Table of Contents
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X] |
|
Filed by a Party other than
the Registrant [ ] |
|
|
|
|
|
Check the appropriate
box: |
|
|
[X] |
|
Preliminary Proxy
Statement |
[ ]
|
Soliciting Material Under Rule
14a-12 |
[ ] |
|
Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
[ ] |
|
Definitive Proxy
Statement |
|
[ ] |
|
Definitive Additional
Materials |
|
|
WHOLE FOODS MARKET, INC. |
|
|
(Name of Registrant as
Specified In Its Charter) |
|
|
|
|
|
|
|
|
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant) |
|
Payment of Filing Fee (Check
the appropriate box): |
[X] |
|
No fee required. |
[
] |
|
Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
|
|
1) |
|
Title of each class of
securities to which transaction applies: |
|
|
|
|
|
|
|
2) |
|
Aggregate number of
securities to which transaction applies: |
|
|
|
|
|
|
|
3) |
|
Per unit price or
other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): |
|
|
|
|
|
|
|
4) |
|
Proposed maximum
aggregate value of transaction: |
|
|
|
|
|
|
|
5) |
|
Total fee
paid: |
|
|
|
|
|
[
] |
|
Fee paid previously
with preliminary materials: |
[
] |
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing. |
|
|
1) |
|
Amount previously
paid: |
|
|
|
|
|
|
|
2) |
|
Form, Schedule or Registration
Statement No.: |
|
|
|
|
|
|
|
3) |
|
Filing Party: |
|
|
|
|
|
|
|
4) |
|
Date Filed: |
|
|
|
|
|
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
Roosevelt New Orleans, 130 Roosevelt Way, New Orleans, Louisiana 70112, on March
10, 2015 at 8:30 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 2016 or upon a successor being
elected and qualified; |
2. |
To conduct an
advisory vote to approve the compensation of the named executive
officers; |
3. |
To ratify the
appointment of Ernst & Young LLP as independent auditor for the fiscal
year ending September 27, 2015; |
4. |
To approve an
amendment to the Companys Articles of Incorporation to increase the
number of authorized shares of the Companys common stock from 600 million
to 1.2 billion; |
5. |
To approve an
amendment to the Companys Bylaws regarding proxy access;
and |
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 12, 2015 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 2015 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 12,
2015
|
By Order of the Board of
Directors, |
|
|
January [__],
2015 |
Executive Vice President and Chief Financial
Officer |
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
550 Bowie
Street
Austin, Texas 78703
PROXY
STATEMENT
Annual Meeting of
Shareholders of the Company to be held on March 10, 2015
Questions and Answers
Regarding This Proxy Statement
Q: |
Why am I
being asked to review these materials? |
|
|
|
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 Roosevelt New Orleans, 130 Roosevelt Way, New Orleans, Louisiana
70112, on March 10, 2015 at 8:30 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. |
|
|
|
Q: |
Why am I
being asked to review materials online? |
|
|
|
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 [__], 2015. |
|
|
|
Q: |
Who may
vote at the meeting? |
|
|
|
A: |
You may
vote all of the shares of our common stock that you owned at the close of
business on January 12, 2015, the record date. On the record date, the
Company had [_____] 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. |
|
|
|
Q: |
What
proposals will be voted on at the meeting and how does the Board of
Directors recommend I vote? |
|
|
|
A: |
There are
five proposals to be considered and voted on at the meeting. 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: |
|
|
|
|
1. |
To elect the eleven
nominees named herein to the Board of Directors of Whole Foods Market,
Inc., each to serve a one-year term expiring at the later of the Annual
Meeting of Shareholders in 2016 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. |
|
|
|
|
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. |
|
|
|
|
3. |
To ratify the
appointment of Ernst & Young LLP as independent auditor for the
Company for the fiscal year ending September 27, 2015. Our Board of
Directors unanimously recommends that you vote FOR ratification of Ernst & Young LLP as our
independent auditor. |
- 1 -
Table of Contents
|
4. |
To approve
an amendment to the Companys Articles of Incorporation to increase the
number of authorized shares of the Companys common stock from 600 million
to 1.2 billion. Our Board of Directors unanimously recommends that you
vote FOR this proposal. |
|
|
|
|
5. |
To approve
an amendment to the Companys Bylaws regarding proxy access. Our Board of
Directors unanimously recommends that you vote FOR this
proposal. |
|
|
|
|
We will also consider other business that properly comes before the
meeting in accordance with Texas law and our Bylaws. |
|
|
|
Q: |
How do I vote? |
|
|
|
A: |
You may vote your shares in advance using any of the following
voting alternatives: |
|
|
|
|
|
VIA INTERNET at
www.ProxyVote.com. |
|
|
|
|
|
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. |
|
|
|
|
|
BY MAIL by completing
and mailing in a paper proxy card, as outlined in the
Notice. |
|
|
|
|
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.
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.
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 9, 2015, or the Companys agent must
receive your paper proxy card on or before March 9, 2015. 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 6, 2015, or the Companys
agent must receive your paper proxy card on or before March 6, 2015. 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. |
- 2 -
Table of Contents
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? |
|
|
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. |
|
Q: |
What happens if
additional matters are presented at the Annual Meeting? |
|
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. |
|
Q: |
If my shares are held
in street name by my broker, will my broker vote my shares for
me? |
|
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. |
|
Q: |
What constitutes a
quorum? Why is a quorum required? |
|
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. |
|
Q: |
What if I
abstain? |
|
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. |
|
Q: |
Can I change my vote
after I have delivered my proxy? |
|
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. |
|
Q: |
Who will count the
votes? |
|
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. |
|
Q: |
Where can I find
voting results of the meeting? |
|
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 expect to
file within four business days after the
meeting. |
- 3 -
Table of Contents
Q: |
Who will bear the
cost for soliciting votes for the meeting? |
|
|
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. |
|
Q: |
Whom should I call
with other questions? |
|
A: |
If you have
additional questions about this Proxy Statement or the meeting or would
like additional copies of this document or our 2014 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. |
|
|
Q: |
How can I communicate
with the Companys Board of Directors? |
|
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. |
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, Gabrielle Greene-Sulzberger, Shahid (Hass) Hassan, Stephanie
Kugelman, John Mackey, Walter Robb, Jonathan Seiffer, Morris (Mo) Siegel,
Jonathan Sokoloff, Dr. Ralph Sorenson 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 their fiscal year 2014 director questionnaires distributed
after the end of the fiscal year, 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 2014
ownership interest and/or noted service as a director represented approximately
3% of the Companys purchases during fiscal year 2014. 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.
- 4 -
Table of Contents
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 November 21, 2014.
Dr. John
Elstrott, 66, 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.
Gabrielle
Greene-Sulzberger, 54, has served
as a director of the Company since 2003. Ms. Greene-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. Greene-Sulzberger served
as Chief Financial Officer of the Villanueva Companies, a private holding
company with diverse investment interests, from 2002 through 2005. Ms.
Greene-Sulzberger also serves on the board of directors of Stage Stores, Inc.
Ms. Greene-Sulzberger brings to our Board of Directors financial, leadership and
risk assessment experience as well as her entrepreneurial experience and history
with the Company.
Shahid (Hass)
Hassan, 66, 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, 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, 67, has served as a
director of the Company since November 2008. Ms. Kugelman is the Chairman of
A.S.O., A Second Opinion, a strategy and branding consultancy she founded in
2006. 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, 61, 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, 61, 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.
- 5 -
Table of Contents
Jonathan
Seiffer, 43, has served as a
director of the Company since December 2008. He has been a Partner of Leonard
Green & Partners, L.P. since 1999 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, 65, 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 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. Mr. Sokoloff brings to our
Board of Directors investment banking, financial, leadership and risk assessment
experience.
Dr. Ralph
Sorenson, 81, has served as a
director of the Company since 1994. Dr. Sorenson is the Managing Partner of the
Sorenson Limited Partnership, which focuses on venture capital investments in a
diverse range of entrepreneurial start-ups. 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 faculty
member 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, 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.
William (Kip) Tindell,
III, 61, 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 on the Executive Committee of
the National Retail Federation Board of Directors 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.
- 6 -
Table of Contents
CORPORATE
GOVERNANCE
Directors and Committee
Assignments
Assuming election of all
nominees above, the following is a list of persons who will constitute the
Companys Board of Directors following the meeting, including their current
committee assignments.
Name |
|
Audit Committee |
|
Compensation Committee |
|
Nominating and Governance Committee |
Dr. John Elstrott * |
|
✓ |
|
|
|
|
Gabrielle Greene-Sulzberger |
|
✓** |
|
✓ |
|
|
Hass Hassan |
|
✓ |
|
|
|
|
Stephanie Kugelman |
|
|
|
|
|
✓ |
John Mackey |
|
|
|
|
|
|
Walter Robb |
|
|
|
|
|
|
Jonathan Seiffer |
|
✓ |
|
|
|
|
Mo Siegel |
|
✓ |
|
✓** |
|
|
Jonathan Sokoloff |
|
|
|
✓ |
|
|
Dr. Ralph Sorenson |
|
|
|
✓ |
|
✓** |
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.
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.
- 7 -
Table of
Contents
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 2014 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 Companys Corporate
Governance Principles were amended in November 2014 to provide that, in
performing its responsibilities to review director candidates and recommend
candidates to the Board for election, 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. Shareholder recommendations must
also comply with the notice provisions contained in the Companys Bylaws in
order to be considered (current copies of the Companys Bylaws are available at
no charge in the Companys public filings with the Securities and Exchange
Commission, on the Corporate Governance page of the Companys website, or from
the Secretary of the Company).
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.
- 8 -
Table of
Contents
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 rules of the
Securities and Exchange Commission and the NASDAQ Listing Rules.
Fiscal Year 2014
Meetings
During fiscal year 2014, the
Board of Directors and the various committees held the following number of
meetings: Board of Directors, five meetings; Audit Committee, nine meetings;
Compensation Committee, three meetings; and Nominating and Governance Committee,
two meetings. No director attended fewer than 75% of the meetings of the Board
of Directors (and any committees thereof) that they were 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 2014 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.
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 2014 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. 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 new hedging and pledging arrangements by Section 16 officers
after January 24, 2013.
- 9 -
Table of
Contents
Managements conclusion was
presented to and discussed with the Compensation Committee.
Leadership
Structure
The Company currently
separates the roles of Chairman of the Board of Directors and CEO. 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 CEO.
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 CEO is in the best interests of the Company and its
stakeholders.
Compensation Committee
Interlocks and Insider Participation
No member of our Board of
Directors Compensation Committee has served as one of our officers or employees
at any time. None of our executive officers serves as a member of the
compensation committee of any other company that has an executive officer
serving as a member of our Board of Directors. None of our executive officers
serves as a member of the board of directors of any other company that has 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://www.wholefoodsmarket.com/sites/default/files/media/Global/Company%20Info/PDFs/CodeofBusinessConduct2013.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 2014
For fiscal year 2014, each of
our non-employee directors received the following: a $9,655 quarterly retainer;
$7,104 for each Board of Directors meeting attended in person; $1,301 for each
Committee meeting attended in person in conjunction with a Board of Directors
meeting; $5,205 for each Committee meeting attended in person apart from a Board
of Directors meeting; $1,735 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; $1,301 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
$651 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 $11,043. Finally, each quarter the
Board of Directors Committee Chairs received the following retainers: $4,135 to
the Audit Committee Chair; $2,168 to the Compensation Committee Chair; and
$2,168 to 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
November 17, 2014, 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.
- 10 -
Table of
Contents
Director Compensation Table
for Fiscal Year 2014
The following table provides
compensation information for the fiscal year ended September 28, 2014 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 |
|
$
|
132,060 |
|
$
|
162,707 |
|
$
|
153,160 |
|
$
|
|
|
$
|
447,927 |
Gabrielle Greene-Sulzberger |
|
|
104,428 |
|
|
162,707 |
|
|
153,160 |
|
|
350 |
|
|
420,645 |
Hass Hassan |
|
|
87,888 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
403,755 |
Stephanie Kugelman |
|
|
87,888 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
403,755 |
Jonathan Seiffer |
|
|
85,954 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
401,821 |
Mo Siegel |
|
|
96,560 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
412,427 |
Jonathan Sokoloff |
|
|
80,155 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
396,022 |
Dr. Ralph Sorenson |
|
|
95,909 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
411,776 |
Kip Tindell |
|
|
82,107 |
|
|
162,707 |
|
|
153,160 |
|
|
|
|
|
397,974 |
(1) Amounts
represent the grant date fair value of stock awards granted in fiscal year 2014.
See Note 12 to the consolidated financial statements in the Companys Annual
Report for the fiscal year ended September 28, 2014 regarding assumptions
underlying the valuation of equity awards. The total number of shares granted to
each specified director during fiscal year 2014 was 3,114. At fiscal year end
the aggregate number of stock awards outstanding for each director was as
follows: Dr. John Elstrott 4,394; Gabrielle Greene-Sulzberger 4,394; Hass Hassan
4,394; Stephanie Kugelman 4,394; Jonathan Seiffer 4,014; Mo Siegel 4,394;
Jonathan Sokoloff 4,014; Dr. Ralph Sorenson 4,394; and Kip Tindell 4,394.
Leonard Green & Partners, L.P. had 760 restricted shares outstanding which
were granted in respect of Mr. Seiffers and Mr. Sokoloffs service on our Board
of Directors. These shares may be considered beneficially owned by Mr. Seiffer
and Mr. Sokoloff.
(2) Amounts
represent the aggregate grant date fair value of option awards granted in fiscal
year 2014 (consisting of two awards valued at $124,477 and $28,683,
respectively, per director). See Note 12 to the consolidated financial
statements in the Companys Annual Report for the fiscal year ended September
28, 2014 regarding assumptions underlying the valuation of equity awards. The
total number of options granted to each specified director during fiscal year
2014 was 12,250. At fiscal year end the aggregate number of option awards
outstanding for each director was as follows: Dr. John Elstrott 40,124;
Gabrielle Greene-Sulzberger 45,500; Hass Hassan 45,500; Stephanie Kugelman
45,500; Jonathan Seiffer 24,000; Mo Siegel 45,500; Jonathan Sokoloff 24,000; Dr.
Ralph Sorenson 45,500; and Kip Tindell 45,500. 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) The specified
amount relates to reimbursement payments for continuing board education. The
Companys policy 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.
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 2014 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.
- 11 -
Table of
Contents
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.
EXECUTIVE
COMPENSATION
Compensation Discussion and
Analysis
Overview
The following section explains
our compensation programs, with an emphasis on the compensation of our seven
executive officers, who we refer to as our named executive
officers:
●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
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 an additional executive officer in order to present
compensation information for all of our executive officers.
2014 Shareholder Advisory
Vote on Executive Compensation
At our 2014 Annual Meeting, a
substantial majority of our shareholders approved the compensation of our named
executive officers, with 98% 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 did not implement changes to our executive
compensation program for 2014 as a result of the vote, partly because it
believed that the vote demonstrated that our shareholders support the overall
design of the program.
- 12 -
Table of
Contents
Summary of Compensation
Practices
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 currently in place 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 2014,
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 10% 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. Exceptions to this
limit have been made in certain years, including fiscal year
2014. |
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.
Mr. Mackey voluntarily reduced his salary to $1 and elected to forgo any
future bonus and stock option awards effective January 1,
2007. |
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. |
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.
- 13 -
Table of
Contents
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 seven 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)
participate in our Bonus Plan. 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 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 therefore
need to be adjusted to reward performance.
- 14 -
Table of
Contents
The following five
quantitative bonus criteria were selected at the beginning of the fiscal year by
the Compensation Committee in its discretion:
1. |
|
Comparable store sales
growth year-over-year sales growth at existing stores, calculated on a
store-by-store basis. The sales of a store are deemed to be comparable
commencing in the 53rd 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 expense. 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 an average
of the trailing four quarters. |
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. |
The list of 2014 criteria is
different from the list of possible and actual criteria for 2013 in several
respects:
●For fiscal
year 2013, the Compensation Committee selected six criteria from a list of
thirteen possible criteria. For fiscal year 2014, the Compensation Committee
eliminated eight possible criteria that had been included in the Bonus Plan
since it was approved in 2009, seven of which had never been used. The reason
for this elimination is that the Compensation Committee believed that the
criteria it selected for fiscal year 2014 were the most useful measures of
performance, and it did not believe that the eight eliminated criteria were
necessary at that time.
●A second
change to the Bonus Plan criteria for fiscal year 2014 as compared to 2013 is
that the Compensation Committee eliminated the metric of year-over-year
improvement in average store development cost per square foot for fiscal year
2014. The required cash investment for new stores varies depending on the size
of the store, geographic location, degree of landlord incentives and complexity
of site development issues. To a significant degree, it also depends on how the
project is structured, including costs for elements that often increase or
decrease rent, e.g., lease acquisition costs, shell and/or garage costs, and
landlord allowances. Because of these differences, the average development cost
per square foot may vary significantly from project to project, and therefore,
the Compensation Committee did not believe that year-over-year improvement in
this metric was necessarily the desired result or the right goal for executive
officers. The Compensation Committee believes that the ROIC metric used for
fiscal year 2014 better reflects appropriate levels of capital investment in new
stores.
●A third change
to the Bonus Plan criteria for 2014 as compared to 2013 is that the Compensation
Committee selected ROIC rather than net operating profit after taxes (NOPAT)
ROIC for fiscal year 2014. (NOPAT ROIC is the result of dividing NOPAT for the
Company by total invested capital.) The Compensation Committee made this change
because it believed that, with respect to this metric, the incentive bonus for
executive officers should align with the way the Company reports ROIC in the
quarterly and annual financial statements.
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 2014, 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. |
- 15 -
Table of
Contents
The weighting of positive free
cash flow was increased to 20% from the 2013 level of 10% to account for the
deletion of the year-over-year improvement in average store development cost per
square foot metric. 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 years 2012 and 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 2014, all performance criteria resulted in positive dollar
amounts and were summed to determine the quantitative bonus amount. Had any of
these performance criteria resulted in a neutral or negative dollar amount, such
amount would not have been 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 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.
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 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 was included to provide the committee with
some level of planned discretion in granting executive bonuses.
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 28 years ago. Each of these
increases was made to keep the compensation paid to our executives competitive
in the marketplace. 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 |
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 |
2010 |
|
|
17.84 |
|
|
37,107 |
|
19 |
|
|
705,037 |
(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.
____________________
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. In addition, the salary cap may not apply to
compensation arrangements found in agreements related to change of control or
termination of employment.
- 16 -
Table of Contents
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. Approximately 94% of the equity awards
granted under our stock plan since its inception in 1992 have been granted to
team members who are not executive officers. Each of our executive officers
(other than Mr. Mackey, who has voluntarily elected not to receive stock option
grants) 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. 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.
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 approximately 10% of all shares issuable under equity grants made
to all team members in such fiscal year. The Company has followed this practice
for each fiscal year, except 2010, 2013 and 2014, since WFLN was established
more than a decade ago. The exception in fiscal year 2010 was primarily the
result of our Compensation Committees decision to reward WFLN members
extraordinary work and results in responding to the economic downturn of 2009.
The exception in fiscal year 2013 was primarily due to replacement awards
granted to Walter Robb and A.C. Gallo in connection with the rescission of
awards originally granted to each of them in 2010. The exception in fiscal year
2014 was primarily due to our Compensation Committees decision to award special
equity grants in February 2014, which are discussed in more detail
below.
For fiscal year 2014, 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 positive 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.
- 17 -
Table of Contents
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 2014
grants, which were approved by our Compensation Committee in December 2013 and
granted when our trading window opened in February 2014. 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 1, 2013, our
Compensation Committee awarded special grants of stock options and restricted
stock to our executive officers. Because our trading window was closed at the
time, the committee determined that the grants would be made on February 14,
2014, when our trading window was open. One purpose of the grants was to reward
the executives 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 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 strong
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).
- 18 -
Table of Contents
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 2014 executive compensation.
Review of 2014
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 2014, 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
2014, the Compensation Committee increased the salary of each of our named
executive officers, other than Mr. Mackey, to $472,350. For each member of the
executive team other than Mr. Mackey, the quantitative portion of the bonus was
calculated to be $532,870 for fiscal year 2014. Additionally, the Compensation
Committee awarded each of the members of the executive team, other than Mr.
Mackey, the maximum qualitative bonus of $141,700 (approximately 30% of their
annualized salary rate) in recognition of and appreciation for their performance
during fiscal year 2014; however, 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 to forfeit $389,720 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 $160, which is calculated according to a
formula consistent with the matching contribution available to all participating
team members.
Benefit
hours. 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
$16,986; Mr. Gallo received $65,616; Ms. Flanagan received $64,717; Mr. Sud
received $31,347; Mr. Lannon received $56,336; and Mr. Meyer received $35,747.
Equity
incentives. Each of our executive
officers, other than Mr. Mackey, received a leadership grant of stock options to
purchase 4,500 shares in connection with our annual grant process on May 16,
2014. Also in connection with our annual grant process, our executives other
than Mr. Mackey received a grant of options on May 16, 2014 based on his or her
years of service with the Company in the following amounts: Mr. Robb received
options to purchase 249 shares; Mr. Gallo received options to purchase 222
shares; Ms. Flanagan received options to purchase 246 shares; Mr. Sud received
options to purchase 198 shares; Mr. Lannon received options to purchase 229
shares; and Mr. Meyer received options to purchase 175 shares. In addition to
the annual grant of stock options, on February 14, 2014, our executive officers
received special stock option and restricted stock grants in the following
amounts: Mr. Robb and Mr. Gallo received 19,139 restricted shares and options to
purchase 50,000 shares; and our other executive officers, other than Mr. Mackey,
received 9,570 restricted shares and options to purchase 35,000 shares.
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.
- 19 -
Table of Contents
We have reviewed and discussed
with management the forgoing Compensation Discussion and Analysis to be included
in this Proxy Statement for the Companys 2015 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)
Gabrielle Greene-Sulzberger
Jonathan Sokoloff
Dr. Ralph Sorenson
Summary Compensation Table
for Fiscal Year 2014
The following table includes
information concerning compensation for the one-year periods ended September 28,
2014, September 29, 2013 and September 30, 2012 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. Except for cash payments in exchange for unused paid time off, if
any, 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. For fiscal years 2014, 2013 and 2012, the salary cap was $757,200,
$746,500 and $736,200, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1 |
2013 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
2012 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,018 |
|
|
69,019 |
Walter Robb Co-Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
1,000,013 |
|
|
968,161 |
|
|
225,010 |
|
|
17,146 |
|
|
2,742,520 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
1,520,426 |
|
|
898,632 |
|
|
242,700 |
|
|
67,182 |
|
|
3,232,740 |
2012 |
|
|
453,807 |
|
|
37,426 |
|
|
|
|
|
467,020 |
|
|
244,967 |
|
|
64,398 |
|
|
1,267,618 |
A.C. Gallo President and Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
1,000,013 |
|
|
967,817 |
|
|
225,010 |
|
|
65,776 |
|
|
2,790,806 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
1,537,414 |
|
|
895,230 |
|
|
242,700 |
|
|
62,154 |
|
|
3,241,298 |
2012 |
|
|
453,807 |
|
|
37,426 |
|
|
|
|
|
467,728 |
|
|
244,967 |
|
|
63,045 |
|
|
1,266,973 |
Glenda Flanagan Executive Vice President and Chief Financial
Officer |
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,837 |
|
|
225,010 |
|
|
64,877 |
|
|
2,017,947 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
|
|
|
413,172 |
|
|
242,700 |
|
|
19,091 |
|
|
1,178,763 |
2012 |
|
|
443,532 |
|
|
38,788 |
|
|
|
|
|
467,085 |
|
|
253,880 |
|
|
77,515 |
|
|
1,280,800 |
Jim Sud Executive Vice President of Growth and Business
Development |
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,225 |
|
|
225,010 |
|
|
31,347 |
|
|
1,983,805 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
|
|
|
412,277 |
|
|
242,700 |
|
|
58,051 |
|
|
1,216,828 |
2012 |
|
|
453,807 |
|
|
37,426 |
|
|
|
|
|
465,412 |
|
|
244,967 |
|
|
58,270 |
|
|
1,259,882 |
David Lannon Executive Vice President of Operations |
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
695,620 |
|
|
225,010 |
|
|
56,496 |
|
|
2,009,349 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
|
|
|
413,628 |
|
|
242,700 |
|
|
68,876 |
|
|
1,229,004 |
2012 |
|
|
435,659 |
|
|
39,831 |
|
|
|
|
|
955,803 |
|
|
260,710 |
|
|
76,224 |
|
|
1,768,227 |
Ken Meyer Executive Vice President of Operations |
|
|
|
|
|
|
|
2014 |
|
|
472,350 |
|
|
59,840 |
|
|
500,033 |
|
|
694,932 |
|
|
225,010 |
|
|
35,907 |
|
|
1,988,072 |
2013 |
|
|
458,600 |
|
|
45,200 |
|
|
|
|
|
412,698 |
|
|
242,700 |
|
|
57,187 |
|
|
1,216,385 |
2012 |
|
|
430,519 |
|
|
40,512 |
|
|
|
|
|
954,098 |
|
|
265,169 |
|
|
89,637 |
|
|
1,779,935 |
- 20 -
Table of Contents
(1) Amounts shown
in the Salary column of this table for fiscal year 2014 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
2014, the Compensation Committee awarded the maximum qualitative bonus of
$141,700 (approximately 30% of the annual base salary) in recognition of and
appreciation for the performance of the executive team during fiscal year 2014.
The quantitative portion of the Bonus Plan award was calculated to be $532,870
for fiscal year 2014. The total of these two amounts is $674,570. The amounts
shown in the table as paid were calculated by multiplying approximately 21% (the
ratio of the $141,700 qualitative award amount to the total Bonus Plan award
amount of $674,570) times the average actual total cash paid under the Bonus
Plan after the application of the salary cap for Mr. Robb, Mr. Gallo, Ms.
Flanagan, Mr. Sud, Mr. Lannon and Mr. Meyer.
(5) Amounts
represent grant date fair value. See Note 12 to the consolidated financial
statements in the Companys Annual Report for the fiscal year ended September
28, 2014 regarding assumptions underlying the valuation of equity awards. The
2013 stock award amount for Mr. Robb was inadvertently reported for Mr. Gallo
(and vice versa) in the Companys last Proxy Statement, causing the stock award
value to be $16,988 too high for Mr. Robb and $16,988 too low for Mr. Gallo.
Those amounts have been corrected in the Summary Compensation Table of this
Proxy Statement.
(6) 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).
(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
2014, the quantitative portion of the Bonus Plan was calculated to be $532,870.
Additionally, the Compensation Committee awarded
the maximum qualitative bonus of $141,700 (approximately 30% of the annual
salary) in recognition of and appreciation for the excellent performance of the
executive team during fiscal year 2014. The total of these two amounts is
$674,570. The portion of the Bonus Plan bonus disclosed in this column is the
actual total cash paid under the Bonus Plan, after a deduction of the amount
allocated to the qualitative portion of the bonus under the Bonus Plan (See the
Bonus column of this table) and after the application of the salary cap for Mr.
Robb, Mr. Gallo, Ms. Flanagan, Mr. Sud, Mr. Lannon and Mr. Meyer.
(9) The balance of
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). Also reflected in this
Column are the Companys 401(k) match payments, which are available to all team
members. For fiscal year 2014, each executive other than Mr. Mackey and Mr. Sud
received $160 in 401(k) match payments.
- 21 -
Table of Contents
Grants of Plan-Based Awards
for Fiscal Year 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under |
|
All
Other |
|
Option Awards: |
|
|
|
|
Grant Date Fair |
|
|
|
|
Non-Equity Incentive Plan Awards |
|
Stock Awards: |
|
Number of |
|
Exercise or |
|
Value |
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Securities |
|
Base
Price |
|
of
Stock |
|
|
Grant |
|
|
|
|
|
|
|
|
Shares of Stock |
|
Underlying |
|
of
Option |
|
and
Option |
Name |
|
Date |
|
Threshold |
|
Target |
|
Maximum |
|
or
Units |
|
Options |
|
Awards |
|
Awards |
|
|
|
|
|
|
(2) |
|
|
|
(3) |
|
(4) |
|
|
|
|
(5) |
John Mackey
(1) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
Walter Robb |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
52.25 |
|
|
907,620 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
19,139 |
|
|
|
|
|
|
|
1,000,013 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
249 |
|
|
37.91 |
|
|
3,174 |
A.C.
Gallo |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
52.25 |
|
|
907,620 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
19,139 |
|
|
|
|
|
|
|
1,000,013 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
222 |
|
|
37.91 |
|
|
2,830 |
Glenda Flanagan |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
52.25 |
|
|
635,334 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
9,570 |
|
|
|
|
|
|
|
500,033 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
246 |
|
|
37.91 |
|
|
3,136 |
Jim
Sud |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
52.25 |
|
|
635,334 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
9,570 |
|
|
|
|
|
|
|
500,033 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
198 |
|
|
37.91 |
|
|
2,524 |
David Lannon |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
52.25 |
|
|
635,334 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
9,570 |
|
|
|
|
|
|
|
500,033 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
229 |
|
|
37.91 |
|
|
2,919 |
Ken
Meyer |
|
|
|
|
|
|
284,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/14 |
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
52.25 |
|
|
635,334 |
|
|
2/14/14 |
|
|
|
|
|
|
|
|
9,570 |
|
|
|
|
|
|
|
500,033 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
37.91 |
|
|
57,367 |
|
|
5/16/14 |
|
|
|
|
|
|
|
|
|
|
175 |
|
|
37.91 |
|
|
2,231 |
(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, the
amount disclosed as each named executive officers target under the
quantitative portion of the Bonus Plan for fiscal year 2014 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 2014 is subject, together with
base salary, to the salary cap described in the Compensation Discussion and
Analysis section above.
(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 12 to
the consolidated financial statements in the Companys Annual Report for the
fiscal year ended September 28, 2014 regarding assumptions underlying the
valuation of equity awards.
- 22 -
Table of Contents
Outstanding Equity Awards
Value at Fiscal Year-End 2014
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 28, 2014. The number of restricted stock and options
held at September 28, 2014 includes restricted stock and options granted under
the Whole Foods Market, Inc. 2009 Stock Incentive Plan, which is a
consolidation, amendment and restatement of the Whole Foods Market, Inc. Stock
Incentive Plan for team members and the Whole Foods Market, Inc. Amended and
Restated Stock Option Plan for Outside Directors.
|
|
|
|
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 |
|
8,330 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
7,082 |
|
2,360 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
10,000 |
|
10,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
4,684 |
|
4,684 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
2/21/2013 |
|
|
|
31,600 |
|
|
42.47 |
|
2/21/2020 |
|
|
|
35,800 |
|
|
1,348,586 |
|
|
5/14/2010 |
|
67,500 |
|
15,200 |
|
|
20.42 |
|
5/14/2020 |
|
(3) |
|
|
|
|
|
|
|
5/31/2013 |
|
1,174 |
|
3,520 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
50,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
19,139 |
|
|
720,966 |
|
|
5/16/2014 |
|
|
|
4,749 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
A.C.
Gallo |
|
5/14/2010 |
|
2,244 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
7,044 |
|
2,348 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
10,000 |
|
10,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
4,708 |
|
4,704 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
2/21/2013 |
|
|
|
31,800 |
|
|
42.47 |
|
2/21/2020 |
|
|
|
36,200 |
|
|
1,363,654 |
|
|
5/14/2010 |
|
47,500 |
|
14,554 |
|
|
20.42 |
|
5/14/2020 |
|
(3) |
|
|
|
|
|
|
|
5/31/2013 |
|
1,179 |
|
3,535 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
50,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
19,139 |
|
|
720,966 |
|
|
5/16/2014 |
|
|
|
4,722 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
Glenda Flanagan |
|
5/14/2010 |
|
8,842 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
7,088 |
|
2,362 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
10,000 |
|
10,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
4,688 |
|
4,684 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
22,500 |
|
27,500 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
1,174 |
|
3,520 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
35,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
9,570 |
|
|
360,502 |
|
|
5/16/2014 |
|
|
|
4,746 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
Jim
Sud |
|
5/14/2010 |
|
2,232 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
7,008 |
|
2,334 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
2/10/2012 |
|
10,000 |
|
10,000 |
|
|
40.81 |
|
2/10/2019 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
4,636 |
|
4,632 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
15,500 |
|
27,500 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
1,161 |
|
3,482 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
35,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
9,570 |
|
|
360,502 |
|
|
5/16/2014 |
|
|
|
4,698 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
David Lannon |
|
5/14/2010 |
|
2,346 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
2,352 |
|
2,350 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
29,712 |
|
29,710 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
2,200 |
|
11,000 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
1,180 |
|
3,540 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
35,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
9,570 |
|
|
360,502 |
|
|
5/16/2014 |
|
|
|
4,729 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
Ken
Meyer |
|
5/14/2010 |
|
2,320 |
|
|
|
|
20.42 |
|
5/14/2017 |
|
|
|
|
|
|
|
|
|
5/13/2011 |
|
6,972 |
|
2,324 |
|
|
31.25 |
|
5/13/2018 |
|
|
|
|
|
|
|
|
|
5/11/2012 |
|
29,660 |
|
29,656 |
|
|
44.27 |
|
5/11/2019 |
|
|
|
|
|
|
|
|
|
12/4/2012 |
|
5,000 |
|
15,000 |
|
|
46.04 |
|
12/4/2019 |
|
|
|
|
|
|
|
|
|
5/14/2010 |
|
9,000 |
|
11,000 |
|
|
20.42 |
|
5/14/2020 |
|
|
|
|
|
|
|
|
|
5/31/2013 |
|
1,167 |
|
3,500 |
|
|
51.86 |
|
5/31/2020 |
|
|
|
|
|
|
|
|
|
2/14/2014 |
|
|
|
35,000 |
|
|
52.25 |
|
2/14/2021 |
|
|
|
9,570 |
|
|
360,502 |
|
|
5/16/2014 |
|
|
|
4,675 |
|
|
37.91 |
|
5/16/2021 |
|
|
|
|
|
|
|
- 23 -
Table of Contents
(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 become exercisable
with respect to 650 shares on the second anniversary of the date of grant; 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 become
exercisable with respect to 850 shares on the second anniversary of the date of
grant; 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 vest 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 vest 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.
- 24 -
Table of Contents
Option Exercises and Stock
Vested for Fiscal Year 2014
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 28, 2014.
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
|
|
|
Number of |
|
|
|
|
|
Shares |
|
Value |
|
Shares |
|
Value |
|
|
Acquired on |
|
Realized on |
|
Acquired on |
|
Realized on |
Name |
|
Exercise |
|
Exercise |
|
Vesting |
|
Vesting |
|
|
|
|
(1) |
|
|
|
|
|
John Mackey |
|
|
|
$
|
|
|
|
|
$
|
|
Walter Robb |
|
|
|
|
|
|
|
|
|
|
A.C. Gallo |
|
20,000 |
|
|
735,100 |
|
|
|
|
|
Glenda Flanagan |
|
|
|
|
|
|
|
|
|
|
Jim Sud |
|
4,000 |
|
|
153,885 |
|
|
|
|
|
David Lannon |
|
4,704 |
|
|
112,675 |
|
|
|
|
|
Ken Meyer |
|
|
|
|
|
|
|
|
|
|
(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 2014
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 28, 2014.
Upon termination of
employment, all team members are entitled to receive a related 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 28, 2014, 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 |
|
|
|
|
|
16,986 |
|
|
|
|
|
|
|
|
613,836 |
A.C. Gallo |
|
|
|
|
|
65,616 |
|
|
|
|
|
|
|
|
489,379 |
Glenda Flanagan |
|
|
|
|
|
64,717 |
|
|
|
|
|
|
|
|
587,255 |
Jim Sud |
|
|
|
|
|
31,347 |
|
|
|
|
|
|
|
|
319,470 |
David Lannon |
|
|
|
|
|
56,336 |
|
|
|
|
|
|
|
|
299,305 |
Ken Meyer |
|
|
|
|
|
35,747 |
|
|
|
|
|
|
|
|
288,840 |
(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 2014 rate of pay
of $227.09 per hour ($214.06 per hour for Mr. Mackey, who in fiscal year 2013
elected to accrue no additional paid time off), rounded to the nearest hour, as
follows: Mr. Mackey 2,132 paid time off hours; Mr. Robb 2,703 hours; Mr. Gallo
2,155 hours; Ms. Flanagan 2,586 hours; Mr.
Sud 1,407 hours; Mr. Lannon 1,318 hours; and Mr. Meyer 1,272 hours. Amounts in
this column were also reported in the All Other Compensation column of the
Summary Compensation Table in previous fiscal years.
- 25 -
Table of Contents
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. 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 or Ken Meyer, 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 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%.
- 26 -
Table of
Contents
If a termination of the
executives employment, not by the executive and other than for cause, had
occurred as of September 28, 2014, 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 |
|
$ |
277,351 |
|
$ |
2,069,522 |
|
$ |
272 |
A.C. Gallo |
|
|
800,000 |
|
|
266,131 |
|
|
2,084,620 |
|
|
971 |
Glenda Flanagan |
|
|
600,000 |
|
|
489,539 |
|
|
360,502 |
|
|
231 |
Jim Sud |
|
|
600,000 |
|
|
489,359 |
|
|
360,502 |
|
|
741 |
David Lannon |
|
|
400,000 |
|
|
204,837 |
|
|
360,502 |
|
|
1,105 |
Ken Meyer |
|
|
400,000 |
|
|
204,670 |
|
|
360,502 |
|
|
1,105 |
(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; and $4,000,000 for Mr. Meyer. The executives would receive an
additional semi annual payment reflecting the increase in the Consumer Price
Index between the date of the executives agreement under the Plan and his or
her termination date. For a September 28, 2014 termination date, each additional
semi annual payment would range in amount from $13,989 to $27,977.
(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 $37.67 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
$37.67.
(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: $4,896 for Mr. Robb; $17,478 for Mr. Gallo; $4,158 for Ms.
Flanagan; $13,338 for Mr. Sud; $19,890 for Mr. Lannon; and $19,890 for Mr.
Meyer.
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. |
- 27 -
Table of Contents
If a change of control had
occurred as of September 28, 2014 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 |
|
$ |
944,700 |
|
$ |
569,700 |
|
$ |
|
|
$ |
6,637 |
|
$ |
5,940 |
A.C. Gallo |
|
|
944,700 |
|
|
569,700 |
|
|
|
|
|
27,402 |
|
|
5,940 |
Glenda Flanagan |
|
|
944,700 |
|
|
569,700 |
|
|
|
|
|
5,548 |
|
|
5,940 |
Jim Sud |
|
|
944,700 |
|
|
569,700 |
|
|
|
|
|
17,476 |
|
|
5,940 |
David Lannon |
|
|
944,700 |
|
|
569,700 |
|
|
|
|
|
31,608 |
|
|
5,940 |
Ken Meyer |
|
|
944,700 |
|
|
569,700 |
|
|
|
|
|
31,608 |
|
|
5,940 |
(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 2014, starting with the salary cap and deducting the fiscal year 2014 base
salary amount.
(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 28, 2014, we estimate the value of this lump sum amount would have
been as follows:
|
Lump
Sum |
|
Severance |
Named Executive Officer |
Payment |
|
(1) |
Walter Robb |
$ |
2,280,800 |
A.C. Gallo |
|
2,280,800 |
Glenda Flanagan |
|
2,280,800 |
Jim Sud |
|
2,280,800 |
David Lannon |
|
2,280,800 |
Ken Meyer |
|
2,280,800 |
(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.
- 28 -
Table of Contents
If a Triggering Event and an
involuntary termination of employment other than for cause had occurred as of
September 28, 2014, 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 2014 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.
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 2015. 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 2015 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 27,
2015.
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 28, 2014. Our Audit Committee has
appointed Ernst & Young as our independent auditor for fiscal year
2015.
The following table presents
aggregate fees billed to the Company for services rendered by Ernst & Young
for fiscal years ended September 28, 2014 and September 29, 2013 (in
thousands):
|
2014 |
|
2013 |
Audit fees |
$ |
1,600 |
|
$ |
1,610 |
Audit-related fees |
|
|
|
|
|
Tax
fees |
|
|
|
|
|
All other fees |
|
51 |
|
|
|
Total |
$ |
1,651 |
|
$ |
1,610 |
- 29 -
Table of Contents
Services rendered by Ernst
& Young in connection with fees presented above were as follows:
Audit
Fees
In fiscal years 2014 and
2013, 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.
Audit-Related
Fees
We did not engage Ernst
& Young for audit-related services in fiscal year 2014 or 2013.
Tax
Fees
We did not engage Ernst
& Young for tax compliance matters in fiscal year 2014 or 2013.
All Other
Fees
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 2014 and 2013 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 28, 2014. 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 28, 2014,
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 2014 were
compatible with, and did not impair, its independence.
- 30 -
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 28,
2014.
Audit
Committee
Gabrielle Greene-Sulzberger
(Chair)
Dr. John Elstrott
Hass Hassan
Jonathan Seiffer
Mo
Siegel
PROPOSAL 4 INCREASE OF AUTHORIZED COMMON
STOCK |
The Board of Directors has
approved a resolution to amend Article IV, Section A of our Amended and Restated
Articles of Incorporation (which we refer to as the Articles) to increase the
number of authorized shares of our common stock from 600,000,000 to
1,200,000,000. The proposed amendment would replace the second sentence of
Article IV, Section A of the Articles with the following sentence: The
aggregate number of shares of Common Stock authorized to be issued is
1,200,000,000 shares with no par value.
Purpose of the
Amendment
As of December 19, 2014, there
were 360,009,563 shares of Common Stock outstanding, 17,109,424 treasury shares,
and 59,663,445 shares reserved for future issuance pursuant to the Companys
equity compensation plans (consisting of shares available for grant and shares
subject to outstanding stock options). If all of the shares of Common Stock
reserved for issuance pursuant to these plans are in fact issued, then,
including the Companys treasury shares, only 180,326,992 shares would be
available for issuance unless the amendment is adopted. If the amendment is
adopted, approximately 780,326,992 shares of Common Stock would be authorized,
unissued and not reserved for future issuance.
The Board of Directors
believes it is in the best interest of the Company to increase the number of
authorized shares of Common Stock in order to give us greater flexibility in
considering and planning for future corporate needs. Such future corporate needs
include stock splits; stock dividends; grants under equity compensation plans;
financings; potential strategic transactions, including mergers, acquisitions,
and business combinations; and other general corporate transactions. The Board
of Directors believes that additional authorized shares of Common Stock will
better position us to take timely advantage of market conditions and the
availability of favorable financing and acquisition opportunities without the
delay and expense associated with convening a special shareholders meeting
(unless otherwise required by the rules of NASDAQ).
The Company has no current
plan, commitment, arrangement, understanding or agreement regarding the issuance
of additional shares of Common Stock resulting from the proposed increase in
authorized shares. The additional authorized shares of Common Stock will be
available for issuance by the Board of Directors for various future corporate
needs, including those outlined above.
Possible Effects of the
Amendment and Additional Anti-Takeover Considerations
If the amendment is approved,
except as may be required by law or NASDAQ rules, no further shareholder
approval would be required prior to the issuance of the additional shares
authorized by the amendment. While adoption of the amendment would not have any
immediate dilutive effect on the proportionate voting power or other rights of
the Companys existing shareholders, any future issuances of additional shares
could significantly dilute the equity interests of current shareholders and
could have a negative effect on the market price of the Common Stock. Current
shareholders have no preemptive or similar rights, which means that current
shareholders do not have a prior right to purchase any new issue of common stock
in order to maintain their proportionate ownership.
We have not proposed the
increase in the number of authorized shares of Common Stock with the intention
of using the additional authorized shares for anti-takeover purposes, but we
would be able to use the additional shares to oppose a hostile takeover attempt
or delay or prevent changes in control or management of the Company. For
example, without further shareholder approval, the Board of Directors could sell
shares of Common Stock in a private transaction to purchasers who would oppose a
takeover or favor the current Board of Directors. Although this proposal to
increase the authorized number of shares of
Common Stock has been prompted by business and financial considerations and not
by the threat of any known or threatened hostile takeover attempt, shareholders
should be aware that approval of this proposal could facilitate future efforts
by the Company to oppose changes in control of the Company and perpetuate the
Companys management, including transactions in which the shareholders might
otherwise receive a premium for their shares over then current market
prices.
- 31 -
Table of Contents
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR ADOPTION OF THE PROPOSED AMENDMENT TO INCREASE OUR
AUTHORIZED SHARES OF COMMON STOCK.
Vote
Required
Approval of this proposal
requires the affirmative vote of the holders of a majority of the shares
entitled to vote on this proposal. If the proposal is approved, the Company will
have the authority to file articles of amendment with the Secretary of State of
Texas and the Amendment will become effective upon the filing of articles of
amendment with the Secretary of State of the State of Texas, which filing is
expected to occur promptly after the Annual Meeting approving this
proposal.
PROPOSAL 5 PROXY ACCESS |
We are asking shareholders to
approve proxy access amendments to the Companys Amended and Restated Bylaws
(which we refer to as the Bylaws). The proposed amendments provide a means for
shareholders to include shareholder-nominated director candidates in the
Companys proxy materials for annual meetings of shareholders. Consistent with
good governance practice, the Board of Directors decided to submit the
amendments to shareholders for approval. The Bylaw amendments will not become
effective unless approved by holders of a majority of the shares entitled to
vote on, and who vote for or against, the proposal.
A summary of the proposed
amendment to the Bylaws is set forth below. The description of the proposed
amendment is qualified in its entirety by reference to the text of the proposed
amendment, which is attached as Appendix A to this Proxy Statement.
Terms of Proposed Proxy
Access Bylaw
Shareholder
eligibility. The Bylaw amendment
would permit any single shareholder or group of funds under common management
(but not a group of shareholders) owning 5% or more of the Companys common
stock continuously for five years to nominate candidates for election to the
Board of Directors and require the Company to list such nominees with the
boards nominees in the Companys proxy statement for our annual meeting of
shareholders. Proxy access will be unavailable to any shareholders at any
special meeting of the shareholders.
Number of
shareholder-nominated candidates.
Under this Bylaw amendment, such a shareholder would be permitted to nominate
the greater of (x) one director or (y) 10% of the Board of Directors, rounding
down to the nearest whole number of board seats. If the Board of Directors
decides to reduce the size of the board after the nomination deadline, the 10%
calculation will be applied to the reduced size of the board, with the potential
result that a shareholder-nominated candidate may be disqualified.
Nominating shareholders
submitting more than one nominee would be required to rank their nominees in
order. If the number of shareholder-nominated candidates exceeds the greater of
(x) one director or (y) 10% of the Board of Directors, rounding down to the
nearest whole number of board seats, the highest ranking qualified individual
from the list proposed by each nominating shareholder, beginning with the
nominating shareholder with the largest qualifying ownership and proceeding
through the list of nominating shareholders in descending order of qualifying
ownership, will be selected for inclusion in the proxy materials until the
maximum number is reached.
Shareholder-nominated
candidates that the Board of Directors determines to include in the proxy
materials as board-nominated candidates will be counted against the greater of
(x) one director or (y) 10% maximum.
Calculation of
ownership. In order to ensure
that the interests of shareholders seeking to include director nominees in the
Companys proxy materials are aligned with those of our other shareholders, a
nominating shareholder would be considered to own only the shares for which the shareholder possesses the full
voting and investment rights and the full economic interest. Borrowed or hedged
shares would not count as owned shares.
- 32 -
Table of Contents
Nominating
procedure. In order to provide
adequate time to assess shareholder-nominated candidates, requests to include
shareholder-nominated candidates in the Companys proxy materials must be
received no earlier than 150 days and no later than 120 days before the
anniversary of the date that the Company issued its proxy statement for the
previous years annual meeting of shareholders.
Information required
of all nominating shareholders. Each shareholder seeking to include a director nominee in the
Companys proxy materials is required to provide certain information,
including: |
● |
proof of qualifying stock
ownership as of the date of the submission and the record date for the
annual meeting and an agreement to
maintain qualifying ownership through the date of the
meeting; |
● |
the shareholders notice
on Schedule 14N required to be filed with the Securities and Exchange
Commission; |
● |
the written consent of
the shareholder nominee to being named in the proxy statement and serving
as a director, if elected; and |
● |
the information required
by the advance notice provision of our Bylaws. |
|
|
Nominating shareholders
are also required to make certain representations and agreements
regarding: |
● |
lack of intent to effect
a change of control; |
● |
intent to maintain
qualifying ownership through the meeting date; |
● |
intentions with respect
to maintaining qualifying ownership for one year after the meeting
date; |
● |
only participating in
the solicitation of their nominee or Board of Director nominees;
and |
● |
complying with
solicitation rules and assuming liabilities related to and indemnifying
the Company against losses arising out of the nomination. |
|
Information required
of all shareholder nominees. Each shareholder nominee is required to provide the
representations and agreements required of all nominees for election as
director, including representations and agreements
regarding: |
● |
refraining from voting
commitment; |
● |
refraining from entering
into agreements, arrangements or understandings with any person or entity
other than the Company with respect to compensation, reimbursement or
indemnification for service as a director; |
● |
compliance with
Companys policies and guidelines applicable to directors;
and |
● |
accuracy and
completeness of all information provided to the Company. |
|
|
Shareholder nominees
also must submit completed and signed questionnaires required of directors
and officers of the Company and provide any additional information
necessary for the Board of Directors independence evaluation and
determination. |
|
Disqualification of
shareholder nominees. We
will not be required to include any nominee information in our proxy
materials for any director nominee submitted by
shareholders: |
● |
for which our Secretary
receives a notice that a shareholder has nominated such person pursuant to
the advance notice requirements for shareholder nominees for director set
forth in Article II, Section 12(a) of our Bylaws; |
● |
if the shareholder that
has nominated such nominee has engaged in or is currently engaged in, or
has been or is a participant in another persons, solicitation within
the meaning of Rule 14a-1(l) under the Securities Exchange Act of 1934 in
support of the election of any individual as a director at the annual
meeting other than its nominee(s) or a nominee of our Board of
Directors; |
● |
if the nominee is or
becomes a party to any compensatory, payment or other financial agreement,
arrangement or understanding with any person or entity other than the
Company, or is receiving or will receive any such compensation or other
payment from any person or entity other than the Corporation, in each case
in connection with service as our director; |
● |
who is not independent
under the listing standards of each principal U.S. exchange upon which our
common stock is listed, any applicable rules of the Securities and
Exchange Commission and any publicly disclosed standards used by our Board
of Directors in determining and disclosing independence of our directors,
in each case as determined by our Board of Directors; |
● |
whose election would
cause the Company to be in violation of our Bylaws, our Articles of
Incorporation, the rules and listing standards of the principal U.S.
exchanges upon which our common stock is traded, or any applicable state
or federal law, rule or regulation; |
● |
who is or has been,
within the past three years, an officer or director of a competitor, as
defined in Section 8 of the Clayton Antitrust Act of
1914; |
● |
who is a named subject
of a pending criminal proceeding (excluding traffic violations and other
minor offenses) or has been convicted in such a criminal proceeding within
the past 10 years; |
● |
who is subject to any
order of the type specified in Rule 506(d) of Regulation D promulgated
under the Securities Act of 1933; or |
● |
if the nominee or the
applicable nominating shareholder provided information to us in respect to
such nomination that was untrue in any material respect or omitted to
state a material fact, as determined by our Board of Directors or any
committee thereof. |
- 33 -
Table of Contents
Each director nominee would
also be required to execute and deliver, among other things, a written
questionnaire and an agreement designed to disclose various aspects of the
nominees background and qualifications. The nominee must also agree to comply
with law and comply with other requirements.
Supporting
statement. Shareholders will be
permitted to include in our proxy statement a statement not exceeding 500 words
in support of their nominees. We may omit any information or statement that we,
in good faith, believe would violate any applicable law or
regulation.
Re-nomination of
shareholder nominees. Shareholder
nominees who are included in the Companys proxy materials but subsequently
withdraw from or become ineligible for election at the meeting or do not receive
at least 25% of the vote cast in the election would be ineligible for nomination
for the next two years.
Rationale for the
Proposal
The proposal represents the
Board of Directors view of proxy access that it believes is most beneficial to
all shareholders. The Board of Directors believes that proxy access should be
structured in a way that (1) provides minority shareholders who hold a
significant ownership interest in the Company with the opportunity to include
board candidates on the Companys proxy statement, and (2) requires a sustained
commitment to the Company in terms of the shareholders ownership holding
period, which is in keeping with the Companys focus on managing the business
for the long term.
The Board of Directors
determined that proxy access should require a nominating shareholder to own a
minimum of 5% of the outstanding shares. The Company often engages with many of
its shareholders to discuss their views on various matters, including corporate
governance, and such discussions were a consideration behind the Board of
Directors decision to select 5% as the applicable threshold. Another factor
considered when selecting the 5% threshold is that, based on a review of the
most recent Schedule 13F filings, the Board of Directors believes that the
proposed requirements provide for proxy access which may be immediately usable.
Additionally, the Board of Directors considered that many commentators on the
Securities and Exchange Commissions 2009 proxy access proposal, who are
knowledgeable on corporate governance matters, noted that a 5% threshold is
appropriate (where no aggregation is allowed) and that further lowering the bar
provides activist shareholders and special interest groups with a relatively
low-cost avenue to disrupt board composition and corporate strategy. Some
activist shareholders have a short-term or narrow agendasuch as demands that a
company declare extraordinary dividends or enter into a sale transactionthat
are not necessarily in the best interest of all of our shareholders. Our Board
of Directors believes that permissive proxy access could be potentially damaging
to the effectiveness of our Board and, by extension, to the Companys
operational performance.
The Board of Directors
believes that proxy access bylaw provisions should not allow shareholders to
aggregate unrelated interests to achieve the minimum 5% ownership requirement.
The Board of Directors believes that only shareholders with a significant
ownership interest in the Company should have the opportunity to include
nominees on the Companys proxy statement. As noted above, the Board of
Directors is concerned about activist shareholders. Also, proxy access is not
yet common in the United States, which creates potential for other unknown
problems. The Board of Directors believes that caution is necessary to protect
the interests of all shareholders.
The Board of Directors also
determined that proxy access should require a nominating shareholder to have
held a minimum of 5% of outstanding shares for a continuous five-year period or
longer. The Board of Directors believes shareholders with this long-term
financial commitment to the Company are likely aligned with the Companys
longer-term management philosophy, which it believes is beneficial to all
shareholders. The Board of Directors believes that granting proxy access to
shareholders with holding periods of less than five years could result in a
shorter-term focus at the board level that may not be in the best interest of
all shareholders.
- 34 -
Table of Contents
Effects of Approval or
Disapproval of the Proposal
If approved by shareholders,
the proxy access Bylaw amendment will go into effect. The amendment will not go
into effect if the proposal is not approved by shareholders.
Board of Directors
Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR ADOPTION OF THE PROPOSED AMENDMENT TO ADOPT PROXY
ACCESS.
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.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
2014 Related Party
Transactions
During fiscal year 2014, 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.
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 2014 that was submitted to the Nominating and Governance Committee
for approval as a related party transaction.
- 35 -
Table of Contents
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 5, 2014. 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 5, 2014.
|
Common Stock |
|
Number of Shares |
|
|
|
Beneficially Owned |
|
Percent of Class |
T. Rowe Price Associates,
Inc.(1) |
25,235,701 |
|
7.01% |
Baillie Gifford &
Co.(2) |
20,133,575 |
|
5.59% |
BlackRock,
Inc.(3) |
18,849,742 |
|
5.24% |
Dr. John
Elstrott(4) |
72,214 |
|
* |
Glenda
Flanagan(5) |
298,247 |
|
* |
A.C. Gallo(6) |
163,085 |
|
* |
Gabrielle
Greene-Sulzberger(7) |
57,723 |
|
* |
Hass
Hassan(8) |
52,758 |
|
* |
Stephanie
Kugelman(9) |
39,413 |
|
* |
David
Lannon(10) |
57,782 |
|
* |
John
Mackey(11) |
879,942 |
|
* |
Ken Meyer(12) |
70,852 |
|
* |
Walter
Robb(13) |
264,870 |
|
* |
Jonathan
Seiffer(14) |
174,228 |
|
* |
Mo Siegel(15) |
71,281 |
|
* |
Jonathan
Sokoloff(16) |
929,391 |
|
* |
Dr. Ralph
Sorenson(17) |
81,423 |
|
* |
Jim Sud(18) |
235,019 |
|
* |
Kip
Tindell(19) |
93,641 |
|
* |
Including indirect beneficial
ownership, |
|
|
|
all 16 directors and officers as a
group(20) |
3,528,339 |
|
* |
* 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 11, 2014. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt
Street, Baltimore, Maryland 21202. The Form 13G/A reported sole voting power
over 8,425,802 shares, shared voting power over none of the shares, sole
dispositive power over 25,235,701 shares and shared dispositive power over none
of the shares.
(2) Based upon the
report on Form 13G/A, filed with the Securities and Exchange Commission on
January 28, 2014. The address of Baillie Gifford & Co. is Calton Square, 1
Greenside Row, Edinburgh, EH1 3AN, Scotland UK. The Form 13G/A reported sole
voting power over 12,218,534 shares, shared voting power over none of the
shares, sole dispositive power over 20,133,575 shares and shared dispositive
power over none of the shares.
(3) Based upon the
report on Form 13G, filed with the Securities and Exchange Commission on January
30, 2014. The address of BlackRock, Inc. is 40 East 52nd Street, New York, New
York 10022. The Form 13G reported sole voting power over 15,438,027 shares,
shared voting power over none of the shares, sole dispositive power over
18,849,742 shares and shared dispositive power over none of the
shares.
- 36 -
Table of
Contents
(4) Includes 20,315
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 64,292
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 82,675
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 25,691
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. Greene-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.
(8) Includes 16,913
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 25,691
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
47,790 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.
(11) 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.
(12) Includes
59,119 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.
(13) Includes
108,770 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.
(14) Includes
18,813 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 4,500 exercisable
stock options held by Mr. Seiffer for the benefit of Leonard Green &
Partners, L.P. (LGP LP). LGP LP separately holds 2,280 shares of stock and
11,250 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.
(15) Includes
25,691 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.
(16) Includes
18,813 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 4,500 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 2,280 shares of stock and 11,250 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.
- 37 -
Table of
Contents
(17) Includes
24,691 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.
(18) Includes
50,537 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.
(19) Includes
25,691 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 11,250 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 604,242 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 set forth below:
● |
Directors
Jonathan Seiffer and Jonathan Sokoloff each had one late filing. They both
filed a Form 4 on May 20, 2014 which inadvertently reported a grant of
2,250 shares of restricted stock, but should have instead reported a grant
of 2,250 stock options. Messrs. Seiffer and Sokoloff each filed a Form 4/A
on May 22, 2014 to correct the mistake. |
● |
Director
Dr. Ralph Sorenson had two late filings related to gifts of shares to a
charitable trust (which was a non-profit family foundation over which he
has no pecuniary interest) occurring in November 2011 and December 2005.
Mr. Sorensons holdings were corrected in footnotes on a Form 4 filed on
June 6, 2014. |
Shareholders
Proposals
Pursuant to SEC Rule 14a-8,
any proposal that a shareholder of the Company wishes to have considered in
connection with the 2016 Annual Meeting of Shareholders must be submitted to the
Corporate Secretary at our principal executive offices no later than September
[__], 2015, and in accordance with related provisions of the Companys current
Bylaws.
Under our current Bylaws,
shareholder proposals submitted for consideration at the 2016 Annual Meeting of
Shareholders but not submitted for inclusion in our Proxy Statement for our 2016
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 executive offices not later than 120 days
prior to the anniversary of the date on which we mailed our proxy materials for
our 2015 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) must be received no later than September [__], 2015. However,
if the date of the 2016 Annual Meeting is not within 30 days of March 10, 2016,
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 2016 Annual Meeting is made. Shareholder
proposals or nominations must include the specified information described in our
Bylaws.
If the Company proposal
regarding proxy access is approved and our Bylaws are amended accordingly,
eligible shareholder nominations for candidates for election as directors
submitted for consideration at the 2016 Annual Meeting of Shareholders pursuant
to such proxy access Bylaws will not be subject to the deadlines described in
the above paragraph, and instead will be subject to the deadlines set forth in
the amended Bylaws.
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.
- 38 -
Table of
Contents
Appendix A
Proposal Regarding Proxy
Access
Proposed Amendments to
Article II, Sections 12 - 15 of the Bylaws
Section 12. Order of Business. The Chairman of the Board, or such other officer
of the Corporation designated by a majority of the Board of Directors, will call
meetings of the shareholders to order and will act as presiding officer thereof.
Unless otherwise determined by the Board of Directors prior to the meeting, the
presiding officer of the meeting of the shareholders will also determine the
order of business and have the authority in his or her sole discretion to
regulate the conduct of any such meeting, including without limitation by (i)
imposing restrictions on the persons (other than shareholders of the Corporation
or their duly appointed proxies) who may attend any such shareholders meeting,
(ii) ascertaining whether any shareholder or his proxy may be excluded from any
meeting of the shareholders based upon any determination by the presiding
officer, in his or her sole discretion, that any such person has unduly
disrupted or is likely to disrupt the proceedings thereat, and (iii) determining
the circumstances in which any person may make a statement or ask questions at
any meeting of the shareholders.
(a) At an annual meeting of
the shareholders, only such business will be conducted or considered as is
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (ii)
otherwise properly brought before the meeting by the presiding officer or by or
at the direction of a majority of the Board of Directors, or (iii) otherwise
properly requested to be brought before the meeting by a shareholder of the
Corporation in accordance with the immediately succeeding sentence. For business
to be properly requested by a shareholder to be brought before an annual
meeting, the shareholder must (i) be a shareholder of record at the time of the
giving of the notice of such annual meeting by or at the direction of the Board
of Directors and at the time of the annual meeting, (ii) be entitled to vote
with respect to such business at such meeting, and (iii) comply with the notice
procedures set forth in Article II, Section 13 of these Bylaws as to such
business.
NominationsExcept as provided in Article II, Section 15 of
these Bylaws, nominations
of or recommendations for persons for
election as Directors of the Corporation may be made at an annual meeting of
shareholders only (i) by or at the direction of the Board of Directors or (ii)
by a shareholder of the Corporation in accordance with the immediately
succeeding sentence. Any shareholder, (A) who is a shareholder of record at the
time of the giving of the notice of such annual meeting of the shareholders by
or at the direction of the Board of Directors and at the time of the annual
meeting, (B) who is entitled to vote for the election of directors at such
meeting and (C) who complies with the notice procedures set forth in Article II,
Section 13 of these Bylaws as to such nomination or recommendation, may nominate
or recommend one or more persons for election or to be considered as a potential
nominee or nominees for election, as applicable, as a Director or Directors of
the Corporation at an annual meeting of the shareholders. Only persons who are
nominated in accordance with this Article II, Section 12(a) or Article II, Section 15 of these
Bylaws will be eligible for election at an annual meeting
of shareholders as Directors of the Corporation.
The immediately preceding two
paragraphs and Article II, Section
15 of these Bylaws shall be the exclusive means for a shareholder to
make nominations or submit other business (other than matters properly brought
under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
Exchange Act), and included in the Corporations notice of meeting) before an
annual meeting of shareholders.
(b) At a special meeting of
shareholders, only such business may be conducted or considered as is properly
brought before the meeting. To be properly brought before a special meeting,
business must be (i) specified in the notice of the meeting (or any supplement
thereto) given by or at the direction of the Chairman of the Board, one of the
Chief Executive Officers, the President, a Vice President or the Secretary or
(ii) otherwise properly brought before the meeting by the presiding officer or
by or at the direction of a majority of the Board of Directors or pursuant to
Article II, Section 3 of these Bylaws. In addition, for business requested by a
shareholder in accordance with Article II, Section 3 of these Bylaws to be
brought before a special meeting, the shareholder must (i) be a shareholder of
record at the time of the giving of the notice of such special meeting and at
the time of the special meeting, (ii) be entitled to vote with respect to such
business at such meeting, and (iii) comply with the notice procedures set forth
in Article II, Section 13 of these Bylaws as to such business.
- A-1 -
Table of
Contents
Nominations of persons for
election as Directors of the Corporation may be made at a special meeting of
shareholders at which the election of directors has been properly brought before
the meeting in accordance with the foregoing paragraph only (i) by or at the
direction of the Board of Directors or (ii) by any shareholder (A) who is a
shareholder of record at the time of the giving of the notice of such special
meeting and at the time of the special meeting, (B) who is entitled to vote for
the election of directors at such meeting and (C) who complies with the notice
procedures set forth in Article II, Section 13 of these Bylaws as to such
nominations. Only persons who are nominated in accordance with this Article II,
Section 12(b) will be eligible for election at a special meeting of shareholders
as Directors of the Corporation. Nominations pursuant to Article II, Section
15 of these Bylaws may not be made in connection with a special meeting of
shareholders.
The immediately preceding two
paragraphs and the provisions of Article II, Section 3 of these Bylaws shall be
the exclusive means for a shareholder to make nominations or submit other
business before a special meeting of shareholders.
(c) The determination of
whether any business sought to be brought before any annual or special meeting
of the shareholders is properly brought before such meeting in accordance with
this Article II, Section 12, and whether any nomination of a person for election
as a Director of the Corporation at any annual or special meeting of the
shareholders was properly made in accordance with this Article II, Section
12, or
Article II, Section 15,
will be made by the presiding officer
of such meeting. If the presiding officer determines that any business is not
properly brought before such meeting, or any nomination was not properly made,
he or she will so declare to the meeting and any such business will not be
conducted or considered and any such nomination will be disregarded.
Section 13. Advance Notice of Shareholder Proposals and
Director Nominations.
(a) To be timely for purposes
of Article II, Section 12(a) of these Bylaws, a shareholders notice of
nominations or other business to be properly brought before an annual meeting
(other than a Notice of Proxy
Access Nomination, which must be delivered or mailed to and received at the
principal executive offices of the Corporation within the time periods provided
in Article II, Section 15(b) of these Bylaws) must
be addressed to the Secretary and delivered or mailed to and received at the
principal executive offices of the Corporation not less than one hundred twenty
(120) calendar days prior to the anniversary date of the date (as specified in
the Corporations proxy materials for its immediately preceding annual meeting
of shareholders) on which the Corporation first mailed its proxy materials for
its immediately preceding annual meeting of shareholders; provided, however,
that in the event the annual meeting is called for a date that is not within
thirty (30) calendar days of the anniversary date of the date on which the
immediately preceding annual meeting of shareholders was called, to be timely,
notice by the shareholder must be so received not later than the close of
business on the tenth (10th) calendar day following the day on which public
announcement of the date of the annual meeting is first made. In no event will
an adjournment or postponement of an annual meeting of shareholders or the
announcement thereof commence a new time period for the giving of a
shareholders notice as provided above.
(b) To be timely for purposes
of Article II, Section 12(b) of these Bylaws, a shareholders notice of
nominations to be properly brought before a special meeting must be addressed to
the Secretary and delivered or mailed to and received at the principal executive
offices of the Corporation not less than one hundred twenty (120) calendar days
prior to the date of such special meeting; provided, however, that if the first
public announcement of the date of such special meeting is less than one hundred
thirty (130) days prior to the date of such special meeting, notice by the
shareholder must be so received not later than the close of business on the
tenth (10th) calendar day following the day on which public announcement is
first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event will an
adjournment or postponement of a special meeting of shareholders or the public
announcement thereof commence a new time period for the giving of a
shareholders notice as provided above. Notice of other business proposed to be
brought before a special meeting by a shareholder must be delivered in
accordance with Article II, Section 3 of these Bylaws.
- A-2 -
Table of
Contents
(c) To be in proper form, a
shareholders notice (whether given pursuant to Section 3, Section 13(a)
or, Section 13(b) or Section 15 of this Article
II) to the Secretary must: (i) set forth, as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
recommendation for nomination or proposal is made or other business is to be
proposed (A) the name and address of such shareholder, as they appear on the
Corporations books, and of such beneficial owner, if any, (B) (I) the class or
series and number of shares of the Corporation which are, directly or
indirectly, owned beneficially and of record by such shareholder and such
beneficial owner, (II) any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege or
a settlement payment or mechanism at a price related to any class or series of
shares of the Corporation or with a value derived in whole or in part from the
value of any class or series of shares of the Corporation, whether or not such
instrument or right shall be subject to settlement in the underlying class or
series of capital stock of the Corporation or otherwise (a Derivative
Instrument) directly or indirectly owned beneficially by such shareholder and
any other direct or indirect opportunity to profit or share in any profit
derived from any increase or decrease in the value of shares of the Corporation,
(III) any proxy, contract, arrangement, understanding, or relationship pursuant
to which such shareholder has a right to vote any shares of any security of the
Corporation, (IV) any short interest in any security of the Corporation (for
purposes of this Section 13(c) a person shall be deemed to have a short interest
in a security if such person directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has the opportunity to
profit or share in any profit derived from any decrease in the value of the
subject security), (V) any rights to dividends on the shares of the Corporation
owned beneficially by such shareholder that are separated or separable from the
underlying shares of the Corporation, (VI) any proportionate interest in shares
of the Corporation or Derivative Instruments held, directly or indirectly, by a
general or limited partnership in which such shareholder is a general partner
or, directly or indirectly, beneficially owns an interest in a general partner
and (VII) any performance-related fees (other than an asset-based fee) that such
shareholder is entitled to based on any increase or decrease in the value of
shares of the Corporation or Derivative Instruments, if any, as of the date of
such notice, including without limitation any such interests held by members of
such shareholders immediate family sharing the same household (which
information shall be supplemented by such shareholder and beneficial owner, if
any, not later than 10 days after the record date for the meeting to disclose
such ownership as of the record date), and (C) any other information relating to
such shareholder and beneficial owner, if any, that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for, as applicable, the proposal and/or
for the election of directors in a contested election pursuant to Section 14 of
the Exchange Act, and the rules and regulations promulgated thereunder; (ii) if
the notice relates to any business other than a nomination or recommendation for
nomination of a director or directors that the shareholder proposes to bring
before the meeting, set forth (A) a description in reasonable detail of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest of such shareholder and
beneficial owner, if any, in such business and (B) a description of all
agreements, arrangements and understandings between such shareholder and
beneficial owner, if any, and any other person or persons (including their
names) in connection with the proposal of such business by such shareholder;
(iii) set forth, as to each person, if any, whom the shareholder proposes to
nominate for election or reelection to the Board of Directors (A) all
information relating to such person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors in a contested election
pursuant to Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder (including such persons written consent to being named
in the proxy statement as a nominee and to serving as a director if elected) and
(B) a description of all direct and indirect compensation and other material
monetary agreements, arrangements and understandings during the past three
years, and any other material relationships, between or among such shareholder
and beneficial owner, if any, and their respective affiliates and associates, or
others acting in concert therewith, on the one hand, and each proposed nominee,
and his or her respective affiliates and associates, or others acting in concert
therewith, on the other hand, including without limitation all information that
would be required to be disclosed pursuant to Item 404 of Regulation S-K if the
shareholder making the nomination and any beneficial owner on whose behalf the
nomination is made, if any, or any affiliate or associate thereof or person
acting in concert therewith, were the registrant for purposes of such item and
the nominee were a director or executive officer of such registrant; and (iv)
with respect to each nominee or recommended nominee for election or reelection
to the Board of Directors, include a completed and signed questionnaire,
representation and agreement required by Article II, Section 14 of these Bylaws.
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as an independent director of the
Corporation or that could be material to a reasonable shareholders
understanding of the independence, or lack thereof, of such nominee. All
recommendations by a shareholder of a person to be considered as a potential
nominee for election as a director of the Corporation at any annual meeting of
shareholders will be presented to the Board of Directors, or the appropriate
committee of the Board of Directors, for consideration.
(d) Notwithstanding the
provisions of Sections 3, 12 and, 13 and 15 of this Article II, a shareholder must also comply
with all applicable requirements of the Exchange Act, and the rules and
regulations thereunder with respect to the matters set forth in Sections 3, 12
and,
13 and 15 of this Article II; provided,
however, that any references in these Sections 3, 12 and, 13 and 15 of this Article II to the Exchange Act, or the
rules promulgated thereunder are not intended to and shall not limit the
requirements applicable to nominations or proposals as to any other business to
be considered pursuant to Section 13 of this Article II. Nothing in Sections 3,
12 and, 13 and 15 of this Article II will be deemed to affect any
rights of shareholders to request inclusion of proposals in the Corporations
proxy statement in accordance with the provisions of Rule 14a-8 under the
Exchange Act.
(e) For purposes of this
Article II, Section 13, public announcement means disclosure in a press
release reported by the Dow Jones News Service, Associated Press, or comparable
national news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of
the Exchange Act, or furnished to shareholders.
- A-3 -
Table of
Contents
Section 14. Submission of Questionnaire, Representation and
Agreement. To be eligible to be a
nominee for election or reelection as a director of the Corporation, a person
must deliver (in accordance with the time periods prescribed for delivery of
notice under Article II, Section 13 of these Bylaws, or, in the case of a Shareholder Nominee, the time
periods prescribed for delivery of a Notice of Proxy Access Nomination under
Article II, Section 15
of these Bylaws) to the Secretary at
the principal executive offices of the Corporation a written questionnaire with
respect to the background and qualification of such person and the background of
any other person or entity on whose behalf the nomination or recommendation for
nomination or nomination, as the case may be, is being made (which questionnaire
shall be provided by the Secretary upon written request) and a written
representation and agreement (in the form provided by the Secretary upon written
request) that such person (a) is not and will not become a party to (i) any
agreement, arrangement or understanding with, and has not given any commitment
or assurance to, any person or entity as to how such person, if elected as a
director of the Corporation, will act or vote on any issue or question (a
Voting Commitment) that has not been disclosed to the Corporation or (ii) any
Voting Commitment that could limit or interfere with such persons ability to
comply, if elected as a director of the Corporation, with such persons
fiduciary duties under applicable law, (b) is not and will not become a party to
any agreement, arrangement or understanding with any person or entity other than
the Corporation with respect to any direct or indirect compensation,
reimbursement or indemnification in connection with service or action as a
director that has not been disclosed therein, (c) in such persons individual
capacity and on behalf of any person or entity on whose behalf the nomination is
being made, would be in compliance, if elected as a director of the Corporation,
and will comply with all applicable publicly disclosed corporate governance,
conflict of interest, confidentiality and stock ownership and trading policies
and guidelines of the Corporation and (d) will abide by the requirements of
Article II, Section 9 of these Bylaws.
Section 15. Proxy Access for Director
Nominations.
(a) Whenever the Board of
Directors solicits proxies with respect to the election of directors at an
annual meeting of the shareholders,
subject to the provisions of this Article II, Section 15, the Corporation shall
include in its proxy statement for such annual meeting, in addition to any
persons nominated for election by the Board of Directors or any committee
thereof, the name, together with the Required Information, of any person or
persons, as applicable, nominated for election (the Shareholder Nominee(s)) to
the Board of Directors by any single shareholder (including a group of funds
under common management and beneficial ownership, as determined by the Board of
Directors or any committee thereof, but excluding any other group of
shareholders) that satisfies the requirements of Article II, Section 15(e) (the
Eligible Shareholder), and who expressly elects at the time of providing the
notice required by this Article II, Section 15 (the Notice of Proxy Access
Nomination) to have its nominee or nominees, as applicable, included in the
Corporations proxy materials pursuant to this Article II, Section 15. For
purposes of this Article II, Section 15, the Required Information that the
Corporation will include in its proxy statement is the information provided to
the Secretary concerning the Shareholder Nominee(s) and the Eligible Shareholder
that is required to be disclosed in the Corporations proxy statement by Section
14 of the Exchange Act, and the rules and regulations promulgated thereunder,
and, if the Eligible Shareholder so elects, a written statement, not to exceed
500 words, in support of the Shareholder Nominee(s) candidacy (the
Statement). Notwithstanding anything to
the contrary contained in this Article II, Section 15, the Corporation may omit
from its proxy materials any information or Statement (or portion thereof) that
it, in good faith, believes would violate any applicable law or
regulation.
(b) To be timely for
purposes of this Article II, Section 15, the Notice of Proxy Access Nomination
must be addressed to the Secretary
and delivered to or mailed to and received at the principal executive offices of
the Corporation not more than 150 calendar days and not less than 120 calendar
days prior to the anniversary date of the date (as specified in the
Corporations proxy materials for its immediately preceding annual meeting of
shareholders) on which the Corporation first mailed its proxy materials for its
immediately preceding annual meeting of shareholders. In no event will an
adjournment or postponement of an annual meeting of shareholders or the
announcement thereof commence a new time period for the giving of a Notice of
Proxy Access Nomination as provided above.
- A-4 -
Table of
Contents
(c) The maximum number of
Shareholder Nominees nominated by all Eligible Shareholders that will be
included in the Corporations proxy
materials with respect to an annual meeting of shareholders shall not exceed the
greater of (i) one and (ii) 10% of the number of directors in office as of the
last day on which a Notice of Proxy Access Nomination may be delivered pursuant
to and in accordance with this Article II, Section 15 (the Final Proxy Access
Nomination Date), or if such amount is not a whole number, the closest whole
number below 10%. In the event that one or more vacancies for any reason occurs
on the board after the Final Proxy Access Nomination Date but before the date of
the annual meeting and the Board of Directors resolves to reduce the size of the
board in connection therewith, the maximum number of Shareholder Nominees
included in the Corporations proxy materials shall be calculated based on the
number of directors in office as so reduced. Any individual nominated by an
Eligible Shareholder for inclusion in the Corporations proxy materials pursuant
to this Article II, Section 15 whom the Board of Directors decides to nominate
as a nominee for Director shall be counted as one of the Shareholder Nominees
for purposes of determining when the maximum number of Shareholder Nominees
provided for in this Article II, Section 15 has been reached. Any Eligible
Shareholder submitting more than one Shareholder Nominee for inclusion in the
Corporations proxy materials pursuant to this Article II, Section 15 shall rank
such Shareholder Nominees based on the order that the Eligible Shareholder
desires such Shareholder Nominees to be selected for inclusion in the
Corporations proxy statement in the event that the total number of Shareholder
Nominees submitted by Eligible Shareholders pursuant to this Article II, Section
15 exceeds the maximum number of nominees provided for in this Article II,
Section 15. In the event that the number of Shareholder Nominees submitted by
Eligible Shareholders pursuant to this Article II, Section 15 exceeds the
maximum number of nominees provided for in this Article II, Section 15, the
highest ranking Shareholder Nominee who meets the requirements of this Article
II, Section 15 from each Eligible Shareholder will be selected for inclusion in
the Corporations proxy materials until the maximum number is reached, going in
order of the amount (largest to smallest) of shares of common stock of the
Corporation each Eligible Shareholder disclosed as owned in its respective
Notice of Proxy Access Nomination submitted to the Corporation. If the maximum
number is not reached after the highest ranking Shareholder Nominee who meets
the requirements of this Article II, Section 15 from each Eligible Shareholder
has been selected, this process will continue as many times as necessary,
following the same order each time, until the maximum number is reached.
Notwithstanding anything to the contrary contained in this Article II, Section
15, if the Corporation receives notice pursuant to Article II, Section 12(a) of
these Bylaws that a shareholder intends to nominate for election at such meeting
a number of nominees greater than or equal to a majority of the total number of
directors to be elected at such meeting, no Shareholder Nominees will be
included in the Corporations proxy materials with respect to such meeting
pursuant to this Article II, Section 15.
(d) For purposes of this
Article II, Section 15, an Eligible Shareholder shall be deemed to own only
those outstanding shares of common
stock of the Corporation as to which the shareholder possesses both (i) the full
voting and investment rights pertaining to the shares and (ii) the full economic
interest in (including the opportunity for profit from and risk of loss on) such
shares; provided, that the number of shares calculated in accordance with
clauses (i) and (ii) shall not include any shares (x) sold by such shareholder
or any of its affiliates in any transaction that has not been settled or closed,
(y) borrowed by such shareholder or any of its affiliates for any purposes or
purchased by such shareholder or any of its affiliates pursuant to an agreement
to resell or (z) subject to any option, warrant, forward contract, swap,
contract of sale, other derivative or similar agreement entered into by such
shareholder or any of its affiliates, whether any such instrument or agreement
is to be settled with shares or with cash based on the notional amount or value
of shares of outstanding common stock of the Corporation, in any such case which
instrument or agreement has, or is intended to have, the purpose or effect of
(1) reducing in any manner, to any extent or at any time in the future, such
shareholders or its affiliates full right to vote or direct the voting of any
such shares, and/or (2) hedging, offsetting or altering to any degree any gain
or loss realized or realizable from maintaining the full economic ownership of
such shares by such shareholder or affiliate. For purposes of this Article II,
Section 15, a shareholder shall own shares held in the name of a nominee or
other intermediary so long as the shareholder retains the right to instruct how
the shares are voted with respect to the election of directors and possesses the
full economic interest in the shares. A shareholders ownership of shares shall
be deemed to continue during any period in which the shareholder has delegated
any voting power by means of a proxy, power of attorney or other instrument or
arrangement which is revocable at any time by the shareholder. The terms
owned, owning and other variations of the word own shall have correlative
meanings. Whether outstanding shares of the common stock of the Corporation are
owned for these purposes shall be determined by the Board of Directors or any
committee thereof. For purposes of this Article II, Section 15, the term
affiliate or affiliates shall have the meaning ascribed thereto under the
General Rules and Regulations under Exchange Act.
- A-5 -
Table of
Contents
(e) In order to make a
nomination pursuant to this Article II, Section 15, an Eligible Shareholder must
have owned the Required Ownership
Percentage of the Corporations outstanding common stock (the Required Shares)
continuously for the Minimum Holding Period as of both the date the Notice of
Proxy Access Nomination is delivered to or mailed to and received by the
Secretary in accordance with this Article II, Section 15 and the record date for
determining the shareholders entitled to vote at the annual meeting and must
continue to own the Required Shares through the meeting date. For purposes of
this Article II, Section 15, the Required Ownership Percentage is 5% or more,
and the Minimum Holding Period is 5 years. Within the time period specified in
this Article II, Section 15 for delivering the Notice of Proxy Access
Nomination, an Eligible Shareholder must provide the following information in
writing to the Secretary: (i) one or more written statements from the record
holder of the shares (and from each intermediary through which the shares are or
have been held during the Minimum Holding Period) verifying that, as of a date
within seven calendar days prior to the date the Notice of Proxy Access
Nomination is delivered to or mailed to and received by the Secretary, the
Eligible Shareholder owns, and has owned continuously for the Minimum Holding
Period, the Required Shares, and the Eligible Shareholders agreement to
provide, within five business days after the record date for the annual meeting,
written statements from the record holder and intermediaries verifying the
Eligible Shareholders continuous ownership of the Required Shares through the
record date; (ii) a copy of the Schedule 14N that has been filed with the
Securities and Exchange Commission as required by Rule 14a-18 under the Exchange
Act; (iii) the information, representations and agreements that are the same as
those that would be required to be set forth in a shareholders notice of
nomination pursuant to Article II, Section 13(c) of these Bylaws; (iv) the
consent of each Shareholder Nominee to being named in the proxy statement as a
nominee and to serving as a Director if elected; (v) a representation that the
Eligible Shareholder (A) acquired the Required Shares in the ordinary course of
business and not with the intent to change or influence control at the
corporation, and does not presently have such intent, (B) presently intends to
maintain qualifying ownership of the Required Shares through the date of the
annual meeting, (C) has not engaged and will not engage in, and has not and will
not be a participant in another persons, solicitation within the meaning of
Rule 14a-1(l) under the Exchange Act in support of the election of any
individual as a Director at the annual meeting other than its Shareholder
Nominee(s) or a nominee of the Board of Directors, (D) agrees to comply with all
applicable laws and regulations applicable to the use, if any, of soliciting
material, and (E) will provide facts, statements and other information in all
communications with the Corporation and its shareholders that are or will be
true and correct in all material respects and do not and will not omit to state
a material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; (vi) a representation
as to the Eligible Shareholders intentions with respect to maintaining
qualifying ownership of the Required Shares for at least one year following the
annual meeting; (vi) an undertaking that the Eligible Shareholder agrees to (A)
assume all liability stemming from any legal or regulatory violation arising out
of the Eligible Shareholders communications with the shareholders of the
Corporation or out of the information that the Eligible Shareholder provided to
the Corporation and (B) indemnify and hold harmless the Corporation and each of
its directors, officers and employees individually against any liability, loss
or damages in connection with any threatened or pending action, suit or
proceeding, whether legal, administrative or investigative, against the
corporation or any of its directors, officers or employees arising out of any
nomination submitted by the Eligible Shareholder pursuant to this Article II,
Section 15.
(f) Within the time period
specified in this Article II, Section 15 for delivering the Notice of Proxy
Access Nomination, each Shareholder
Nominee must deliver to the Secretary the representations, agreements and other
information required by Article II, Section 14 of these Bylaws.
(g) In the event that any
information or communications provided by the Eligible Shareholder or any
Shareholder Nominees to the
Corporation or its shareholders ceases to be true and correct in all material
respects or omits a material fact necessary to make the statements made, in
light of the circumstances under which they were made, not misleading, each
Eligible Shareholder or Shareholder Nominee, as the case may be, shall promptly
notify the Secretary of any defect in such previously provided information and
of the information that is required to correct any such defect.
(h) The Corporation shall
not be required to include, pursuant to this Article II, Section 15, a
Shareholder Nominee in its proxy
materials for any meeting of shareholders (i) for which the Secretary receives a
notice that a shareholder has nominated such Shareholder Nominee for election to
the Board of Directors pursuant to the advance notice requirements for
shareholder nominees for director set forth in Article II, Section 12(a) of
these Bylaws, (ii) if the Eligible Shareholder that has nominated such
Shareholder Nominee has engaged in or is currently engaged in, or has been or is
a participant in another persons, solicitation within the meaning of Rule
14a-1(l) under the Exchange Act in support of the election of any individual as
a Director at the annual meeting other than its Shareholder Nominee(s) or a
nominee of the Board of Directors, (iii) if the Shareholder Nominee is or
becomes a party to any compensatory, payment or other financial agreement,
arrangement or understanding with any person or entity other than the
Corporation, or is receiving or will receive any such compensation or other
payment from any person or entity other than the Corporation, in each case in
connection with service as a Director of the Corporation, (iv) who is not
independent under the listing standards of each principal U.S. exchange upon
which the common stock of the Corporation is listed, any applicable rules of the
Securities and Exchange Commission and any publicly disclosed standards used by
the Board of Directors in determining and disclosing independence of the
Corporations directors, in each case as determined by the Board of Directors,
(v) whose election as a member of the Board of Directors would cause the
Corporation to be in violation of these Bylaws, the Articles of Incorporation,
the rules and listing standards of the principal U.S. exchanges upon which the
common stock of the Corporation is traded, or any applicable state or federal
law, rule or regulation, (vi) who is or has been, within the past three years,
an officer or director of a competitor, as defined in Section 8 of the Clayton
Antitrust Act of 1914, (vii) who is a named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses) or has been
convicted in such a criminal proceeding within the past 10 years, (viii) who is
subject to any order of the type specified in Rule 506(d) of Regulation D
promulgated under the Securities Act of 1933, as amended, (ix) if such
Shareholder Nominee or the applicable Eligible Shareholder shall have provided
information to the Corporation in respect to such nomination that was untrue in
any material respect or omitted to state a material fact necessary in order to
make the statement made, in light of the circumstances under which they were
made, not misleading, as determined by the Board of Directors or any committee
thereof, or (x) the Eligible Shareholder or applicable Shareholder Nominee fails
to comply with its obligations pursuant to this Article II, Section
15.
- A-6 -
Table of
Contents
(i) Notwithstanding
anything to the contrary set forth herein, the Board of Directors or the
presiding officer of the annual
meeting of shareholders shall declare a nomination by an Eligible Shareholder to
be invalid, and such nomination shall be disregarded notwithstanding that
proxies in respect of such vote may have been received by the Corporation, if
(i) the Shareholder Nominee(s) and/or the applicable Eligible Shareholder shall
have breached its or their obligations under this Article II, Section 15, as
determined by the Board of Directors or such presiding officer or (ii) the
Eligible Shareholder (or a qualified representative thereof) does not appear at
the meeting of shareholders to present any nomination pursuant to this Article
II, Section 15.
(j) Any Shareholder Nominee
who is included in the Corporations proxy materials for a particular annual
meeting of shareholders but either
(i) withdraws from or becomes ineligible or unavailable for election at the
annual meeting, or (ii) does not receive at least 25% of the votes cast in favor
of such Shareholder Nominees election, will be ineligible to be a Shareholder
Nominee pursuant to this Article II, Section 15 for the next two annual
meetings. For the avoidance of doubt, this Article II, Section 15 shall not
prevent any shareholder from nominating any person to the Board of Directors
pursuant to and in accordance with Article II, Section 12(a) of these
Bylaws.
(k) This Article II,
Section 15 shall be the exclusive method for shareholders to include nominees
for Director in the Corporations
proxy materials.
- A-7 -
Table of
Contents
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 9,
2015.
For participants in the
Company's 401(k) plan, your proxy must be received by 11:59 P.M. (Eastern Time)
on March 6, 2015.
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: |
|
|
|
M80544-P58283-Z64533 |
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. |
|
|
|
|
|
For |
|
Withhold |
|
For All |
|
|
|
All |
|
All |
|
Except |
|
The Board of Directors recommends that you
vote FOR the following director nominees: |
|
|
|
|
|
|
|
|
|
1. |
ELECTION OF DIRECTORS: |
|
|
|
|
|
⬜ |
|
⬜ |
|
⬜ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01) |
|
DR.
JOHN ELSTROTT |
|
07) |
|
JONATHAN SEIFFER |
|
|
|
|
|
|
02) |
|
GABRIELLE GREENE-SULZBERGER |
|
08) |
|
MORRIS (MO) SIEGEL |
|
|
|
|
|
|
03) |
|
SHAHID (HASS) HASSAN |
|
09) |
|
JONATHAN SOKOLOFF |
|
|
|
|
|
|
04) |
|
STEPHANIE KUGELMAN |
|
10) |
|
DR. RALPH SORENSON |
|
|
|
|
|
|
05) |
|
JOHN
MACKEY |
|
11) |
|
WILLIAM (KIP) TINDELL, III |
|
|
06) |
|
WALTER ROBB |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote FOR the following company
proposals: |
|
For |
|
Against
|
|
Abstain |
|
|
|
2. |
ADVISORY VOTE TO APPROVE THE COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS. |
|
⬜ |
|
⬜ |
|
⬜ |
|
|
|
3. |
RATIFICATION OF THE APPOINTMENT OF ERNST
& YOUNG LLP AS INDEPENDENT AUDITOR FOR THE COMPANY FOR THE FISCAL YEAR
ENDING SEPTEMBER 27, 2015. |
|
⬜ |
|
⬜ |
|
⬜ |
|
|
|
|
|
|
|
|
|
|
4. |
PROPOSAL REGARDING AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF THE COMPANYS COMMON STOCK FROM 600 MILLION TO 1.2 BILLION.
|
|
⬜ |
|
⬜ |
|
⬜ |
|
|
|
|
|
|
|
|
|
|
5. |
PROPOSAL REGARDING PROXY ACCESS. |
|
⬜ |
|
⬜ |
|
⬜ |
|
|
|
|
|
|
|
|
|
|
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. |
|
|
|
|
|
|
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. |
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX] |
Date |
|
|
|
|
Signature (Joint Owners) |
Date |
|
Table of
Contents
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 10, 2015 at 8:30
a.m., local time, at The Roosevelt New Orleans, 130 Roosevelt Way, New
Orleans, Louisiana 70112 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 27,
2015; |
● |
|
FOR THE
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANYS
COMMON STOCK FROM 600 MILLION TO 1.2 BILLION; AND |
● |
|
FOR THE
PROPOSAL REGARDING PROXY ACCESS. |
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)
Historical Stock Chart
From Aug 2024 to Sep 2024
Whole Foods Market, Inc. (NASDAQ:WFM)
Historical Stock Chart
From Sep 2023 to Sep 2024