for fiscal year 2016.
The following table presents
aggregate fees billed to the Company for services rendered by Ernst & Young
for fiscal years ended September 27, 2015 and September 28, 2014 (in thousands):
|
|
2015 |
|
2014 |
Audit fees |
|
$ |
2,004 |
|
$ |
1,600 |
Audit-related fees |
|
|
|
|
|
|
Tax
fees |
|
|
|
|
|
|
All other fees |
|
|
|
|
|
51 |
Total |
|
$ |
2,004 |
|
$ |
1,651 |
Services rendered by Ernst
& Young in connection with fees presented above were as follows:
Audit Fees
In fiscal years 2015 and 2014, audit fees consist
of fees paid for the annual audit of the Companys consolidated financial
statements included in the Annual Report on Form 10-K and of the Companys
internal control over financial reporting, review of the Companys consolidated
financial statements included in the quarterly reports on Form 10-Q, and
consents and review of other documents filed with the Securities and Exchange
Commission.
- 36 -
Table of Contents
Audit-Related Fees
We did not engage Ernst &
Young for audit-related services in fiscal year 2015 or 2014.
Tax Fees
We did not engage Ernst & Young for tax
compliance matters in fiscal year 2015 or 2014.
All Other Fees
We did not engage Ernst &
Young for other services in fiscal year 2015. All other fees in fiscal year 2014
consist of fees for consultations on non-financial software.
Audit Committee
Pre-Approval Policies and Procedures
Among its other duties, the
Audit Committee is responsible for appointing, setting compensation for and
overseeing the work of the independent auditor. The Audit Committee has
established a policy regarding pre-approval of all audit and non-audit services
provided by the independent auditor. On an ongoing basis, management
communicates specific projects and categories of service for which the advance
approval of the Audit Committee is requested. The Audit Committee reviews these
requests and advises management if the committee approves the engagement of the
independent auditor. On a periodic basis, management reports to the Audit
Committee regarding the actual spending for such projects and services compared
to the approved amounts. All services performed by Ernst & Young for fiscal
years 2015 and 2014 were approved in accordance with the Audit Committees
pre-approval guidelines.
Audit Committee Report
The following Report of the
Audit Committee is not to be deemed to be soliciting material or to be filed
with the Securities Exchange Commission or subject to Regulation 14A or 14C or
to the liabilities of Section 18 of the Securities Exchange Act of 1934, except
to the extent we specifically request that such information be treated as
soliciting material or we specifically incorporate it by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Management of the Company is
responsible for the preparation and presentation of the Companys financial
statements, the effectiveness of internal control over financial reporting, and
procedures that are reasonably designed to assure compliance with accounting
standards and applicable laws and regulations. The independent auditor, Ernst
& Young, is responsible for performing an independent audit of the
consolidated financial statements and of the Companys internal control over
financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). The Audit Committees responsibility
is to monitor and oversee these processes on behalf of the Board of Directors.
In fulfilling our oversight responsibilities, we have reviewed and discussed
with management and Ernst & Young the audited financial statements for the
fiscal year ended September 27, 2015. We also reviewed and discussed with
management and Ernst & Young the quarterly financial statements for each
quarter in such fiscal year, managements assessment of the effectiveness of the
Companys internal control over financial reporting as of September 27, 2015,
Ernst & Youngs evaluation of the Companys internal control over financial
reporting as of that date, and audit plans and results. We have also discussed
with Ernst & Young the matters required to be discussed with the independent
registered public accounting firm by Auditing Standard No. 16, Communications with Audit
Committees, as adopted by the
Public Company Accounting Oversight Board.
We have received and reviewed
the written disclosures and the letter from the independent registered public
accounting firm required by Rule 3526 of the Public Company Accounting Oversight
Board, Communications with Audit Committees Concerning Independence. We have
also considered whether the provision of specific non-audit services by the
independent auditor is compatible with maintaining its independence and believe
that the services provided by Ernst & Young for fiscal year 2015 were
compatible with, and did not impair, its independence.
- 37 -
Table of Contents
In reliance on the reviews and
discussions referred to above, we have recommended to the Board of Directors
that the financial statements referred to above be included in the Companys
Annual Report on Form 10-K for the fiscal year ended September 27, 2015.
Audit Committee
Gabrielle Sulzberger
(Chair)
Dr. John Elstrott
Hass Hassan
Jonathan Seiffer
Mo Siegel
PROPOSAL 4 TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE COMPANY'S TEAM MEMBER STOCK PURCHASE PLAN
|
In 1993, we adopted a team member stock purchase plan. In 2007, our shareholders approved an amendment and restatement of this plan, which was then renamed as the Whole Foods Market 2007 Team Member Stock Purchase Plan (the “Stock Purchase Plan”). The purpose of the Stock Purchase Plan is to provide a broad-based incentive for Team Members to acquire a proprietary interest (or increase an existing proprietary interest) in the Company through the purchase of shares of the Company’s common stock.
As of September 27, 2015, there were 75,033 Team Members who were eligible to participate in the Stock Purchase Plan and approximately 8,224 Team Members who were actually participating in the Stock Purchase Plan.
At September 27, 2015, 1,344,050 shares of common stock have been issued to Team Members under the Stock Purchase Plan since its adoption in 1993 and as of said date, there were 241,407 shares of common stock remaining available for issuance under the Stock Purchase Plan. Our Board of Directors has approved an amendment, subject to ratification by the shareholders at the Annual Meeting, to increase this number by an additional 1,000,000 shares.
Summary of the Plan
The following is a brief summary of the material features of the Stock Purchase Plan.
The Stock Purchase Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee has complete and absolute authority to make any and all decisions regarding the administration of the Stock Purchase Plan, including the authority to construe and interpret the Stock Purchase Plan; prescribe, amend and rescind administrative rules and procedures relating to the Plan; and perform all acts that it may deem necessary or appropriate for the administration of the Plan and to carry out the purpose of the Plan.
The Stock Purchase Plan is a payroll deduction plan that permits eligible Team Members to purchase shares of common stock of the Company at a discount from the market price. Each participant determines the amount of the payroll deduction that will be applied to the purchase of common stock, with a minimum payroll deduction of $10.00. The maximum number of shares of common stock that may be purchased by a participant in any year is the number of shares having a fair market value of $25,000.00, the annual limit prescribed under Section 423 of the Internal Revenue Code.
Shares are purchased on the last business day of each calendar quarter through a brokerage account maintained on behalf of the participant. The shares of common stock are purchased directly from the Company and are allocated to participant brokerage accounts at the discounted purchase price. If a participant's employment terminates for any reason, payroll deductions under the Stock Purchase Plan are discontinued.
- 38 -
Table of Contents
The Company makes no contributions to the Stock Purchase Plan, other than making common stock available for purchase at a discount and paying the costs of administering the Stock Purchase Plan.
Eligible Team Members include all common-law employees of the Company or one of its affiliates who have completed at least 400 service hours, other than seasonal Team Members, non-U.S. Team Members, Section 162(m) Covered Employees and Section 16 Insiders. Seasonal Team Members are defined, in accordance with Section 423 of the Internal Revenue Code, as Team Members who complete 5 or fewer months of employment during a plan year.
Income Tax Consequences
The following is a summary of the U.S. federal income tax consequences of transactions under the Plan based on current federal income tax laws. This summary is not intended to be exhaustive and does not discuss the tax consequences of a participant's death or the provision of any income tax laws of any municipality, state or foreign country in which a participant may reside.
The Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended. Participants do not recognize income for federal income tax purposes either upon enrollment or purchase of common stock. All tax consequences are deferred until a participant sells the shares, disposes of the shares by gift, or dies. If common stock is held for more than two years after the date on which the participant is granted the option to purchase the shares and one year after the date on which the shares are purchased on behalf of the participant (the “Holding Period”), any gain realized on the sale will be treated as ordinary income taxable as compensation to the participant to the extent of the lesser of (i) 5% of the fair market value of the common stock as of the purchase date; or (ii) the actual gain (the amount by which the sale price exceeds the purchase price). All additional gain recognized upon the sale of the common stock is treated as long-term capital gain. If the participant sells, gifts or otherwise disposes of the common stock before the expiration of the Holding Period, the entire gain, if any, will be treated as ordinary income taxable as compensation to the participant. This is referred to as a “disqualifying disposition.”
The Company receives a deduction from its income for federal income tax purposes to the extent the participant realizes ordinary income on a disqualifying disposition of the shares of the common stock. The Company does not receive a deduction if the participant does not sell, gift or otherwise dispose of the shares of the common stock prior to the expiration of the Holding Period.
Participation by Named Executive Officers
Future benefits under the Stock Purchase Plan are not currently determinable, as they will depend on the actual purchase price of shares of common stock in future offering periods, the market value of the Company's common stock on various future dates, the amount of contributions eligible employees elect to make under the Stock Purchase Plan, and similar factors. During 2015, none of the executive officers set forth in the Summary Compensation Table above, nor any of our other executive officers, were permitted under the terms of the Stock Purchase Plan to be participants in the Stock Purchase Plan. The number of shares purchased during fiscal year 2015 under the Stock Purchase Plan by all participants was 164,849. The average discounted purchase price of a share in fiscal year 2015 was $42.76 per share.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE AMENDMENT TO THE STOCK PURCHASE PLAN.
Vote Required
In accordance with the NASDAQ Listing Rules, approval of the proposal requires the affirmative vote of the holders of a majority of the shares cast on the proposal.
- 39 -
Table of Contents
PROPOSAL 5
SHAREHOLDER PROPOSAL REGARDING REVISIONS TO THE COMPANYS PROXY ACCESS
BYLAW |
We received a formal
shareholder proposal. The Company will promptly provide to any shareholder the
name, address and number of the Companys voting securities held of/by the
person submitting this proposal (to whom we refer as the Proponent) upon
receiving an oral or written request from such shareholder made to Company
counsel, via phone at 512-542-0676, or via email at
proxy.information@wholefoods.com. Proponent has furnished evidence of ownership
of no less than $2,000 (market value) of shares of Whole Foods Market, Inc.
common stock for at least one year prior to the date the proposal was submitted.
The Proponents proposal and supporting statement are quoted verbatim below.
For the reasons set forth by
the Company in the section titled Our Statement in Opposition, following the
Proponents proposal and supporting statement, the Company disagrees with
Proponents proposal and supporting statement.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL.
Vote Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on, and who vote for or against, this proposal.
PROPONENTS
PROPOSAL AND SUPPORTING STATEMENT |
Proposal 5 Shareholder
Proxy Access Revisions
RESOLVED: Shareholders of Whole Foods Market, Inc. (the
Company) ask the board of directors (the Board) to adopt, and present for
shareholder approval, revisions to its Proxy Access for Director Nominations
bylaw, such as the following, to ensure they meet best practices according to
investors:
1. |
The number
of shareholder-nominated candidates eligible to appear in proxy materials
should not exceed one quarter of the directors then serving or two,
whichever is greater. Having at least two nominees helps ensure that, if
elected, directors can serve on multiple committees and bring an
independent perspective to Board decisions. |
2. |
Loaned
securities should be counted toward the ownership threshold if the
nominating shareholder or group represents that it has the legal right to
recall those securities for voting purposes, will vote the securities at
the annual meeting, and will hold those securities through the date of
that meeting. |
3. |
There
should be no limitations on the number of shareholders that can aggregate
their shares to achieve the 3% Required Ownership Percentage. Even if the
20 largest public pension funds were able to aggregate their shares, they
would not meet the 3% criteria at most of the companies examined by the
Council of Institutional Investors. |
4. |
There
should be no prohibition of otherwise legally allowed compensation
arrangements between shareholder nominees and parties other than the
corporation. However, any such compensation arrangements should be
disclosed. |
- 40 -
Table of Contents
5. |
There
should be no limitation on the re-nomination of shareholder nominees based
on the number or percentage of votes received in any election. Such
limitations do not facilitate the shareholders traditional state law
rights and add unnecessary complexity. |
6. |
To the
extent possible, the Board should defer decisions about the suitability of
shareholder nominees to the vote of
shareholders. |
Supporting
Statement:
The SECs universal proxy
access Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf) was
vacated after a court decision regarding the SECs cost-benefit analysis.
Therefore, proxy access rights must be established on a company-by-company
basis. Subsequently, Proxy Access
in the United States: Revisiting the Proposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb. v2014.n9.1) a cost-benefit
analysis by CFA Institute, found proxy access would benefit both the markets
and corporate boardrooms, with little cost or disruption, raising US market
capitalization by up to $140.3 billion. Public Versus Private Provision of Governance: The Case of Proxy
Access
(http://ssrn.com/abstract=2635695) found a 0.5 percent average increase in
shareholder value for proxy access targeted firms. Proxy Access: Best Practices
(http://www.cii.org/files/publications/misc/08_05_15_Best%20Practices%20-%20Proxy%20Access.pdf)
by the Council of Institutional Investors, highlights the most troublesome
provisions in recently implemented access bylaw or charter amendments.
Although the Companys board
adopted a proxy access bylaw, it contains troublesome provisions that
significantly impair the ability of shareholders to use it, rendering it largely
unworkable. Adoption of revisions, such as those suggested in this proposal,
would largely remedy that situation.
Enhance shareholder value.
Vote for Shareholder Proxy Access Revisions - Proposal 5
OUR STATEMENT IN
OPPOSITION |
Our Board of Directors has
carefully considered this proposal and recommends a vote against it. As
discussed below, the Company has already implemented proxy access for its
shareholders. Our Board of Directors believes that no further action is needed,
and that the form of proxy access sought by the proponent is not in the best
interest of the Company or our shareholders.
Our Board of Directors
has Adopted Proxy Access for the Benefit of All Shareholders.
Due to the interest of our
shareholders in proxy access, our Board of Directors considered various
potential formulations of proxy access, including the provisions advocated by
the proponent. Company representatives also solicited feedback from a number of
our largest shareholders to understand what proxy access parameters are
important to them. Based upon our Board of Directors assessment of the relative
advantages and disadvantages to shareholders and the Company of the various
proxy access formulations, and the feedback from our shareholders, our Board of
Directors amended the bylaws of the Company in June 2015 to implement proxy
access in the form it believes is most meaningful and appropriate for the
Company and its shareholders.
Under the amended bylaws
adopted by our Board of Directors, any shareholder or group of up to 20
shareholders that beneficially owns at least 3 percent of our outstanding common
stock continuously for three years is permitted to nominate candidates for
election to the Board of Directors and to require the Company to list such
nominees along with the boards nominees in the Companys
proxy statement. The qualifying shareholder or group of shareholders may
nominate up to 20 percent of the board, rounding down to the nearest whole
number of board seats, under the proxy access provisions of the
bylaws.
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The Proposals Allowance
to Nominate Up to 25 Percent of the Board Each Year May Result in Excessive
Disruption to the Board and Reduce the Boards Effectiveness.
Consistent with the best
practices of many other public companies that have adopted proxy access, the
Company limited the maximum number of directors who could be nominated through
proxy access to 20 percent of the board (2 seats on a board of 11), to ensure
there could be enough shareholder-selected nominees to have a meaningful effect
on the Board of Directors, without excessive disruption of the boards
continuity and operations and the balance of the knowledge, experience, skills
and diversity of the board.
The Nominating &
Governance Committee has an important role in considering the effectiveness of
our Board of Directors and in identifying nominees who possess a combination of
knowledge, experience, skills and diversity required for the board to fulfill
its duties. The Nominating & Governance Committee also considers whether a
candidate would contribute to an effective and well-rounded and diverse board
that operates openly and collaboratively and represents the best interests of
all shareholders, and not just those with a special interest, including
interests unrelated to long-term shareholder value. With respect to nominations
through proxy access, however, the Nominating & Governance Committee is
unable to consider those factors. Accordingly, the Board of Directors believes
that limiting proxy candidates to 20 percent of the board will help to ensure
that director turnover does not disrupt the boards effectiveness. Further,
given the current size of the Board of Directors, the existing 20 percent
limitation provides for the same number of proxy nominees as does the
proposal.
The Proposal Places No
Limit on the Number of Shareholders Who Can Assemble as a Group to Establish the
Ownership Threshold Required to Make a Proxy Access Nomination, Which May Result
in Excessive Administrative Burden and Expense for the
Company.
We believe that a reasonable
limitation should be established to reduce administrative costs for the Company
and help reduce the risk of abuse of proxy access rights by shareholders with a
special interest, including interests unrelated to long-term shareholder value.
In the absence of a reasonable limitation on the number of shareholders in a
group, the Company could be required to make burdensome and time-consuming
inquiries into the nature and duration of the share ownership of a large number
of individuals participating in a nomination in order to verify their required
share ownership, which could impede the exercise of proxy access rights by other
shareholders.
Our proxy access right limits
the number of shareholders who can assemble as a group to 20 holders of record.
Allowing a limited number of holders to act as a group strengthens the principle
that we believe is shared by most of our shareholders: that the right to
nominate a director using the Companys proxy statement should be available only
for those who have a sufficient financial stake in the Company to cause their
interests to be aligned with the interests of our shareholders as a
whole.
We Have an Established
Record of Best Governance Practices and are Responsive to
Shareholders.
In addition to the proxy
access provisions in the Companys bylaws, there are a number of other key
protections currently in place for shareholders of the Company,
including:
● |
Any shareholder may
nominate directors pursuant to the Companys bylaws and solicit proxies
for director nominees under federal proxy rules; |
● |
Any shareholder may
submit proposals for consideration at the Companys annual meeting and for
inclusion in the Companys proxy statement, subject to certain conditions
and SEC rules and regulations; |
● |
Each shareholder may
express their views on our executive compensation program through an
annual say-on-pay vote; |
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● |
We have majority voting
and a director resignation policy, requiring directors to offer to resign
if they fail to receive a majority of votes to be elected in an
uncontested election; |
● |
Nine of our eleven
directors are independent under NASDAQ Listing Rules; |
● |
Shareholders have the
right to propose director nominees to the Nominating & Governance
Committee; and |
● |
Shareholders have the
right to communicate directly with the Board or with the independent
directors serving on the Board. |
For the foregoing reasons, our
Board of Directors believes that our current proxy access right serves the best
interests of our shareholders and that the proponents approach is not necessary
or appropriate for the Company and recommends that shareholders vote AGAINST
this proposal.
PROPOSAL 6 SHAREHOLDER PROPOSAL REGARDING
ACCELERATED VESTING OF EQUITY AWARDS UPON A CHANGE IN
CONTROL |
We received a formal
shareholder proposal. The Company will promptly provide to any shareholder the
name, address and number of the Companys voting securities held of/by the
person submitting this proposal (to whom we refer as the Proponent) upon
receiving an oral or written request from such shareholder made to Company
counsel, via phone at 512-542-0676, or via email at
proxy.information@wholefoods.com. Proponent has furnished evidence of ownership
of no less than $2,000 (market value) of shares of Whole Foods Market, Inc.
common stock for at least one year prior to the date the proposal was submitted.
The Proponents proposal and supporting statement are quoted verbatim
below.
For the reasons set forth by
the Company in the section titled Our Statement in Opposition, following the
Proponents proposal and supporting statement, the Company disagrees with
Proponents proposal and supporting statement.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL.
Vote
Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on, and who vote for or against, this proposal.
PROPONENTS PROPOSAL AND SUPPORTING
STATEMENT |
Proposal 6 Limit
Accelerated Executive Pay
Resolved: Shareholders ask our board of directors to adopt
a policy that in the event of a change in control (as defined under any
applicable employment agreement, equity incentive plan or other plan), there
shall be no acceleration of vesting of any equity award granted to any senior
executive, provided, however, that our boards executive pay committee may
provide in an applicable grant or purchase agreement that any unvested award
will vest on a partial, pro rata basis up to the time of the senior executives
termination, with such qualifications for an award as the committee may
determine.
For purposes of this Policy,
equity award means an award granted under an equity incentive plan as defined
in Item 402 of the SECs Regulation S-K, which addresses executive pay. This
resolution shall be implemented so as not affect any contractual rights in
existence on the date this proposal is adopted.
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The vesting of equity pay over
a period of time is intended to promote long-term improvements in performance.
The link between executive pay and long-term performance can be broken if such
pay is made on an accelerated schedule.
An added incentive to vote for
this proposal is our Companys clearly improvable corporate governance and
performance as summarized in 2015:
GMI Ratings, an independent
investment research firm, said the Whole Foods board of directors did not
include a fully independent Audit Committee, a serious concern for shareholders.
For example Audit Committee member Shahid Hassan served as President of Fresh
& Wild until Whole Foods acquired it. Our chairman, John Elstrott, with a
whooping 20-years of director tenure, was also on our Audit Committee. 20-years
of director tenure is arguably a red flag for a lack of independence.
GMI has also flagged our board
as potentially entrenched due to a high number of long-serving directors. In
addition to Mr. Elstrotts 20-years, John Mackey had 37-years and Ralph Sorenson
(age 81) had 21-years. To compound the situation Mr. Sorenson was also the
Chairman of our Nomination Committee. Further in regard to our Nomination
Committee, shareholders might want to investigate why Nomination Committee
member William Tindell received 16-times as many negative votes as Director
Stephanie Kugelman who served on the same committee.
In the area of executive pay
GMI said unvested equity bonuses would partially or fully accelerate upon CEO
termination. GMI said multiple related party transactions and other potential
conflicts of interest involving our companys board or senior managers should be
reviewed in greater depth.
Please vote to protect
shareholder value: Limit
Accelerated Executive Pay Proposal 6
OUR STATEMENT IN
OPPOSITION |
Our Board of Directors has
considered this proposal and believes that it is contrary to the best interests
of the Company and our shareholders and recommends a vote against it. Currently,
our named executive officers (other than Mr. Mackey, who owns no unvested equity
awards and does not receive any grants) are parties to agreements under our
Executive Retention Plan that do not provide for accelerated vesting of equity
upon a change in control (rather, they provide for accelerated vesting of equity
upon certain types of termination of employment). We believe that adopting the
abstract policy set forth in the proposal, which has little current practical
significance, may be harmful to our Company and our shareholders, as it may be
appropriate in some future circumstances to provide for accelerated vesting in
connection with a change in control.
The Current Structure of
Equity Awards Aligns the Interests of Our Executive Officers and Shareholders,
Encourages Stability During a Potential Change in Control, and Rewards
Executives for their Performance.
As we describe in more detail
in the section of this Proxy Statement entitled Executive Compensation
Compensation Discussion and Analysis, we provide our named executive officers
with employee benefits, including severance and change in control benefits. We
believe that our Compensation Committee, which is composed entirely of
independent directors, is in the best position to design and implement executive
compensation arrangements that are appropriate for our Company and our
shareholders, including the treatment of equity awards in connection with a
change in control.
The Proponent seeks
preemptively to tie the hands of the Compensation Committee with respect to a
single element of our executive compensation program. Depending on the
circumstances, accelerated vesting of outstanding equity awards could be an
effective way for us to retain our leadership team up to and following a change
in control transaction as it could help remove some of the resulting uncertainty
that may arise for the executive, including potential job loss. This protection
could provide our executives with the incentive to continue to maximize the
Companys value for the shareholders up to and following the change in control.
The Compensation Committee should be able to exercise its business judgment to
determine
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whether, and on what
conditions, the acceleration of vesting of equity awards is in the best
interests of the Company and our shareholders in a particular change in control
transaction.
Implementing the
Proposal would Significantly Limit the Companys Ability to Attract, Retain, and
Incentivize Talented Executives.
We believe that most public
companies do not prohibit accelerated vesting of equity awards in connection
with a change in control. Accordingly, restricting the judgment of the
Compensation Committee and adopting the Proponents one-size-fits all policy
required by the proposal could place us at a competitive disadvantage in
attracting and retaining key executives, particularly if a change in control
transaction is pending or contemplated. Retaining key executives while a change
in control transaction is pending can be particularly important, since the loss
of such executives could adversely affect the Companys business or operations
if the transaction is not completed.
Shareholders Have Shown
Their Support for our Executive Compensation Program
Our executive compensation
program is designed to link executive pay with the interests of our
shareholders. The alignment of our accelerated vesting practices as set forth in
the Executive Retention Plan with shareholder interests is evidenced by the
overwhelming shareholder approval of the Companys current executive
compensation program. For example, our advisory vote to approve executive
compensation received the support of 95% of the votes cast at our 2015 annual
meeting, and each of the members of the Compensation Committee received at least
97% of votes cast at that meeting.
The Companys
Demonstrated Commitment to High Standards of Corporate Governance Refutes the
Allegations Made in the Proposal.
Although we believe many of
the assertions in the Proponents proposal are irrelevant to the proposal
itself, we want to specifically correct or add context to several inaccurate
and/or misleading statements related to our commitment to corporate
governance:
● |
The Proponent suggests
that Mr. Hassan, who is a member of the Audit Committee of the Board of
Directors, is not an independent director. This is false. Mr. Hassan, like
all of our Audit Committee members, meets the NASDAQ Listing Rules very
stringent independence requirements for audit committee
members. |
● |
The Proponent insinuates
that Mr. Elstrott, who is also a member of the Audit Committee, is not an
independent director because of the length of his director tenure. This is
also false. Mr. Elstrott likewise meets the NASDAQ Listing Rules very
stringent independence requirements for audit committee
members. |
● |
The Proponent implies
that the director tenures of Messrs. Elstrott, Mackey and Sorenson are
evidence of our improvable corporate governance and performance. We
strongly disagree with the insinuation. Our Company is fortunate to draw
upon the meaningful expertise and experience of these three directors, and
their long-term focus and history with the Company benefit our
shareholders. We believe that our Board of Directors is well rounded and
diverse and that Messrs. Elstrott, Mackey and Sorenson play an important
role in how well the board works together. |
● |
The Proponent states
that concerns exist about related party transactions, but fails to voice
any specific concerns. Any such transaction would be reviewed and subject
to the approval of the Nominating & Governance Committee of our Board
of Directors. |
Accordingly, our Board of
Directors believes that the current structure of the Companys executive
compensation program, including the provisions related to accelerated vesting of
equity incentive awards, is appropriate and effective, aligning the interests of
our executives with those of the Companys shareholders. We believe that these
compensation programs are consistent with market practice and provide us with
the ability to compete for, attract, retain and motivate talented
executives.
For the foregoing reasons, our
Board of Directors believes that this proposal is not in the best interests of
the Company or our shareholders and recommends that shareholders vote AGAINST
this proposal.
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PROPOSAL 7
SHAREHOLDER PROPOSAL REGARDING FOOD WASTE
REPORTING |
We received a formal
shareholder proposal. The Company will promptly provide to any shareholder the
name, address and number of the Companys voting securities held of/by the
person submitting this proposal (to whom we refer as the Proponent) upon
receiving an oral or written request from such shareholder made to Company
counsel, via phone at 512-542-0676, or via email at
proxy.information@wholefoods.com. Proponent has furnished evidence of ownership
of no less than $2,000 (market value) of shares of Whole Foods Market, Inc.
common stock for at least one year prior to the date the proposal was submitted.
The Proponents proposal and supporting statement are quoted verbatim
below.
For the reasons set forth by
the Company in the section titled Our Statement in Opposition, following the
Proponents proposal and supporting statement, the Company disagrees with
Proponents proposal and supporting statement.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL.
Vote
Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on, and who vote for or against, this proposal.
PROPONENTS PROPOSAL
AND SUPPORTING STATEMENT |
Whereas:
Approximately
40% of food produced in the U.S. goes uneaten, contributing to myriad social and
environmental problems, and often ending up in landfills.
Food decomposing in landfills
emits methane, a greenhouse gas 80 times as potent as CO2. In total,
approximately 4.5% of U.S. greenhouse gas emissions and 23% of U.S. methane
emissions result from food waste. If global food waste were a country, its
emissions would be 3rd, behind only China and the United States.
25% of water and 31% of land
in the U.S. is used to produce food that is wasted throughout the supply
chain. Nearly 50 million Americans,
including 16 million children, are food insecure; reducing food waste by just
15% could feed 25 million people every year.
Food waste and loss costs
Americans an estimated $165 billion per year. In 2008, the USDA estimated the
value of food lost by retailers was $47 billion.
Some retailers are taking
action. Stop & Shop saved an estimated $100 million annually by reducing
losses of perishables while providing items that were 3 days fresher on average.
Price Chopper reduced bakery item losses by $2 million in one year, while
increasing sales by 3%. British grocery giant Tesco established a zero waste to
landfill policy in 2009.
The Consumer Goods Forum has
committed to halve food waste from its 400 corporate members by 2025.
Whole Foods Markets (WFM)
peers, Safeway, Target, and Kroger, joined the Food Waste Reduction Alliance, a
collaborative industry effort to reduce food waste.
California, Massachusetts and
Vermont have laws requiring companies to divert food waste from landfills. These
laws often apply to grocery stores, creating regulatory risk for retailers who
lack comprehensive food waste plans.
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Many environmental
organizations are working to address food waste which may lead to negative media
attention for retailers like WFM.
While WFM provides anecdotal
evidence of efforts to reduce food waste in select stores and provides
generalized 2010 data on waste diversion, this limited and outdated information
is insufficient to understand its current approach to this issue. The company
has yet to disclose a company-wide strategy or current data.
Resolved: Shareholders request Whole Foods Market issue a
report by August 1, 2016, at reasonable cost and omitting proprietary
information, on company-wide efforts (above and beyond its existing reporting)
to assess, disclose, reduce and optimally manage food waste.
Supporting
Statement: Items to be covered in
the report can include:
● |
Results of audits to
determine the causes, quantity and destination of food
waste |
● |
Estimated costs from
purchasing, handling, and disposing of excess food |
● |
Estimated savings from
reducing food waste |
● |
Prioritization of
strategies based on EPAs Food Recovery Hierarchy: source reduction,
feeding people in need, feeding animals, industrial uses, composting, and
landfill |
● |
Identification of
additional revenue streams (and possible tax benefits) from new uses of
previously wasted food |
● |
Time bound targets to
reduce waste and progress towards meeting these
targets. |
OUR STATEMENT IN
OPPOSITION |
Our Board of Directors has
carefully considered this proposal and, in light of our Companys track record
and demonstrated commitment to lessening the impact of our business operations
on the environment, including the management of food waste, believes this
proposal would result in additional labor and expense that would provide limited
justifiable benefit.
The Company has been and
remains committed to practicing and advancing various Green Mission initiatives,
including diverting materials from community landfills. Unless located in a
community that does not support recycling and composting, all of our stores are
involved in a recycling program, and most participate in a composting program
where food waste and compostable paper items are regenerated into compost. In
developing these programs, we completed comprehensive waste audits to determine
the sources of food waste and ways in which it can be reduced. Between our food
bank partnerships, composting programs, and recycling efforts, we have achieved
a waste stream diversion rate of more than 80 percent in several regions, with
14 stores receiving Zero Waste Certification from the U.S. Zero Waste Business
Council.
We are committed to annually
increasing the number of stores achieving Zero Waste Certification. As part of
that commitment, as of yearend we were in the final stages of selecting a
national waste service and tracking company, with plans to implement a
management, tracking and reporting solution in 2016.
Sustainability is a core value
of the Company and our environmental commitment extends beyond food waste. In
2007, we introduced fiber packaging in many of our prepared foods departments as
a compostable alternative to traditional petroleum, wood or tree-based
materials. In 2008, we discontinued the use of disposable plastic grocery bags
at the checkouts in all stores, and were the first national retailer to utilize
Forest Stewardship Council certified paper bags originating from 100 percent
post-consumer recycled fiber. We continue to actively work with our vendor
partners to ensure more responsible product packaging, such as eliminating the
use of Styrofoam. Additional information about our sustainability efforts is
available on our website at http://www.wholefoodsmarket.com/mission-values/core-values/sustainability-and-our-future.
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Given our existing efforts,
accomplishments and reporting on sustainability, the preparation of an
additional report as requested by this proposal is unnecessary as it would
result in the Company incurring costs and expenses that provide limited
justifiable benefit.
Accordingly, our Board of
Directors believes this proposal is not in our shareholders best interests and
recommends that shareholders vote AGAINST this proposal.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
2015 Related Party
Transactions
During fiscal year 2015, the
Company received lease payments totaling approximately $0.5 million from
BookPeople, Inc. (BookPeople), a retailer of books and periodicals
unaffiliated with the Company. Mr. Mackey and Ms. Flanagan, executive officers
of the Company, own approximately 51% and 2%, respectively, of the capital stock
of BookPeople. BookPeople leases retail space from the Company at one of the
Companys Austin, Texas locations. The lease, which was entered into on December
31, 1993, provides for an aggregate annual minimum rent of approximately $0.5
million.
During fiscal year 2015, the
Company made purchases totaling approximately $278,000 from Willow Wood Partners
One, LLC d/b/a New Barn, a company in which Ted Robb and Chris Robb, Walter
Robbs sons, have a collective ownership interest of approximately 25%. By way
of background, the Companys relationship with New Barn began from the Companys
Southern Pacific Regions desire to sell an almond milk product with simple,
quality ingredients at a desirable price point. The region believed that they
found such a product from New Barn. Once this vendor was established, some other
regions began purchasing this product to fill a market need. Walter Robb has no
influence on the regions purchasing decisions with respect to the product;
rather, the purchases were made in arms length transactions and reflect market
prices. We believe that the Company currently makes up a significant portion of
New Barns total sales.
In addition, during fiscal
year 2015, the Company made purchases totaling approximately $150,000 from
InHouse Creative, Inc., a media production company in which Ted Robb, Walter
Robbs son, has an ownership interest of approximately 55%.
Related Party Transactions
in General
The Nominating and Governance
Committee of the Board of Directors, pursuant to its written charter, generally
is charged with the responsibility of reviewing certain issues involving
potential conflicts of interest, and reviewing and approving all related party
transactions, including those required to be disclosed as a related party
transaction under applicable federal securities laws. The Companys Code of
Business Conduct requires officers and directors to contact the chairperson of
the Nominating and Governance Committee regarding potential conflicts of
interest which would include potential related party transactions. The
Nominating and Governance Committee has not adopted any specific procedures for
conducting such reviews and considers each transaction in light of the specific
facts and circumstances presented. However, to the extent a potential related
party transaction is presented to the Nominating and Governance Committee, the
Company expects that the committee would become fully informed regarding the
potential transaction and the interests of the related party, and would have the
opportunity to deliberate outside of the presence of the related party. The
Company expects that the committee would only approve a related party
transaction that was in the best interests of the Company, and further would
seek to ensure that any completed related party transaction was on terms no less
favorable to the Company than could be obtained in a transaction with an
unaffiliated third party. Other than as described above, no transaction
requiring disclosure under applicable federal securities laws occurred during
fiscal year 2015 that was submitted to the Nominating and Governance Committee
for approval as a related party transaction.
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OTHER
INFORMATION
Beneficial
Ownership
The following table presents
the beneficial ownership of our voting securities for (i) each person
beneficially owning more than 5% of the outstanding shares of any class of our
voting securities, (ii) each director of the Company, (iii) our named executive
officers, and (iv) all of our current directors and executive officers as a
group. Except pursuant to applicable community property laws and except as
otherwise indicated, each shareholder possesses sole voting and investment power
with respect to its, his or her shares. In the case of our directors and
executive officers, the ownership levels are as of December 4, 2015. In the case
of shareholders owning more than 5% of our shares, the ownership levels are as
of the latest Form 13G or 13G/A filed with the Securities and Exchange
Commission as of December 4, 2015.
|
|
Common Stock |
|
|
Number of Shares |
|
|
|
|
Beneficially |
|
|
|
|
Owned |
|
Percent of
Class |
BlackRock,
Inc.(1) |
|
21,429,126 |
|
6.53% |
The Vanguard
Group(2) |
|
19,180,313 |
|
5.85% |
Jason
Buechel(3) |
|
37,959 |
|
* |
Dr. John
Elstrott(4) |
|
82,032 |
|
* |
Glenda
Flanagan(5) |
|
329,216 |
|
* |
A.C.
Gallo(6) |
|
186,763 |
|
* |
Hass
Hassan(7) |
|
57,179 |
|
* |
Stephanie
Kugelman(8) |
|
47,393 |
|
* |
David
Lannon(9) |
|
88,155 |
|
* |
John
Mackey(10) |
|
979,952 |
|
* |
Ken
Meyer(11) |
|
94,409 |
|
* |
Walter
Robb(12) |
|
296,087 |
|
* |
Jonathan
Seiffer(13) |
|
184,316 |
|
* |
Mo
Siegel(14) |
|
70,102 |
|
* |
Jonathan
Sokoloff(15) |
|
657,812 |
|
* |
Dr. Ralph
Sorenson(16) |
|
76,433 |
|
* |
Jim
Sud(17) |
|
261,974 |
|
* |
Gabrielle
Sulzberger(18) |
|
65,866 |
|
* |
Kip
Tindell(19) |
|
89,284 |
|
* |
Including indirect beneficial ownership, all 17 |
|
|
|
|
directors and officers
as a group(20) |
|
3,586,902 |
|
1.09% |
* Indicates ownership of less
than 1% of the outstanding shares of the Companys common stock. Each of our
executive officers and directors may be contacted at 550 Bowie Street, Austin,
Texas 78703.
(1) Based upon the
report on Form 13G/A, filed with the Securities and Exchange Commission on
February 9, 2015. The address of BlackRock, Inc. is 55 East 52nd Street, New
York, New York 10022. The Form 13G/A reported sole voting power over 17,953,231
shares, shared voting power over none of the shares, sole dispositive power over
21,429,126 shares and shared dispositive power over none of the
shares.
(2) Based upon the
report on Form 13G, filed with the Securities and Exchange Commission on
February 10, 2015. The address of The Vanguard Group is 100 Vanguard Blvd.,
Malvern, Pennsylvania 19355. The Form 13G reported sole voting power over
621,880 shares, shared voting power over none of the shares, sole dispositive
power over 18,593,280 shares and shared dispositive power over 587,033
shares.
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(3) Includes 33,375
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(4) Includes 26,189
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(5) Includes 90,607
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(6) Includes
101,489 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days.
(7) Includes 19,065
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(8) Includes 31,565
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(9) Includes 73,763
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days.
(10) Includes 0
shares of common stock issuable upon exercise of outstanding stock options and
any shares of which this individual has the right to acquire beneficial
ownership within 60 days. Does not include 100,000 shares beneficially owned by
Mr. Mackeys spouse for which Mr. Mackey disclaims beneficial
ownership.
(11) Includes
78,237 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days.
(12) Includes
130,854 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days. Includes an aggregate of 40,000 shares of
common stock subject to pledge, all of which Mr. Robb pledged prior to the
adoption of our current policy on hedging and pledging Company stock in
accordance with the terms and conditions of a brokerage firms customary margin
account requirements.
(13) Includes
11,189 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days, which amount includes 2,250 exercisable
stock options held by Mr. Seiffer for the benefit of Leonard Green &
Partners, L.P. (LGP LP). LGP LP separately holds a total of 2,280 shares of
stock and 15,750 exercisable stock options in respect of Mr. Seiffers and Mr.
Sokoloffs service on our Board of Directors. These shares of stock and stock
options held by LGP LP might be considered beneficially owned by Mr. Seiffer and
are included in the table.
(14) Includes
31,565 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days.
(15) Includes
11,189 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days, which amount includes 2,250 exercisable
stock options held by Mr. Sokoloff for the benefit of LGP LP. Also includes
620,810 shares held by a limited liability company of which Mr. Sokoloff is the
sole manager. Mr. Sokoloff owns 1% of the interests in the limited liability
company, and a trust for certain of his family members owns the other 99%. These
shares of stock held by the limited liability company might be considered
beneficially owned by Mr. Sokoloff and are included in the table. LGP LP
separately holds a total of 2,280 shares
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Table of Contents
of stock and 15,750
exercisable stock options in respect of Mr. Sokoloffs and Mr. Seiffers service
on our Board of Directors. These shares of stock and stock options held by LGP
LP might be considered beneficially owned by Mr. Sokoloff and are included in
the table.
(16) Includes
30,565 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days. Also includes 1,867 shares held by a
charitable trust over which Mr. Sorenson possesses voting and investment
power.
(17) Includes
74,541 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days. Includes an aggregate of 108,312 shares of
common stock subject to pledge, all of which Mr. Sud pledged prior to the
adoption of our current policy on hedging and pledging Company stock in
accordance with the terms and conditions of a brokerage firms customary margin
account requirements.
(18) Includes
31,565 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days. Includes an aggregate of 12,448 shares of
common stock subject to pledge, all of which Ms. Sulzberger pledged prior to the
adoption of our current policy on hedging and pledging Company stock in
accordance with the terms and conditions of a brokerage firms customary margin
account requirements.
(19) Includes
19,065 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which this individual has the right to acquire
beneficial ownership within 60 days.
(20) The 2,280
shares of stock and 15,750 exercisable stock options held by LGP LP in respect
of Mr. Sokoloffs and Mr. Seiffers service on our Board of Directors have only
been counted once in this row and for purposes of this footnote. Amount shown
includes 0 shares of common stock issuable upon exercise of outstanding stock
options and any shares of which the individuals have the right to acquire
beneficial ownership within 60 days.
Section 16(a) Beneficial
Ownership Reporting Compliance
Based solely upon a review of
Forms 3, 4 and 5 furnished to the Company, the Company believes that all of its
directors, officers and applicable shareholders timely filed these reports
except as follows:
● |
Director Mo Siegel had
the following late filings: (1) a sale of 10,280 shares on February 13,
2012 not reported and (2) a correction to the number of shares
beneficially held to report the ownership of 958 shares not previously
reported. Both (1) and (2) were disclosed on a Form 5 filed on November
12, 2015 with the SEC. |
● |
Director Stephanie
Kugelman had the following late filings: (1) a gift of 400 shares on
February 27, 2010 not reported and (2) nine acquisitions as a result of
dividend reinvestments between July 2011 and July 2013, not previously
reported, with acquisitions ranging from 8 shares to 78 shares. Both (1)
and (2) were disclosed on a Form 5 filed on November 12, 2015 with the
SEC. |
Deadlines for Submitting
Shareholder Proposals
Pursuant to SEC Rule 14a-8,
any proposal that a shareholder of the Company wishes to have considered in
connection with the 2017 Annual Meeting of Shareholders must be submitted to the
Corporate Secretary at our principal executive offices no later than September
23, 2016, and in accordance with related provisions of the Companys current
Bylaws.
Shareholder proposals
submitted for consideration at the 2017 Annual Meeting of Shareholders but not
submitted for inclusion in our Proxy Statement for our 2017 Annual Meeting
pursuant to SEC Rule 14a-8, including shareholder nominations for candidates for
election as directors, generally must be delivered to the Corporate Secretary at
our principal
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executive offices not later
than 120 days prior to the anniversary of the date on which we mailed our proxy
materials for our 2016 Annual Meeting of Shareholders. As a result, any notice
given by a shareholder pursuant to the provisions of our bylaws (other than
notice pursuant to SEC Rule 14a-8 or proxy access nominations, which are
discussed below) must be received no later than September 23, 2016. However, if
the date of the 2017 Annual Meeting is not within 30 days of March 9, 2017,
notice by the shareholder of a proposal must be received not later than the
close of business on the 10th day following the day on which public announcement
of the date of the 2017 Annual Meeting is made.
Our Bylaws provide a proxy
access right to permit a shareholder, or a group of up to 20 shareholders,
owning continuously for at least three years shares of our stock representing an
aggregate of at least 3% of the voting power entitled to vote in the election of
directors, to nominate and include in our proxy materials director nominees
constituting up to 20% of the Board of Directors, provided that the
shareholder(s) and the nominee(s) satisfy the requirements in our Bylaws. Under
our Bylaws, compliant notice of proxy access director nominations for the 2017
Annual Meeting must be submitted to the Corporate Secretary at our principal
executive offices no earlier than August 24, 2016 and no later than September
23, 2016 in order to be timely. However, if the date of the 2017 Annual Meeting
is not within 30 days of March 9, 2017, compliant notice of proxy access
director nominations for the 2017 Annual Meeting must be received not later than
the close of business on the 10th day following the day on which public
announcement of the date of the 2017 Annual Meeting is made.
Our Bylaws (and, with respect
to Rule 14a-8 proposals, SEC Rule 14a-8) set forth the calculation of applicable
deadlines (and certain other requirements) by which compliant notice of
shareholder proposals and director nominations must be submitted in order to be
timely. The summaries set forth above are qualified by our Bylaws and Rule
14a-8.
Multiple Shareholders
Sharing the Same Address
As permitted by Securities and
Exchange Commission rules, the Company will deliver only one Notice of Internet
Availability of Proxy Materials and, if applicable, a single set of annual
report and other proxy materials, to multiple shareholders sharing the same
address, unless the Company has received contrary instructions from one or more
of the shareholders. The Company will, upon written or oral request, deliver a
separate copy of the Notice of Internet Availability of Proxy Materials and, if
applicable, a separate set of annual report and other proxy materials, to a
shareholder at a shared address to which a single copy was delivered and will
include instructions as to how the shareholder can notify the Company that the
shareholder wishes to receive a separate copy in the future. Registered
shareholders wishing to receive a separate Notice of Internet Availability of
Proxy Materials and, if applicable, a separate set of annual report and other
proxy materials, in the future or registered shareholders sharing an address
wishing to receive a single copy in the future may contact Whole Foods Market,
Inc., 550 Bowie Street, Austin, TX 78703, Attention: Investor Relations Dept.,
Telephone: (512) 542-0204.
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WHOLE FOODS MARKET,
INC.
550 BOWIE STREET
AUSTIN, TX 78703
For registered shares,
your proxy must be received by 11:59 P.M. (Eastern Time) on March 8,
2016.
For participants in the Company's 401(k) plan, your proxy must be
received by 11:59 P.M. (Eastern Time) on March 4, 2016.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 P.M.
Eastern Time on the applicable cut-off date. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by
our company in mailing proxy materials, you can consent to receiving all future
proxy statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time on the applicable cut-off date. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign
and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
M99135-P71704-Z66905 |
KEEP THIS PORTION FOR YOUR
RECORDS |
|
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED. |
WHOLE FOODS MARKET,
INC. |
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For |
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Withhold |
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For All |
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All |
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All |
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Except |
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The Board of Directors recommends that you
vote FOR the following director
nominees: |
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☐ |
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☐ |
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☐ |
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1. |
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ELECTION OF DIRECTORS: |
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01) |
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DR.
JOHN ELSTROTT |
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07) |
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MORRIS (MO) SIEGEL |
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02) |
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SHAHID (HASS) HASSAN |
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08) |
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JONATHAN SOKOLOFF |
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03) |
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STEPHANIE KUGELMAN |
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09) |
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DR. RALPH SORENSON |
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04) |
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JOHN
MACKEY |
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10) |
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GABRIELLE SULZBERGER |
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05) |
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WALTER ROBB |
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11) |
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WILLIAM (KIP) TINDELL,
III |
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06) |
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JONATHAN SEIFFER |
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The
Board of Directors recommends you vote FOR the following company
proposals: |
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For |
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Against |
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Abstain |
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2. |
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ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED
EXECUTIVE OFFICERS. |
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☐ |
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☐ |
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☐ |
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3. |
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RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITOR FOR THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER
25, 2016. |
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☐ |
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☐ |
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☐ |
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4. |
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RATIFICATION OF THE AMENDMENT OF OUR TEAM MEMBER STOCK
PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE. |
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☐ |
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☐ |
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☐ |
To
withhold authority to vote for any individual nominee(s), mark For All
Except and write the number(s) of the nominee(s) on the line
below. |
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The
Board of Directors recommends you vote AGAINST
the following shareholder proposals: |
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For |
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Against |
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Abstain |
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5. |
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PROPOSAL ASKING OUR BOARD OF DIRECTORS TO ADOPT AND PRESENT
FOR SHAREHOLDER APPROVAL REVISIONS TO THE COMPANY'S PROXY ACCESS
BYLAW. |
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☐ |
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☐ |
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☐ |
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6. |
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PROPOSAL ASKING OUR BOARD OF DIRECTORS TO ADOPT A POLICY
RELATED TO LIMITING ACCELERATION OF VESTING OF EQUITY UPON A CHANGE IN
CONTROL. |
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☐ |
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☐ |
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☐ |
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7. |
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PROPOSAL ASKING THE COMPANY TO ISSUE A REPORT REGARDING OUR
FOOD WASTE EFFORTS. |
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☐ |
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☐ |
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☐ |
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IF
YOU GRANT A PROXY, THE PROXY HOLDERS WILL ALSO HAVE THE DISCRETION TO VOTE
THESE SHARES ON ANY ADDITIONAL MATTERS PROPERLY PRESENTED FOR A VOTE AT
THE MEETING IN ACCORDANCE WITH TEXAS LAW AND THE COMPANY'S
BYLAWS. |
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Please date the proxy and
sign your name exactly as it appears hereon. Where there is more than one
owner, each should sign. When signing as an attorney, administrator,
executor, guardian or trustee, please add your title as such. If executed
by a corporation, the proxy should be signed by a duly authorized officer.
Please sign the proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you do
attend. |
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Signature [PLEASE SIGN WITHIN
BOX] |
Date |
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Signature (Joint Owners) |
Date |
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Important Notice
Regarding the Availability of Proxy Materials for the Annual
Meeting:
The Notice and Proxy
Statement and Annual Report are available at
www.proxyvote.com.
PROXY
WHOLE FOODS MARKET,
INC.
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby (a)
acknowledges receipt of the Notice of the Annual Meeting of Shareholders of
Whole Foods Market, Inc.
(the "Company") to be held on
March 9, 2016 at 8:00 a.m., local time, at The Fairmont San Francisco, 950 Mason
Street, San Francisco, California 94108 and the Proxy Statement
in connection therewith, and (b) appoints John Mackey and Walter Robb and each
of them, as proxies with full power of substitution and revocation, for and in
the name, place and stead of the undersigned, to vote upon and act with respect
to all of the shares of stock of the Company standing in the name of the
undersigned or with respect to which the undersigned is entitled to vote and act
at said meeting or at any adjournment thereof, and the undersigned directs that
his/her proxy be voted as specified on the reverse side.
The undersigned hereby
revokes any proxy or proxies heretofore given to vote upon or act with respect
to such stock. The undersigned further hereby ratifies and confirms all of the
actions that the proxies named above, their substitutes, or any of them, may
lawfully do by virtue of this proxy.
THIS PROXY WILL BE
VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED:
● |
FOR ALL NOMINEES
FOR DIRECTORS; |
● |
FOR THE APPROVAL
OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS; |
● |
FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITOR FOR THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 25,
2016; |
● |
FOR THE
RATIFICATION OF THE AMENDMENT OF OUR TEAM MEMBER STOCK PURCHASE PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE; |
● |
AGAINST THE
PROPOSAL ASKING OUR BOARD OF DIRECTORS TO ADOPT AND PRESENT FOR
SHAREHOLDER APPROVAL REVISIONS TO THE COMPANYS PROXY ACCESS
BYLAW; |
● |
AGAINST THE
PROPOSAL ASKING OUR BOARD OF DIRECTORS TO ADOPT A POLICY RELATED TO
LIMITING ACCELERATION OF VESTING OF EQUITY UPON A CHANGE IN CONTROL;
AND |
● |
AGAINST THE
PROPOSAL ASKING THE COMPANY TO ISSUE A REPORT REGARDING OUR FOOD WASTE
EFFORTS. |
IF YOU GRANT A PROXY, THE
PROXY HOLDERS WILL ALSO HAVE THE DISCRETION TO VOTE THESE SHARES ON ANY
ADDITIONAL MATTERS PROPERLY PRESENTED FOR A VOTE AT THE MEETING IN ACCORDANCE
WITH TEXAS LAW AND THE COMPANY'S BYLAWS.
Whether or not you plan to
attend the Annual Meeting and regardless of the number of shares owned, please
date, sign and return this proxy card in the enclosed envelope (which requires
no postage if mailed in the United States).
CONTINUED AND TO BE
SIGNED ON REVERSE SIDE
Whole Foods Market, Inc. (NASDAQ:WFM)
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