A Director Battle Is Still Possible Even After Whole Foods Shook Up Board
Jana Partners' Barry Rosenstein

Jana Partners said Wednesday that it plans to "keep all options on the table" at Whole Foods ( (WFM) ), suggesting that a director-election contest is still a possibility, even after the organic grocer announced a major reshuffling of its board.

"We decided we'd rather keep all options on the table, particularly given all the change at the company being announced and the pivotal issues facing the company right now," a Jana Partners spokesman said in a statement. "Now we'll be waiting to see if the newly reconstituted board can show a real commitment to fixing the operations at Whole Foods and pursuing all avenues to shareholder value creation."

The activist investor's comments come after the fund's founder, Barry Rosenstein, launched an insurgency campaign at the grocer last month. In the wake of that campaign, Whole Foods on Wednesday announced it was reshuffling its board to include five new heavy hitters, including 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.

The grocer also on Wednesday reported earnings of 37 cents a share on revenue of $3.74 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.

The activist fund in April reported a 9% stake and also took an unusual step of retaining three highly-qualified potential board candidates, all of which have significant skin-in-the-game in terms of share holdings. At the time the fund said Whole Foods had been "unwilling to engage in discussions with third parties" about M&A alternatives.

Nevertheless, if Jana Partners decided to launch a proxy contest, it would have to be next year at the company's 2018 annual meeting. A contest is a serious possibility if the grocer's performance is still lacking and it doesn't conduct a thorough strategic review and auction process. Jana Partners has launched 56 campaigns since 2001, including seven director-election proxy fights, according to FactSet. In addition, Jana Partners has included the threat of a contest as part of 10 campaigns. 

The deadline for shareholders (read Jana Partners) to launch a director contest at Whole Foods 2018 annual meeting is Sept. 6, 2017. according to securities filings. Whole Foods typically holds its annual meeting in February. It is possible that Rosenstein could launch a director battle if he is unsatisfied that the company explored all its M&A options.

Institutional investors will likely be impressed that some of long-serving directors are stepping down. For example, John Elstrott, 68, is stepping down. Elstrott has been a director for 26 years, according to relationship mapping service BoardEx, a service of TheStreet. Another overtenured director, Ralph Sorenson, has been on the board since 1994. Whole Foods announced in January that he will step down.

However, at least one long-tenured director isn't resigning. Gabrielle Greene-Sulzberger, who has been on the board for 14 years, is the new board chair and the chief of the nomination committee.

-- Michelle Lodge contributed to this story. 

More from Investing

Street Stats: The Mid-Term Elections May Be a Rollercoaster Ride for Investors

Street Stats: The Mid-Term Elections May Be a Rollercoaster Ride for Investors

Trump's Oil Tweets Ruining the Stock Market's Rebound?

Trump's Oil Tweets Ruining the Stock Market's Rebound?

A BJ's Wholesale IPO Is Logical Next Step

A BJ's Wholesale IPO Is Logical Next Step

Tesla Investor Pushing for More Board Changes

Tesla Investor Pushing for More Board Changes

What You Need to Know About Facebook and Europe's New Privacy Rules

What You Need to Know About Facebook and Europe's New Privacy Rules