Whole Foods CEO Used Online Alias

AUSTIN, Texas— Whole Foods Markets Inc. (NASDAQ:WFMI) co-founder, chairman and CEO, John Mackey, has admitted to using a pseudonym when posting to online financial message boards. His messages to the Yahoo! Financial boards ranged from lauding WFMI to predicting the demise of rival Wild Oats Markets Inc. (NASDAQ:OATS). The move has drawn attention from FTC in its case against the proposed WFMI-OATS merger, on the grounds the union would eliminate the substantial competition between these two uniquely close competitors in the natural and organic supermarket category.

Mackey periodically posted under the name "Rahodeb"(an anagram of his wife's name, Deborah) in the online message boards from 1999 to 2006. Among his comments were assertions OATS stock was overvalued and its company poorly managed. Documents detailing his online activities were part of paperwork reviewed in the FTC case. Mackey first said FTC was trying to embarrass him and WFMI over comments he said were made for fun. "The views articulated by rahodeb sometimes represent what I actually believed and sometimes they didn't," he wrote on his company's Web site. "Sometimes I simply played ‘devil's advocate’ for the sheer fun of arguing. Anyone who knows me realizes that I frequently do this in person, too."

While legal experts debate whether Mackey's online comments violate any securities laws—regulators would have to prove Mackey tried to manipulate stock prices—FTC disclosed another damaging nugget, a quote of Mackey addressing WFMI's board of directors. According to FTC, Mackey told his board that taking over OATS would eliminate price competition in some markets and prevent another large grocer from building a formidable competitor. The case is expected to begin in U.S. District Court in the District of Columbia on July 31.

Shortly after the news on Mackey's online actions surfaced, WFMI's board formed a special committee to conduct an independent internal investigation on the matter. The firm of Munger, Tolles & Olson LLP was retained to advise the board during its investigation. The Securities and Exchange Commission (SEC) has launched its own investigation of Mackey's online comments.

Following this, Mackey issued a statement to shareholders: "I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards. I am very sorry and I ask our stakeholders to please forgive me."

Financial and corporate governance experts speculate Mackey will not be at the helm of WFMI much longer.

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