The CEO of Whole Foods Markets Inc. (NYSE: WFMI) is proving to have an ability, rare among CEOs, to hang himself with his electronic words. The Wall Street Journal reports that between January 2000 and last August, John Mackey used the name "Rahodeb" -- an anagram of his wife Deborah's name -- to make nearly 1,400 posts at Yahoo! Inc. (NASDAQ: YHOO) Finance message boards designed to pump up Whole Foods' stock and denigrate that of its then-rival Wild Oats Markets Inc. (NASDAQ: OATS).
My favorite Rahodeb quote was used to cut Wild Oats down to size. He often criticized Perry Odak, Wild Oats' former CEO, who resigned last year. "While Odak was trying to figure out the business and conducting expensive 'research studies,' to help him figure things out, Whole Foods was signing and opening large stores in OATS territories," Rahodeb wrote in 2005. "Odak drove off most of the long-term OATS natural foods managers" and brought in executives who "didn't know too much about the natural/organics industry or their customers."
Meanwhile Mackey also made use of e-mail to make comments that made him look bad. His comments about the competitive impact of his proposed Wild Oats merger suggest to the government that the merger's intent is to raise consumer prices.
To buttress its case, the FTC is trying to use Mackey's words against him. In its lawsuit, it quoted Mackey informing other Whole Foods board members that buying Wild Oats would enable the company to "avoid nasty price wars" in several markets and reduce the chance that a big conventional grocer like Kroger Co. (NYSE: KR) would create a competing national natural-foods retailer.
In a BusinessWeek Online interview last month, I suggested that Mackey's role as Whole Foods CEO had probably passed its expiration date. How much more I believe that now!
Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns has no financial interest in the securities mentioned in this post.
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Reader Comments (Page 1 of 1)
7-12-2007 @ 1:04PM
The Old Vic said...
I can't believe Mackey believes what he did was just 'fun' ! People lose money on the stockmarkets because of such 'fun' - not to mention the whole monopoly question and keeping prices high for his 'customers'. Totally unbelievable - as I wrote in my blog this morning - http://www.sharescity.com/2007/07/ceo-john-mackey-posted-on-financial.html - can he be sued by shareholders for what he did ? I would be furious if I had lost money because of his underhand actions.
7-12-2007 @ 3:47PM
Lisa said...
This news just blew WFMI right off of my list of stocks I might buy. I wanted to buy WFMI because I had the idea that the company had good, competent, thoughtful management. With a CEO like that, it's clear the management stinks. I don't knowingly buy stocks of companies run by idiots.