Safeway Investors Confer on CEO’s Fate

A group of disgruntled Safeway Inc. investors said they met with a majority of the company’s stockholders Monday, hoping to turn up the heat on the slumping supermarket giant and force a change in command later this spring.

About 55% of Safeway’s outstanding shares were represented at an hourlong meeting held in New York, with 93 representatives either showing up in person or participating by telephone, said New York State Comptroller Alan Hevesi, one of the meeting’s leaders.

Some shareholders unable to make Monday’s meeting may be approached during the next few weeks, Hevesi added.

Safeway, based in Pleasanton, Calif., has brushed off the shareholder attacks as the misguided campaign of a few public pension funds beholden to labor groups still bitter about a 4 1/2-month Southern California grocery strike and lockout that ended in late February.

On Monday, Safeway limited its comments to a brief statement assuring “efforts to maximize shareholder value are well underway.” The company is set to report quarterly earnings May 4.

Monday’s meeting provided a forum for the leaders of public pension funds in New York, Connecticut and Illinois to explain why they believe Safeway shareholders should remove the company’s chief executive, Steven Burd, and two directors, William Y. Tauscher and Robert I. MacDonnell. All three are running for reelection to Safeway’s board at the company’s May 20 annual meeting.

So far, the owners of 7 million Safeway shares -- less than 2% of the company’s stock -- have either said or indicated they would withhold their votes from Burd and the other directors.

But strong turnout at Monday’s meeting indicates that Safeway may face serious discord at the May meeting, industry analyst Mark Hugh Sam said.

Besides the pension fund leaders who organized Monday’s meeting, the California Public Employees’ Retirement System also has publicly stated its displeasure with Safeway.

The dissident shareholders say Safeway should end Burd’s 11-year tenure to penalize him for a painful downturn that has lumped the company with $998 million in losses during the last two years and erased more than $20 billion in shareholder wealth since early 2001.

The company’s shares dipped 6 cents Monday to $20.95 on the New York Stock Exchange.