shareholders voted for options and against management-imposed poison pills at the company's annual meeting.
Investors in the natural foods grocery on Monday approved management's proposal to increase the number of options the company can grant under its current stock plan by 28%. But they also voted in favor of a shareholder proposal that the company submit its so-called poison pill plan to investor approval.
The passage of the stock options-plan increase came despite
criticism from some analysts and the growing skepticism among investors about such plans. Whole Foods does not expense stock options, a practice that critics charge inflates earnings and distorts the company's reports. The plan drew significant opposition, with investors voting some 20.9% of shares against it, according to Cindy McCann, Whole Foods' vice president of investor relations.
Meanwhile, shareholders passed the proposal on poison pills over management's objections. Whole Foods' board passed a "shareholder rights" plan in September 1999 without seeking shareholder approval for it, McCann said. Such plans are typically designed to allow company executives to fend off hostile takeovers by allowing them to issue additional shares.
Shareholders voted some 58% of Whole Foods shares in favor of the poison pill proposal, McCann said. McCann declined to say how the company would react to the vote. Like most shareholder plans, the poison pill proposal was nonbinding. However, under a rule proposed by the
Securities and Exchange Commission
, companies that ignore shareholder-passed motions could be forced to open their proxy ballots to a slate of investor-proposed director candidates.
McCann noted that Whole Foods is in the process of declassifying its board of directors in response to a motion passed by shareholders last year.
"It's up to the board to decide how to react" to the poison pill proposal, she said.
Whole Foods shares closed regular trading on Tuesday off 28 cents, or 0.4%, to $76.33.