Safeway Trimmed CEO’s Pay 41% in ’02

The discounts at the Safeway Inc. grocery chain now extend to the chief executive.

The owner of Vons grocery stores in Southern California said in a regulatory filing Friday that it trimmed the pay of Safeway Chief Executive Steven Burd last year by 41% to $1.26 million.

Burd, who also is chairman of the Pleasanton, Calif.-based company, collected $1 million in salary last year, the same as in 2001. But the board of directors slashed his annual bonus by 78% to $258,000 from the $1.15 million he received in 2001. In addition, Burd didn’t use the company jet for personal travel -- a perk that was worth $59,000 in 2001.

Hurt by discounting and increased competition, Safeway shares declined 46% last year as the company lost $828.1 million, contrasted with a $1.25-billion profit in 2001.

Burd’s reduced pay is typical of current trends in executive compensation, experts say.

“I have not seen many decreases in the base salary, but the bonuses are down,” said Joe Rich, a compensation consultant with Clark/Bardes Consulting. “When the bonuses are paid, they are running at 35% to 45% of what the bonus target would have been if the company met its performance goals.”

Like other supermarket chains, Safeway -- the nation’s third-largest -- is facing competition from discount retailers such as Target Corp. and Wal-Mart Stores Inc. and warehouse clubs such as Costco Wholesale Corp. Even 99 Cents Only Stores is starting to eat into the market share of the traditional grocers in California.

In February, Safeway said its fourth-quarter comparable-store sales, a key measure of a retailer’s health, fell 1.3%. Safeway, which has 1,695 stores in North America, said total sales increased to $10 billion from $9.9 billion in the fourth quarter of 2001, primarily because of new store openings.

Safeway lost $1.1 billion in the period ended Dec. 31, contrasted with profit of $353.6 million in the same year-earlier quarter.

Burd’s pay cut won’t dent his personal wealth much. Safeway’s filing with the Securities and Exchange Commission noted that he made $11 million exercising Safeway stock options in 2002, though those earnings come with a hefty income tax bill.

Burd retains $76.8 million worth of in-the-money options that he hasn’t cashed.

Safeway shares rose 21 cents Friday to close at $19.77 on the New York Stock Exchange.