5 Mar 200610:11 ET
Stakeholders Irked By Whole Foods' Stance On Presentations

By Phyllis Plitch
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--With its focus on natural and organic foods and giving back to the community, Whole Foods Market Inc. (WFMI) has developed a reputation as a green, progressive company.

How it conducts its annual meetings is another story. In recent days the company has irked so-called socially responsible investors with a warning that they can't formally present shareholder resolutions during Monday's
annual meeting.

"Given the brand image that Whole Foods' espouses, their current stance is especially surprising," said Mark Orlowski, a member of the board of New England Yearly Meeting of Friends Pooled Funds, which filed one of three
shareholder resolutions on Whole Foods' ballot this year, urging the company to report to shareholders its energy efficiency efforts.

"Silencing the presentation of shareholder proposals is out of step with good corporate governance practices and is disappointing to investors," he said.

According to an e-mail sent by Erica Goldbloom, executive assistant in shareholder services, to an official at the Sierra Club Mutual Funds, the proposal's co-filer, the clampdown during the formal business portion of the meeting was "to improve the efficiency" of the meeting. She wrote that the meetings "enjoy high attendance and we have a lot of business to cover in a short period of time."

Investors would, she said, be allowed to make a brief statement and ask questions during a Q&A session after formal business is completed.

While there's nothing in Whole Foods' bylaws that directly addresses whether shareholders can present their shareholder proposals, Goldbloom cited a section of the governing document enacted last year, which states that the meetings' presiding officer can determine "the circumstances in which any person may make a statement or ask questions at any meeting of the shareholders."

Investor relations and media representatives at the Austin, Texas, company didn't return e-mails or calls for comment Friday to confirm the policy or discuss how the meeting would be handled.

As news spread among activists in governance and social investing circles, though, investors questioned whether they were being muzzled.

"Speaking to the question after the vote is an abridgement of the democratic process," said John Chevedden, a shareholder activist floating a proposal calling for majority voting on issues subject to a shareholder
vote.

"Throwing a ballot-item discussion into the Q&A," he added, doesn't recognize the significance of the topic - as distinguished from "any idle curiosity expressed by a casual shareholder."

What also has some securities lawyers baffled is that Whole Foods' policy seems to be out of sync with federal securities regulations. Under the Securities and Exchange Commission's proxy rules, the proponent of a shareholder proposal or a representative "must attend the meeting to present the proposal."

Con Hitchcock, a Washington lawyer who often represents shareholder activists, has witnessed firsthand the difficulty getting the floor during Whole Foods' post-meeting question and answer period - at least for
animal-rights advocates. Hitchcock was on hand to present a proposal for a client in 2003 and watched as company officials walked to the back of the room for coffee as a member of People For the Ethical Treatment of Animals spoke.

Hitchcock also was surprised by the company's policy, given its "counterculture" reputation going back to its early days as a fledgling natural foods market in the Texas college town back in the early 1980s.

"Glasnost hasn't come to Whole Foods yet," he said.

-By Phyllis Plitch, Dow Jones Newswires; 201-938-2357; phyllis.plitch@dowjones.com

(END) Dow Jones Newswires

March 05, 2006 10:11 ET (15:11 GMT)

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