Oregon to Withhold Safeway Votes

The Oregon Public Employees Retirement System joined the campaign to oust from the board of Safeway Inc. Chairman Steven Burd and two directors, bolstering an effort launched by four state pension funds in March.

The five funds, which hold 7.5 million company shares, are protesting a 60% decline in Safeway’s stock price in the last five years, directors’ ties to buyout firm Kohlberg Kravis Roberts & Co. and their business links to the No. 3 U.S. supermarket chain.

The Oregon pension fund was the only group to publicly announce its support for the campaign after a meeting Monday with 93 Safeway investors, pension fund managers and analysts. Together they hold 55% of Pleasanton, Calif.-based Safeway.

“The board is so replete with conflicts of interest and related-party transactions that we have no confidence in the current directors to turn things around,” said Connecticut State Treasurer Denise Nappier, at a news conference after the meeting in New York.

The campaign, which includes the Illinois State Board of Investment and the New York City comptroller, is trying to persuade investors to withhold board reelection votes for Burd and directors William Y. Tauscher and Robert I. MacDonnell at the annual meeting May 20.

Also on Tuesday, the Washington State Investment Board took steps toward joining the effort.

The Washington pension fund’s public markets committee voted Tuesday to ask the fund’s staff to draft a letter to Barclays Global Investors. The committee wants to express support for Burd’s ouster from the Safeway board, along with Tauscher and MacDonnell.

The draft letter will be considered by the full Washington investment board when it meets April 15.

“We need to give a very clear message as a fiduciary,” state Treasurer Michael Murphy said at the committee meeting in Olympia. “This is not something we ought to tolerate.”

The California Public Employees’ Retirement System, the largest U.S. public pension fund with $155 million in assets and 1.8 million Safeway shares, has publicly expressed its displeasure with Safeway.