Safeway Plans One-Year Board Terms

Heeding shareholders’ advice, supermarket giant Safeway Inc. said Wednesday that it was seeking to require all of its directors to face annual elections beginning in 2005.

The Pleasanton, Calif.-based grocer separates its nine-member board into three classes that allow directors to serve as many as three years before coming up for reelection.

The practice alienated shareholders, who last May approved a nonbinding measure advising Safeway to revise the system. Safeway said its directors unanimously decided to declassify the board, pending final shareholder approval at the company’s annual meeting this year.

Safeway’s directors will be even more accountable to shareholders, Chairman and CEO Steven A. Burd said in a statement.

Safeway, which since Oct. 11 has been the focal point of a Southern California supermarket strike, is making the board switch amid intensifying criticism from shareholders who contend that the board has become too cozy.

Four of Safeway’s nine board members have close ties to Kohlberg Kravis Roberts & Co., which reshaped the nation’s third-largest supermarket chain after a 1986 leveraged buyout. Two of the Kohlberg-linked directors, George Roberts and Robert MacDonnell, are brothers-in-law.

Three other Safeway directors are insiders: Burd; former Chairman Peter Magowan; and Hector Ley Lopez, who runs a Mexican supermarket chain in which Safeway owns a 49% stake. Safeway also has made personal and business loans to another board member, William Tauscher, prompting protests by leaders of several prominent labor unions and pension funds.

Safeway shares rose 11 cents to $22.19 on the New York Stock Exchange.