Safeway Opposes Separating Top Jobs

Safeway Inc.’s board of directors is recommending that shareholders vote against proposals that seek to separate the posts of chairman and chief executive held by Steven Burd, a government filing said Tuesday.

The board of Pleasanton, Calif.-based Safeway, which six public pension funds have accused of being ridden with conflicts of interest, said in the filing that Safeway’s corporate governance structure, with its emphasis on “independence and accountability,” made it un- necessary to require that the offices of chairman and CEO be separated.

“The board believes that combining the offices of CEO and chairman contributes to a more efficient and effective board,” Safeway said in a proxy statement filed with the Securities and Exchange Commission, in preparation for the May 20 shareholders meeting.

It added that if, in the future, it determines that the two offices should be separated, it can do so, but so long as it believes that the current arrangement is in the best interests of the company, it should not be constrained by a bylaw requiring that the two positions be separate.

The call for the separation of Burd’s jobs follows a shareholder revolt that led Walt Disney Co. to strip Michael Eisner of his role as chairman last month. Eisner remains Disney’s chief executive.

In a statement announcing the proxy filing, Safeway said it would allow shareholders to nominate directors. The No. 3 grocery chain also will increase investors’ power over the use of stockholder rights plans, or so-called poison pills, and allow investors to write to the board directly.

Last week the California Public Employees’ Retirement System, the largest U.S. public pension fund, said it would withhold its vote for Burd and two other directors seeking reelection at next month’s meeting. It also challenged Burd’s leadership, citing a $20-billion loss in shareholder value at Safeway since 2001.

Connecticut State Treasurer Denise Nappier, among the public investment officials driving a Safeway “vote no” campaign, told Reuters last week that the pension funds would accept nothing less than the splitting of Burd’s positions or even his replacement altogether.

Safeway shares fell 56 cents, or 2.6%, to $21.08 on the New York Stock Exchange.