Few saw the acquisition of Whole Foods Market by Amazon.com coming, though the synergies between the companies were many, according to former directors at Whole Foods. In light of activism and other challenges presented at the company, the move to sell Whole Foods to Amazon at $42 per share, or $13.4 billion, made sense. So did the opportunity to shake up the company’s board.

NACD Colorado recently welcomed a panel of three of the aforementioned former Whole Foods directors, including John Elstrott, former chair of the board and audit committee chair; Bud Sorenson, former nominating and governance committee and compensation committee chair; and Mo Siegel, financial expert and member of the audit and compensation committees, to share the story of the sale. NACD Colorado program committee chair and EY Partner Kris Pederson moderated, and EY strategy partner lead for consumer products Dave Hollman added perspective around and beyond the transaction.


At a time when the industry was suffering, Whole Foods saw same-store sales declining 1.5 percent in 2017 and 2 percent in 2016. The brand also needed to make large investments to bring its lagging technology infrastructure up to date. When Jana Partners purchased close to 9 percent of the company’s stock, the board saw the writing on the wall and immediately started planning for a counterstrike.

Due to the shift in company stock price, Whole Foods’ shareholders had changed. Siegel explained that no longer did the company fit into either the large cap growth or value funds of institutional shareholders. Thus, a proxy fight would mean talking to a new set of institutional shareholders, namely index funds focused on shorter-term numbers, where the company did not have existing relationships.

When Jana filed a form 13D with the U.S. Securities and Exchange Commission and notified the company that it wanted to replace six directors, including the chair, the board took proactive measures, according to Elstrott. Not only did six directors voluntarily resign, including Elstrott, Sorenson, and Siegel, but the board found and voted in new directors quickly, with credentials they believed exceeded those of replacement directors promoted by Jana. The company also quickly restarted talks with Amazon. Siegel added, “The 13D was like a bomb dropped at the company.”


All three directors who sat on the panel stressed the strong culture at Whole Food, resting on founder and CEO John Mackey’s novel approach to company purpose, known as conscious capitalism. According to Sorenson, the company’s mission was to:

  • Sell the healthiest food to change eating habits and agriculture;
  • Practice servant leadership and bring out the best in team members; and
  • Focus on optimizing returns for customers, team members, partners in the supply chain, investors, communities, and the environment.

When Mackey met Jeff Bezos, there was an instant synergy. “It was love at first site,” said Sorenson. “The more they talked, the more synergies they uncovered.” Amazon and Whole Foods shared cultural beliefs, including an emphasis on customer experience; however, there was a concern about the amount of efficiency change that would be placed on Whole Foods team members. “At a farewell dinner for board members,” said Sorenson, “we were heartened to hear that Amazon didn’t want our culture to change.”

Leadership Takeaways

Pederson facilitated the discussion of a series of lessons learned by taking audience questions. The tenure of members of the Whole Foods board—more than 20 years each for Elstrott and Sorenson, for example—was an issue Jana Partners raised. For public companies, said Elstrott, board turnover is important, though he disavows tenure and age limits and favors annual terms with systematic director and board performance reviews rather than legislated mandates.

Further, Elstrott’s advice to other companies in a world where disruption is accelerating was varied.

  • The board should encourage its CEO to surrounded himself with talented leaders who are not afraid to take a contrary position and back it up with experience and knowledge.
  • Establish a strong board and CEO dialogue that encourages a dialogue on tough questions.
  • Understand that a diverse board and management team—including age, gender, and ethnic diversity—enables companies to react to technology change and competition with greater agility.
  • Stay on top of developments in governance best practices. Whole Foods offered board members $10,000 per year for director education, such as that offered by NACD, as a means to prepare their governing body to navigate governance challenges with confidence.
  • Know that your company could be disrupted, so be prepared to act fast.


Amazon’s purchase of Whole Foods accelerated disruption in the grocery sector. According to Hollman, “In the 90 days after the purchase, Amazon moved with a speed not seen in the industry.” It dropped prices to combat Whole Foods’ “whole paycheck” moniker. It activated Prime Go, a delivery service for Prime members that guaranteed home delivery of Whole Foods products within two hours. “It began to unleash the power of its prime members—70 million unique households,” he said.

Though Kroger lost one third of its market cap after the sale of Whole Foods, “the death of the big retailers was wildly exaggerated,” Hollman noted. “The big guys fought back.” For example, Walmart started a click and collect model, ramping digital efforts quickly to allow for in-store pick up within 15 minutes.

What’s to come? Hollman said the future is bright for technology-driven brick and mortar stores with a strong online presence. And to really peer into a crystal ball, “keep your eye on China,” he stressed. Alibaba was reported to have earned $24 billion in 24 hours on Singles Day, the wildly popular Chinese holiday that is comparable with Black Friday, with 80 percent earned via mobile.


Kimberly Simpson is an NACD regional director, providing strategic support to NACD chapters. Simpson, a former general counsel, was a U.S. Marshall Memorial Fellow to Europe in 2005.