<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[WHOLE FOODS LOGO APPEARS HERE]
February 19, 1999
Dear Fellow Shareholders:
Our Annual Meeting of Shareholders will be held on Monday, March 29, 1999
at the Hotel Boulderado, 2115 13th Street, Boulder, Colorado at 10 a.m. local
time. The accompanying proxy materials (consisting of the Notice of Annual
Meeting, the Proxy Statement and the form of proxy) provide additional
information about the Annual Meeting, including details on the proposal to be
voted on. A copy of the Company's Annual Report is also included.
At the meeting, shareholders will be asked to elect to the Board of
Directors of Whole Foods Market three directors who will serve a three-year term
expiring at the annual meeting of shareholders in 2002.
We look forward to your participation in this year's Annual Meeting
process, and, as always, appreciate your support.
Sincerely,
/s/ JOHN MACKEY
------------------------------
John Mackey
Chairman of the Board &
Chief Executive Officer
<PAGE>
[WHOLE FOODS LOGO APPEARS HERE]
Whole Foods Market, Inc.
601 North Lamar, #300
Austin, Texas 78703
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
The Annual Meeting of Shareholders of Whole Foods Market, Inc. (the
"Company" or "Whole Foods Market") will be held at the Hotel Boulderado, 2115
13th Street, Boulder, Colorado on Monday, March 29, 1999 at 10 a.m. local time.
At the meeting, shareholders will be asked to elect to the Board of Directors of
Whole Foods Market three directors who will serve a three-year term expiring at
the annual meeting of shareholders in 2002.
Shareholders will also transact any other business that may properly come
before the meeting.
Only shareholders of record at the close of business on January 29, 1999
are entitled to notice of, and to vote at, the meeting.
YOUR VOTE IS IMPORTANT!
Please date, sign and return the accompanying proxy card promptly so that
we can be assured of having a quorum at the meeting and so that your shares may
be voted in accordance with your wishes. As an alternative to using the paper
proxy card to vote, beneficial owners of shares held in "street name" by a
stockbroker may vote electronically via the Internet or by telephone. Signing
and returning the proxy card or submitting your proxy via the Internet or by
telephone does not affect your right to vote in person if you attend the
meeting.
By Order of the Board of Directors
/s/ GLENDA FLANAGAN
------------------------------
Glenda Flanagan
Secretary
February 19, 1999
Austin, Texas
<PAGE>
WHOLE FOODS MARKET, INC.
601 North Lamar, #300
Austin, Texas 78703
www.wholefoods.com
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Monday, March 29, 1999
10 a.m.
Hotel Boulderado
2115 13th Street
Boulder, Colorado
The accompanying proxy is being solicited on behalf of the Company's Board
of Directors for use at the Company's Annual Meeting of Shareholders, the time
and place of which are noted above. At the meeting, shareholders will be asked
to vote on one proposal that is listed in the accompanying Notice of Annual
Meeting of Shareholders and described in more detail below. Shareholders will
also consider any other proposals or business that may properly come before the
meeting, although the Board of Directors knows of no other proposals or business
to be presented.
By executing and returning the proxy (either by returning the paper proxy
card or, if a beneficial holder of shares in street name, by submitting your
proxy electronically via the Internet or by telephone), you authorize John P.
Mackey and Glenda Flanagan to represent you and vote your shares at the meeting
in accordance with your instructions. Those persons may also vote your shares
to adjourn the meeting from time to time and will be authorized to vote your
shares at any adjournments or postponements of the meeting.
If you attend the meeting, you may vote in person, regardless of whether
you have executed and returned the proxy. In addition, you may revoke your
proxy at any time before its exercise at the meeting by delivering a written
notice of revocation to the Company's Secretary or by executing and delivering a
later-dated proxy.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
RETURN THE PROXY EITHER IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE, OR, IF
A BENEFICIAL HOLDER OF SHARES IN STREET NAME, BY SUBMITTING YOUR PROXY
ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE.
<PAGE>
QUORUM AND VOTING
Record Date. The record date for the meeting is January 29, 1999. Only
shareholders of record at the close of business on that date are entitled to
notice of, and to vote at, the meeting.
Voting Stock. The only class of stock entitled to be voted at the meeting is the
Company's Common Stock. At the close of business on the record date, there were
26,673,994 shares of Common Stock outstanding and entitled to be voted at the
meeting, and the holders of those shares will be entitled to one vote per share.
Quorum. In order for any business to be conducted, holders of more than 50% of
the shares entitled to vote must be represented at the meeting, either in person
or by proxy.
Adjourned Meeting. If a quorum is not present at the scheduled time of the
meeting, the shareholders who are represented may adjourn the meeting until a
quorum is present. The time and place of the adjourned meeting will be announced
at the time the adjournment is taken, and no other notice will be given. An
adjournment will have no effect on the business that may be conducted at the
meeting.
Tabulation of Votes. The Company's transfer agent will be responsible for
tabulating and certifying the votes.
Voting by Street Name Holders. If you are the beneficial owner of shares held in
"street name" by a broker, the broker, as the record holder of the shares, is
required to vote those shares in accordance with your instructions. If you do
not give instructions to the broker, the broker will nevertheless be entitled to
vote the shares with respect to "discretionary" items but will not be permitted
to vote the shares with respect to "non-discretionary" items (in which case, the
shares will be treated as "broker non-votes").
Abstentions and Broker Non-votes. If you ABSTAIN from voting, your shares will
nevertheless be included in the number of shares represented for purposes of
determining whether a quorum is present. Because directors are elected by a
plurality of the votes (see "Proposal 1 -- Election of Directors" below), an
abstention would have no effect on the outcome of the vote on Proposal 1 and,
thus, is not offered as a voting option for that proposal.
If your shares are treated as broker non-votes, they will nevertheless be
included in the number of shares represented for purposes of determining whether
a quorum is present. Otherwise, however, those shares will be treated as shares
not entitled to be voted on the proposal. Consequently, a broker non-vote with
respect to Proposal 1 (Election of Directors) will have no effect on the outcome
of the vote on that proposal.
Default Voting. If you properly execute and return the accompanying proxy (in
paper form, electronically via the Internet or by telephone) but do not indicate
any voting instructions, your shares will be voted as follows:
. Proposal 1 (Election of Directors) -- FOR all nominees
If any other business properly comes before the shareholders for a vote at the
meeting, the shares will be voted in accordance with the discretion of the
holders of the proxy.
2
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Current Nominees. The three-year terms of the Class I directors will
expire at the upcoming annual meeting. The Board of Directors has nominated
Linda A. Mason and Dr. Cristina G. Banks for reelection as Class I directors.
Dr. Banks and Ms. Mason are currently serving as Class I directors. If they are
reelected, they will continue to serve as Class I directors with terms to expire
at the annual meeting of shareholders to be held in 2002.
In addition, the Board of Directors has nominated Jirka Rysavy for election
as a Class I director. If elected, Mr. Rysavy will serve as a Class I director
with a term to expire at the annual meeting of shareholders to be held in 2002.
The Board of Directors recommends that you vote FOR the election of these
three nominees.
The following is biographical information about each of the nominees.
Dr. Cristina G. Banks, 46, has served as a director of the Company since July
1992. Dr. Banks is a principal and co-owner of Terranova Consulting Group, a
full service management consulting firm which was started in December 1996. She
has served as Senior Lecturer on the faculty at the Walter A. Haas School of
Business in Berkeley, California since 1985.
Linda A. Mason, 44, has served as a director of the Company since July 1992. Ms.
Mason is a co-founder and has served as Chairman of the Board of Bright Horizons
Family Solutions, Inc., which operates work-site childcare centers, since July
1998. From 1982 to July 1988, she served as such company's President.
Jirka Rysavy, 44, joined the Company's board in November 1998. Mr. Rysavy is
the Chairman and Chief Executive Officer of Gaiam, Inc., a provider of
environmental information, goods and services. From 1986 to 1998, Mr. Rysavy
served as Chairman of the Board and Chief Executive Officer of Corporate
Express, Inc., a global provider of non-production goods and services to large
corporations. Mr. Rysavy continues to serve as a director of Corporate Express,
Inc.
Should any nominee become unable or unwilling to accept nomination or
election, the Board of Directors will either select a substitute nominee or will
reduce the size of the Board. If you have properly executed and returned a
proxy and a substitute nominee is selected, the holders of the proxy will vote
your shares FOR the election of the substitute nominee. The Board of Directors
has no reason to believe that any nominee will be unable or unwilling to serve
if elected.
In accordance with the Company's Bylaws, directors are elected by a
plurality of the votes of shares represented and entitled to vote at the
meeting.
Continuing Directors. The Company's Board of Directors is separated into
three classes, and the directors in each class are elected to serve for three-
year terms. The terms of the Class I directors expire at the annual meeting of
shareholders to be held in 2002, the terms of the Class II directors expire at
the annual meeting of shareholders to be held in 2000, and the terms of the
Class III directors expire at the annual meeting of shareholders to be held in
2001. The following is a list of the persons who will constitute the Company's
Board of Directors following the meeting, assuming election of the nominees
named above, and their ages, director class designation and current committee
assignments.
3
<PAGE>
Name Age Director Class Committees
- ---- --- -------------- ----------
John P. Mackey 45 III -
Dr. Cristina G. Banks 46 I Nominating, Compensation (Chairman)
David W. Dupree 45 III Audit and Finance, Nominating
Dr. John B. Elstrott 50 II Audit and Finance (Chairman)
Avram J. Goldberg 69 II Audit and Finance
Fred "Chico" Lager 44 III Compensation
Linda A. Mason 44 I Audit and Finance, Nominating
(Chairman)
Jirka Rysavy 44 I -
Dr. Ralph Z. Sorenson 65 II Compensation
Set forth below is biographical information about each of the Company's
directors, except for Dr. Banks, Ms. Mason, and Mr. Rysavy whose biographical
information is included under "Current Nominees" above.
David W. Dupree, 45, has served as director of the Company since August 1996.
Mr. Dupree is a Managing Partner of Halifax Capital Partners, a limited
partnership founded to pursue small and mid cap investment opportunities. He
was the Managing Director of The Carlyle Group, a Washington, D.C. based
merchant banking concern, from 1995 to 1998. He served as a Principal of such
company from 1992 to 1995. Mr. Dupree also serves as a director of Insight
Health Services Corp.
Dr. John B. Elstrott, 50, has served as a director of the Company since February
1995. Dr. Elstrott is the founding director of the Levy Rosenblum Institute for
Entrepreneurship at Tulane University's A.B. Freeman School of Business that was
started in 1991. He has been on the faculty at Tulane since 1982.
Avram J. Goldberg, 69, has served as a director of the Company since May 1994.
Mr. Goldberg has been the Chairman of the Board of AVCAR Group, Ltd., a
consulting firm specializing in the retail industry, since 1989. Mr. Goldberg
also serves as a director of Ekco Group, Inc.
Fred "Chico" Lager, 44, has served as a director of the Company since January
1996. Mr. Lager has been a Trustee of Fenimore Asset Management Trust, a mutual
fund company, since 1997. Mr. Lager has been a self-employed consultant,
working with a select number of emerging small businesses, since 1991.
John P. Mackey, 45, co-founder of the Company, has served as Chairman of the
Board and Chief Executive Officer since 1980.
Dr. Ralph Z. Sorenson, 65, has served as a director of the Company since
December 1994. Dr. Sorenson is currently Professor Emeritus of business
administration at the University of Colorado, Boulder and has served in various
capacities at the University of Colorado since July 1992, including Dean of the
College of Business and Graduate School of Business Administration. Dr. Sorenson
serves as a director of the Polaroid Corporation, Houghton Mifflin Company,
Eaton Vance Inc. and Exabyte Corporation.
4
<PAGE>
Committees and Meetings. The Board of Directors maintains the following three
standing committees. The members of the various committees are identified in
the preceding table of continuing directors.
. Audit and Finance. The Committee is empowered to recommend to the
Board the appointment of the Company's independent public accountants
and to periodically meet with such accountants to discuss their fees,
audit and non-audit services, and the internal controls and audit
results for the Company. The Audit and Finance Committee also is
empowered to meet with the Company's accounting personnel to review
accounting policies and reports.
. Compensation Committee. The Compensation Committee is responsible for
determining the compensation for the Company's executive officers and
regional presidents. The Compensation Committee also administers the
Company's stock option plans and employee stock purchase plan.
. Nominating Committee. The Nominating Committee recommends to the Board
qualified nominees for election to the Board. The Nominating Committee
considers suggestions from many sources, including shareholders,
regarding possible candidates for director. Such suggestions, together
with appropriate biographical information, should be submitted to the
Secretary of the Company.
During fiscal 1998, the Board of Directors and the various committees held
the following number of meetings: Board of Directors, five; Finance and Audit
Committee, two; Compensation Committee, two; and Nominating Committee, one. No
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees on which that director served.
Executive Compensation
Compensation of Directors
Each non-employee director of the Company receives $3,000 for each Board of
Directors meeting he or she attends and $500 for each telephone meeting called
by the Company which is greater than one hour in length and in which a majority
of directors participate. Each non-employee committee chair receives an annual
retainer of $1,500. Each non-employee director receives $500 for each committee
meeting attended (excluding the Nominating Committee meetings). Each non-
employee director who is a member of the Nominating Committee receives $2,500
for each new director recruited. In addition, directors are reimbursed for
reasonable expenses incurred in attending Board of Directors meetings. Mr.
Mackey, who is the only director who is also an employee of the Company, does
not receive any additional compensation for serving on the Board of Directors.
Under the Company's option plan for outside directors, each newly elected
director is entitled to an option as of the date of his or her election to
purchase 10,000 shares of the Company's common stock at an exercise price equal
to the closing price of the Company's common stock on the date of grant.
Incumbent directors are entitled to an option grant as of the date of the
Company's annual meeting of shareholders to purchase 2,000 shares of the
Company's common stock at an exercise price equal to the closing price of the
Company's common stock on the date of grant if the director attended at least
two-thirds of the meetings of the Company's Board of Directors held in the
preceding year.
5
<PAGE>
Compensation of Executive Officers
The following table sets forth information concerning compensation paid or
accrued by the Company during the three-year period ended September 27, 1998 to
or for the Company's Chief Executive Officer and the certain other highest
compensated executive officers of the Company whose total compensation exceeded
$100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Other Company
Name and Annual Stock
Principal Position Year Salary Bonus(1) Compensation(2) Options
- ------------------ ---- ------ -------- --------------- -------
<S> <C> <C> <C> <C> <C>
John P. Mackey 1998 $185,000 $ 90,000 $ 500 9,000
Chairman & CEO 1997 170,000 93,000 500 9,000
1996 145,000 52,500 500 9,000
Peter Roy 1998 $165,000 $110,000 $ 500 4,000
Former President 1997 150,000 103,000 500 4,000
1996 130,000 67,900 500 19,000
Chris Hitt 1998 $165,000 $ 94,000 $ 500 0
Former Regional President 1997 150,000 68,900 500 3,600
Current President (3) 1996 150,000 47,707 8,035(4) 31,100
Glenda Flanagan 1998 $150,000 $125,000 $ 500 4,000
CFO 1997 135,000 105,000 500 4,000
1996 115,000 78,700 500 9,000
James P. Sud (5) 1998 $150,000 $125,000 $ 500 4,000
COO 1997 90,000 47,600 ----- 14,000
Carl Morris (6) 1998 $130,000 $145,000 $ 500 4,000
Former CIO 1997 130,000 92,000 500 4,000
1996 110,000 47,700 500 9,000
</TABLE>
(1) The Company has a policy that limits the cash compensation paid in any one
year to any officer to ten times the average full time salary of all Team
Members. Amounts earned in excess of the salary limitation may be deferred
to the next year, subject to certain restrictions.
(2) Except as otherwise indicated, the amounts indicated reflect the Company's
contributions on behalf of the persons indicated to the Whole Foods Market,
Inc. Savings Plan and Trust. In 1996, 1997 and 1998, the Company's
contribution was a maximum of $500 paid in shares of the Company's common
stock.
(3) Mr. Hitt became the Company's President effective January 1, 1999.
(4) Of the amount indicated, $7,535 represents reimbursement of moving
expenses.
(5) Mr. Sud did not earn $100,000 prior to fiscal 1997. Salary and bonus for
1997 are prorated to reflect Mr. Sud's May 1, 1997 employment date.
(6) As of the fiscal year end, Mr. Morris was no longer an executive officer of
the Company but served as President of WholeFoods.com, a subsidiary of the
Company.
6
<PAGE>
Option Plans
The following table sets forth certain information with respect to the
options granted during the fiscal year ended September 27, 1998 to each
executive officer of the Company listed in the Summary Compensation Table set
forth under the caption "Executive Compensation."
Option Grants in Fiscal Year 1998
<TABLE>
<CAPTION>
Percentage of Potential Realizable Value
Total Options of Assumed Annual Rates
Number Granted to of Stock Price Appreciation
of Options Employee in Exercise Price Expiration for Option Term (1)
Name Granted Fiscal Year per Share (3) Date 5 % 10 %
- ----------------- ---------- ------------- --------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John P. Mackey 5,000 $ 49.75 01/21/05 $101,266 $235,993
4,000 $ 69.75 03/31/05 $113,581 $264,692
-----
9,000 (2)
Peter Roy 4,000 (2) $ 69.75 03/31/05 $113,581 $264,692
Chris Hitt 0 - - - - -
Glenda Flanagan 4,000 (2) $ 69.75 03/31/05 $113,581 $264,692
James P. Sud 4,000 (2) $ 69.75 03/31/05 $113,581 $264,692
Carl Morris 4,000 (2) $ 69.75 03/31/05 $113,581 $264,692
</TABLE>
(1) The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not reflect the
Company's estimates or projections of future prices of the shares of the
Company's common stock. There can be no assurance that the amounts
reflected in this table will be achieved.
(2) Less than 1%.
(3) Closing price of common stock at date of grant.
The following table sets forth certain information with respect to the
options exercised by the executive officers named above during the year ended
September 27, 1998 or held by such persons at September 27, 1998. The number of
options held at September 27, 1998 includes options granted under the 1992
Option Plan for Team Members.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options at
Shares at September 27, 1998 at September 27, 1998
Acquired Value -------------------------- --------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John P. Mackey 0 $ 0 79,350 24,650 $2,819,350 $370,875
Peter Roy 0 0 48,100 20,900 1,121,563 386,813
Chris Hitt 69,815 3,189,568 22,186 22,250 568,313 417,735
Glenda Flanagan 900 41,625 58,200 15,900 1,990,963 273,375
James P. Sud 0 0 10,100 16,700 260,838 287,063
Carl Morris 4,800 186,000 12,150 17,100 279,356 302,075
</TABLE>
7
<PAGE>
(1) Calculated using the difference between the actual sales price of the
underlying shares (if the underlying shares were sold immediately upon
exercise) or the closing sales price of the Common Stock on the date of
exercise (if the underlying shares were not sold immediately upon exercise)
and the exercise price.
(2) Amounts were calculated by multiplying the number of unexercised options by
the closing sales price of the Common Stock on the last trading day of
fiscal 1998 ($43.625) and subtracting the exercise price.
Employment Agreements
Since November 1991, the Company has entered into Retention Agreements with
the executive officers of the Company or its subsidiaries that provide for
certain benefits upon an involuntary termination of employment other than for
cause after a "Triggering Event." A Triggering Event includes a merger of the
Company with and into an unaffiliated corporation if the Company is not the
surviving corporation or the sale of all or substantially all of the Company's
assets. The benefits to be received by the executive officer whose employment
is terminated after a Triggering Event occurs include receipt of his or her
annual salary through the one-year period following the date of the termination
of employment and the immediate vesting of any outstanding stock options granted
to such executive officer.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between the members of the Company's
Board of Directors or Compensation Committee and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
REPORT OF THE COMPENSATION COMMITTEE
The Company's Compensation Committee is empowered to review and recommend
to the full Board of Directors the annual compensation and compensation
procedures for all executive officers and regional presidents of the Company.
The Committee also administers the Company's stock option plans and team member
stock purchase plan.
Annual executive officer and regional president compensation consists of a
base salary component and an incentive component. The Company's publicly stated
policy is to limit cash compensation paid to any executive officer or regional
president in any calendar year to ten times the average full-time salary of all
team members. Amounts earned in excess of the salary cap may be deferred to the
next year, subject to certain restrictions. All compensation decisions are
subject to the implementation of this policy. Subject to the foregoing, the
Committee considers numerous factors including the Company's financial
performance, the individual contribution of each executive officer and regional
president, compensation practices of comparable companies and general economic
factors. Stock price performance has not been an important consideration in
determining annual compensation, because the price of the Company's common stock
is subject to a variety of factors outside the Company's control.
The base salary levels for the executive officers and regional presidents
of the Company were increased between 0% and 20% in calendar 1998 over calendar
1997. The most significant determinants in these increases were (i) the level
of revenues and net income achieved by the Company and by its operating regions
and (ii) the growth of its operating regions and increased level of
responsibilities of certain of the executive officers and regional presidents.
8
<PAGE>
All of the Company's executive officers and regional presidents participate
in an incentive compensation plan. The incentive compensation paid to the
executive officers for fiscal 1998 was based upon the increase in earnings per
share of the Company. The incentive compensation paid to the regional
presidents was based upon the earnings, new store performance and return on
assets achieved by the specific geographic region of the Company that
corresponds to the executive's area of responsibilities. Additionally,
executive officers and regional presidents may receive special cash bonuses or
option grants at the discretion of the Compensation Committee in connection with
relocations from one region to another, or for successful completion of special
projects. Fiscal 1998 incentive compensation averaged approximately 40% of the
total cash compensation received by the executive officers and regional
presidents.
The Company's executive officers and regional presidents also have received
grants of options under the stock option plans of the Company. The Committee
believes that the grant of options enables the Company to more closely align the
economic interest of the executive officers and regional presidents to those of
the shareholders. The level of stock option grants to executive officers and
regional presidents is based primarily upon their relative positions and
responsibilities within the Company. Grants are made on a discretionary rather
than formula basis by the Committee.
For calendar 1998, the Committee recommended an increase in the base salary
of Mr. Mackey, chief executive officer of the Company, from $170,000 to
$185,000. The increase was intended to recognize Mr. Mackey's contribution
toward the (i) significant growth of the Company, (ii) increase in net income of
the Company in fiscal 1998 over fiscal 1997 and (iii) relative position of the
Company in the natural foods industry. The Committee was also cognizant of the
generally higher level of base salaries paid to chief executive officers of
comparable sized companies. Mr. Mackey's incentive compensation represented
approximately 33% of his total cash compensation for fiscal 1998. During fiscal
1998, Mr. Mackey was awarded options to purchase 9,000 shares of common stock
under the Company's incentive stock option plan.
Compensation Committee
Dr. Cristina G. Banks (Chair)
Fred "Chico" Lager
Dr. Ralph Z. Sorenson
9
<PAGE>
STOCK PRICE PERFORMANCE
The following graph compares the cumulative total return of the Company's
Common Stock during the last five fiscal years with the Nasdaq Stock Market
(U.S.) Index and the S & P Retail Food Chains Index during the same period. The
graph shows the value, at the end of each of the last five fiscal years, of $100
invested in the Company's Common Stock or the indices on September 27, 1993 and
assumes the reinvestment of all dividends. Historical stock price performance
is not necessarily indicative of future stock price performance.
[PERFORMANCE GRAPH APPEARS HERE]
FISCAL YEAR ENDING
---------------------------------------------------
1993 1994 1995 1996 1997 1998
Whole Foods $100.00 70.32 61.94 140.65 180.00 225.16
Composite Nasdaq $100.00 99.67 138.61 161.86 221.36 229.43
S&P Retail Food Stores $100.00 102.31 128.29 158.41 163.08 235.88
10
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of January 29, 1999 for (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of common stock, (ii) each director of the Company, (iii)
each executive officer of the Company listed in the Summary Compensation Table
set forth under the caption "Executive Compensation," and (iv) all of the
directors and officers of the Company as a group. Except pursuant to applicable
community property laws and except as otherwise indicated, each shareholder
identified in the table possesses sole voting and investment power with respect
to its or his shares.
Shares Owned (1)
----------------------
Name Number Percent
- ---- ------ -------
FMR Corp. (2) 1,407,000 5%
Dr. Cristina G. Banks (3) 21,300 *
David W. Dupree (4) 8,010 *
Dr. John B. Elstrott (5) 6,600 *
Glenda Flanagan (6) 64,724 *
Avram J. Goldberg (7) 15,100 *
Christopher Hitt (8) 44,705 *
Fred "Chico" Lager (9) 10,317 *
John P. Mackey (10) 331,817 1%
Linda A. Mason (11) 18,500 *
Carl Morris (12) 18,974 *
Peter Roy (13) 89,024 *
Jirka Rysavy 0 *
Dr. Ralph Z. Sorenson (14) 10,500 *
James P. Sud (15) 56,475 *
All directors and officers
as a group (21 persons) 881,815 3%
* Less than one percent
(1) Includes shares issuable upon exercise of stock options that are vested or
will be vested prior to March 29, 1999.
(2) Based on information contained in Schedule 13G, as amended on December 10,
1998. The amount indicated reflects FMR Corp's beneficial ownership as of
November 30, 1998. Of the shares indicated, FMR Corp. has the sole voting
power of 611,400 shares and the sole power to dispose of all the shares
indicated. The address of such shareholder is 82 Devonshire Street, Boston,
Massachusetts 02109.
(3) Includes options to purchase 21,100 shares of common stock.
(4) Includes options to purchase 2,041 shares of common stock.
(5) Includes options to purchase 3,000 shares of common stock.
(6) Includes options to purchase 58,700 shares of common stock.
(7) Includes options to purchase 12,100 shares of common stock.
(8) Includes options to purchase 26,681 shares of common stock.
(9) Includes options to purchase 8,500 shares of common stock.
(10) Includes options to purchase 67,450 shares of common stock.
(11) Includes options to purchase 18,500 shares of common stock.
(12) Includes options to purchase 18,950 shares of common stock.
(13) Includes options to purchase 41,133 shares of common stock.
(14) Includes options to purchase 10,500 shares of common stock.
(15) Includes options to purchase 14,900 shares of common stock.
11
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Certain Relationships and Related Transactions
John P. Mackey and Glenda Flanagan, executive officers of the Company, own
approximately 11% in the aggregate of BookPeople, Inc. which leases facilities
from the Company. During fiscal 1998, the lease was amended to reduce the size
of the leased facility and the aggregate annual minimum rent from approximately
$582,000 to approximately $391,000. In fiscal 1998, the Company received
approximately $456,000 in rental income from this lease.
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 follows. A sale of common
stock was not timely reported on a Form 4 filed by Dr. John B. Elstrott. This
failure to report was inadvertent, and the transaction has now been reported on
Dr. Elstrott's amended Form 4 filed in June 1998.
SHAREHOLDERS' PROPOSALS
Any proposals that shareholders of the Company desire to have presented at
the 2000 annual meeting of shareholders must be received by the Company at its
principal executive offices no later than October 15, 1999.
ADDITIONAL INFORMATION
Proxy Solicitation. The Company will bear all costs of this proxy
solicitation. Proxies may be solicited by mail, in person, or by telephone or
facsimile transmission by officers, directors and regular employees of the
Company. The Company may also reimburse brokerage firms, custodians, nominees
and fiduciaries for their expenses to forward proxy materials to beneficial
owners.
Internet and Telephone Voting. For shares that are beneficially owned
and held in "street name" through a broker, shareholders have the opportunity to
vote via the Internet or by telephone by utilizing a program provided through
ADP Investor Communication Services ("ADP"). Votes submitted electronically via
the Internet or by telephone through this program must be received by 4:00 p.m.,
New York time, on March 26, 1999. The giving of such a proxy will not affect
the right to vote in person, should the shareholder decide to attend the Annual
Meeting. The Company has been advised by counsel that the Internet and
telephone voting procedures that have been made available through ADP are
consistent with the requirements of applicable law. In accordance with
applicable Texas corporate laws, registered record holders of shares (unlike
holders who own shares in "street name") may not submit their proxy
electronically via the Internet or by telephone.
The Internet voting procedures are designed to authenticate shareholder
identities, to allow shareholders to give their voting instructions and to
confirm that shareholders' instructions have been recorded properly.
Shareholders voting via the Internet should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the shareholder.
12
<PAGE>
PROXY
WHOLE FOODS MARKET, INC.
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 29, 1999, at 10:00 a.m., local time, at the Hotel Boulderado, 2115
13th Street, Boulder, CO and the Proxy Statement in connection therewith, and
(b) appoints John Mackey and Glenda Flanagan, and each of them, his 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 Common 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
proxy be voted as follows:
ELECTION OF DIRECTORS
[_] FOR nominees listed below except as marked to the
contrary below
[_] WITHHOLD AUTHORITY to vote for all nominees listed
below
Dr. Cristina G. Banks, Linda A. Mason, Jirka Rysavy
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return this proxy card in the
enclosed envelope (which requires no postage if mailed in the United States).
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NAMED PROPOSALS.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all
that said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
DATED: _____________________________
------------------------------------
Signature
------------------------------------
(Signature if held jointly)
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.
