Last Updated Aug 25, 2008 12:25 PM EDT
Multnomah County Circuit Court will decide whether Gary De Bay's claims have merit, but in the meantime, the suit could add fuel to the Federal Trade Commission's contention, recently seconded by an appeals court, that Whole Foods should not have been allowed to acquire Oats a year ago.
According to Portland Tribune reporter Nick Budnick, De Bay directed "new ventures and strategic planning" at Boulder, Colo.-based Wild Oats. His turnaround plan to quadruple sales in five years was approved by the company's board in March 2005 but never funded, De Bay claims.
He alleges that they instead sought to cut expenses to increase short-term profits "so they could reach their 100 percent individual cash bonuses.""If I were the lawyer for the FTC, interviewing (De Bay) as a potential witness would be high on my to-do list," said Richard Pierce Jr., an antitrust professor at the George Washington Law School. "This lawsuit and whatever this guy might have to say in an FTC hearing could make the antitrust problems worse for Whole Foods and Wild Oats."
De Bay further alleges that those bonuses were particularly important to [former CEO Perry] Odak and his management team because it was the final year of their five-year contracts, and therefore the bonuses translated to a significantly larger severance payout or "golden parachute."
De Bay alleges that in late 2006 he directly accused the management team of "artificially dressing the company for sale" and that he believed they were "intentionally driving down the value of Wild Oats Markets Inc. to position the corporation for sale for their personal gain, and were not acting in the best interests of the stockholders of Wild Oats Markets Inc."
Odak came in from Ben & Jerry's as a turnaround specialist but his leadership team struggled to get the job done at Wild Oats. De Bay, who lists consulting clients and employers Nike, Starbucks, Exclusive Resorts, Coca-Cola, and Apple, now serves as executive vice president of global strategy and marketing for another Boulder company, Spyder Active Sports.
Since closing the deal last August, Whole Foods has sold, closed, or rebranded a number of Wild Oats stores. Odak, who left Oats before the merger was announced, has stayed out of the press, except for the Denver society pages, which have chronicled Odak's high-ticket adventures with his new wife Stephanie.
Image of Henderson, Nevada, Wild Oats store by Flickr user Miss Shari