Business and Society 9th Edition by Archie Carroll,Ann Buchholtz

Exercise 6

The Anonymous CEO: Strong or Weak Ethical Leader?
John Mackey, CEO of Whole Foods, the country's number one natural and organic grocery store chain, was exposed in July 2007 for having written more than 1,300 anonymous postings on a Web-based Yahoo Finance stock forum between 1999 and 2006. His messages on the discussion forum bashed competitors and praised his own company.
Whole Foods is a giant firm, with 39,000 employees spread over 196 stores in the United States, Canada, and the UK. At the end of fiscal 2006, the company's gross profit margin was 35 percent, compared with 24 percent at Kroger and 29 percent at Safeway. It had sales of $5.6 billion.
Mackey, who took on the pseudonym "Rahodeb" (an anagram of Deborah, his wife), was "outed" by an FTC court filing in July 2007. The Securities and Exchange Commission began an examination of the CEO's postings to determine if he broke any laws. Interestingly, Mackey's alter ego was exposed by the FTC, which filed a lawsuit seeking to block Whole Foods' planned purchase of Wild Oats, its main competitor, on antitrust grounds.
After Mackey apologized to Whole Foods' board, the board announced it would begin an internal investigation of the matter.
In some postings, Mackey (as Rahodeb) bashed Wild Oats, criticizing their former CEO for lack of vision, while noting that it wasn't a profitable company. In a February 2005 posting, Rahodeb apparently wrote with some delight that Wild Oats was going to have to restate its earnings. Rahodeb went on to say that Oats had been misleading its investors for years and that the company was headed for shareholder litigation. He also questioned Wild Oats' leadership regarding its competence and integrity. In spite of these comments, Whole Foods began an effort to acquire Wild Oats, its main rival, in February 2007, but the FTC was seeking to block this purchase on antitrust grounds.
In a public statement posted on Whole Foods' Web site, Mackey claimed that his anonymous postings did not reflect his or his company's policies or beliefs and that some of the views of Rahodeb did not even match his own beliefs.
Mackey explained that he had made the online comments anonymously because he had fun doing it. Some of his defenders have said that his comments were never intended to disclose insider information or to move stock prices.
In 2013, Mackey stimulated another controversy by something he said. To appreciate this it is important to understand that a typical Whole Foods shopper is environmentally conscious. Mackey came out and said that he didn't think global warming was necessarily bad. One writer observed: "Right. That's gonna go over real well with Whole Foods' core customers. 'Climate change is perfectly natural and not necessarily bad.' Uh huh."
1. Were Mackey's anonymous postings representative of a strong, moral leader or a weak, uncertain leader? What insights into his character are revealed by this episode? Is it ethical for a CEO to engage in such deceptions?
2. Do you see Mackey's actions as positive, negative, or indifferent in terms of setting a strong ethical tone for his company?
3. Were Mackey's deceptions just a harmless, fun activity or do they have harmful implications for Whole Foods in the future?
4. Will Mackey's comments about global warming betray the basic beliefs of his environmentally conscious customers?