Wednesday, February 26, 2014
Monsanto and Whole Foods...
Is there a Whole Foods-Monsanto connection?
The answer is yes.
But the important question is: what does this connection mean?
What does it imply?
Is it significant?
If you consult open listings (for example, investors.morningstar.com), you can look at the major shareholders of these two publicly traded companies, Monsanto and Whole Foods.
If you read the top 10 shareholders for each company—the holders of the most stock—you’ll see that five out of those ten are the same.
Who are those five?
Don’t prepare to see the names of individuals.
The five are funds. Investment funds.
They are, at the moment: Vanguard Total Stock Mkt. Index; SPDR S&P 500; Vanguard Institutional Index I; Vanguard 500 Index Inv; Harbor Capital Appreciation Instl.
These funds buy stocks in many, many companies.
These funds don’t say, “Well, we’ll buy Monsanto and Whole Foods stock and then exert massive direct control over Whole Foods and make it bow to Monsanto’s agenda.” No. That’s not how it works.
These funds make automatic purchases of stocks, based on computer calculations and based on the S&P rankings of companies.
These investment funds could be sitting on Mars, and their computers would be running numbers and buying and selling stock in Earth companies with no input from the outside.
Unless…something came up. Unless something big came up. Unless a private and elite word went out that Whole Foods was becoming a threat to some entrenched interest, some vital agenda. For example, some Monsanto agenda.
In that case, one of these big shareholders could cast a proxy vote that would go against the aims or plans of Whole Foods.
One of Vanguard’s investment funds is THE top shareholder of Monsanto, and the fourth largest shareholder of Whole Foods. Here, from Vanguard’s website, is a quote from “Vanguard’s proxy voting guidelines.” Read carefully:
“In evaluating proxy proposals, we consider information from many sources, including but not limited to, the investment advisor for the fund, the management or shareholders of a company presenting a proposal, and independent proxy research services. We will give substantial weight to the recommendations of the company’s board, absent guidelines or other specific facts that would support a vote against management. In all cases, however, the ultimate decision [on how to vote] rests with the members of the [Vanguard] Committee, who are accountable to the [Vanguard] fund’s Board.”
The key excerpt from this paragraph is: “We will give substantial weight to the recommendation of the company’s board, absent guidelines or other specific facts that would support a vote AGAINST MANAGEMENT.”
Bottom line, in plain English, it goes this way: “We, as an investment fund, hold a huge number of shares of a company (like Whole Foods). If the company is holding a vote on its future plans and policies, we can, if we decide to, weigh in with our huge voting block and go against the wishes of that company. And win.”
If such a proxy vote came down to favoring the agenda of Monsanto or Whole Foods, and if the situation was crucial enough, who do you think would come out on top? Who would be torpedoed?
Taking this a step further: with Whole Foods’ decision, in January of 1992, to go public, to become a publicly traded company, to sell stock out in the open, it put itself into a world where money talks a language that is no longer simply based on products sold and company profit.
Whole Foods entered a world where billions and trillions of dollars exert influence, where “important people” can “have discussions” with companies and “suggest strategies” and “offer advice” that goes beyond how to run a successful enterprise.
If someone who is tangentially associated with one of Whole Foods’ top shareholders shows up and wants to talk, there are ears ready to listen.
Remember, that top shareholder in Whole Foods is also a top investor in Monsanto. It isn’t hard to figure out which company—Whole Foods or Monsanto—occupies the superior position in that someone’s mind.
The top shareholder in Whole Foods holds a boatload of proxy votes in his back pocket. He can cast them with or against Whole Foods. The possibility is always there.