Under pressure from activist investor Jana Partners, healthy-food grocer Whole Foods Market (WFM) announced five new independent directors and new board leadership Wednesday.
Effective immediately, board member Gabrielle Sulzberger will become the new chair, replacing Dr. John B. Elstrott, and board member Mary Ellen Coe becomes the new chair of the nominating and governance committee.
In a separate press release issued Wednesday, Whole Foods detailed its accelerated path to shareholder value creation and quarterly earnings, while also announcing Keith Manbeck as its new CFO. Most recently, Manbeck was senior vice president of digital finance, strategy management and business transformation at Kohl's (KSS) , where he had been since 2014.
The new board appointees include Ken Hicks, the former chairman, president and CEO of Foot Locker (FL) who has served in leadership positions at several retail companies, including J.C. Penney (JCP) , Payless ShoeSource (PSS) , Home Shopping Network (HSNI) and May Department Stores. Other new board members are Joe Mansueto, founder and executive chairman of Morningstar; Sharon McCollam, former executive vice president, chief administrative and chief financial officer of Best Buy (BBY) ; Scott Powers, who held leadership positions at State Street Corporation from 2008 to 2015; and Ron Shaich, founder, chairman and CEO of Panera Bread (PNRA) .
Jana Partners would not have launched a campaign at Whole Foods without getting a sense that some institutional investors would back its efforts. As a result, institutional investors will likely be impressed that some of the longest-serving directors are stepping down.
For example, John Elstrott, 68, is leaving the board. He has been a director for 26 years, according to relationship mapping service BoardEx, a service of TheStreet. Morris Siegel, a departing director, has been on the board for 14 years. Another overtenured director, Ralph Sorenson, has been on the board since 1994. Whole Foods announced previously that he will step down.
Activist investors like to target overtenured directors reaching their twilight years, based on the argument that the length of time they spend on the board suggests that they may be too cozy with management and no longer have the skills needed to drive share-price improvement.
At least one departing director appears to be overboarded. Jonathan Sokoloff, a managing partner at Leonard Green & Partners, is leaving. However, according to BoardEx, Sokoloff serves on a number of public and private company boards, including Signet Jewelers (SIG) , Shake Shack Shak and the Container Store (TCS) .
However, some long-tenured directors aren't resigning. Gabrielle Greene-Sulzberger, who has been on the board for 14 years, is the newly appointed board chair.
Board member Mary Ellen Coe, who joined the board last year and serves on one other board, Alphabet (GOOG) , is now chief of the nomination committee.
After Wednesday's market close, Whole Foods reported earnings of 37 cents a share on revenue of $3.7 billion for the 12 weeks ending April 9, almost exactly in line with the earnings of 37 cents a share on revenue of $3.73 billion analysts surveyed at Factset expected.
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