Whole Foods is requesting its shareholders to vote:
To approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 600 million to 1.2 billion
As a common shareholder, why would I want to approve an increase in the number of authorized shares? It seems to me that this just dilutes the earnings per authorized share, and consequently the value of the shares that I hold (both in terms of control/ownership and dividends). I understand that there may be some upsides to this proposal with respect to managing the company, but it seems to me that these are severely offset by dilution.
As stated in the proposal:
If the amendment is approved, except as may be required by law or NASDAQ rules, no further shareholder approval would be required prior to the issuance of the additional shares authorized by the amendment. While adoption of the amendment would not have any immediate dilutive effect on the proportionate voting power or other rights of the Company’s existing shareholders, any future issuances of additional shares could significantly dilute the equity interests of current shareholders and could have a negative effect on the market price of the Common Stock. Current shareholders have no preemptive or similar rights, which means that current shareholders do not have a prior right to purchase any new issue of common stock in order to maintain their proportionate ownership.