Whole Foods Market is known for its commitment to local communities by promoting health through natural, whole, fresh foods. Corporate Board Member intern, Nicole Palmer, spoke with John Elstrott, Chairman of the Board, to find how the board of directors functions to capitalize on Whole Foods’ mission.
Corporate Board Member: What is your main area of focus as Chairman of the board?
John Elstrott: To ensure a productive, honest, open, and challenging dialogue between management and the board.
CBM: You are the former chair of the audit committee. Has your focus changed since you have become Chairman of the board?
JE: Yes, I’m still a member of the audit committee but my focus is more on the overall culture and performance of the board, and I lead the meetings so my concern is to make sure that we have a good agenda prepared that addresses the issues that are current and keeps us looking forward and trying to be innovative and supportive in terms of roles of board members. It’s a bigger picture than just the audit committee.
CBM:What traits make a strong director?
JE: They understand the culture of the business, they are passionate about the overall purpose of the business, and they’re honest. They’re hardworking, they do their homework, and they look beyond just making a profit. They look for ways to work with management to create mutually beneficial exchanges for all the stakeholders, exchanges between all stakeholders that are win-win, that create value. We want a board member who wants to be a part of a purpose-driven business that creates value. That’s what I look for in a board member.
CBM: Do you feel that having a career or experience in the same industry as the board you sit on gives you an advantage in understanding the best direction you can take for the company?
JE: It helps but it’s not necessary. It’s good also to have some perspective from board members who didn’t come up in the industry.
CBM:As a board member, what do you feel is the shareholders’ responsibility to the board?
JE: Well, the shareholders don’t have a responsibility towards the board. The shareholders made an investment, generally in a public company they’re looking for appreciation over time and preservation of value. So the board represents the interest of all the stakeholders but their primary responsibility is a fiduciary responsibility to represent the interest of the shareholder. So the responsibility is more from the board member toward the shareholder not the shareholder toward the board member. The shareholders have an expectation to the board members.
CBM: 30% of shareholders recently voted to put a succession planning policy in place. How is Whole Foods responding to that vote?
JE: We discuss succession at every meeting. It’s at the forefront of our minds. That’s a primary job of the board—to ensure we have good leadership at the top and that there’s a good succession plan in place and that there’s good training going on and preparation for the next generation of leaders. So we already are taking care of that. That was an unnecessary motion by the shareholders. It’s something, of course, that we’re looking at. We have a succession plan in place. There’s no need for us to have a formal written succession plan in place that’s part of a proxy statement that our competitors can look at. That’s in no one’s interest, it isn’t the best interest of the company or the shareholders.
CBM: A few years ago, Whole Foods decided to split the roles of Chairman and CEO. Do you feel that that’s a step that should be taken by other companies?
JE: It’s dependent on the company itself.
CBM:What are the guidelines that should be considered regarding board/shareholder engagement?
JE: Well, the shareholders should have access to the board, and we provide that access. Generally shareholders want to talk to management, they don’t want to talk to board members, but we provide access to our shareholders.
CBM: How important do you feel diversity is to boardroom effectiveness?
JE: Well your customers are diverse, your employees are diverse, you would be foolish not to have a diverse board.
CBM: Did you see yourself in this position at this point in your career?
JE: Yes, I had a career plan in mind. I started out 40 years ago at companies that made a difference in the world, and my hope was that those companies would succeed. I knew it would take time and patience and innovation and hard work but if you stick with something that creates value for people, makes a difference in the world, and has a purpose beyond just making money, you will succeed. So yes, I envisioned that this would happen and it did.
CBM: What would you like your legacy to be on your current board?
JE: That I helped fulfill the higher purpose of the company.
CBM:Do you have a dream board that you would like to sit on?
JE: Whole Foods Market’s my dream board, I’m on it.
topic tags: board of directors, corporate governance