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NEW YORK - Public pension funds owning some 8 million shares -- or 2 percent -- of Safeway, Inc. solicited wider support yesterday for a bid to oust chairman Steven Burd and two other directors over corporate governance issues, according to numerous published reports.
The pension funds' representatives met yesterday with members of Safeway's institutional investors, the latter of which hold 55 percent of the Pleasanton, Calif. retailer's stock, in an effort to gain additional firepower for its "vote no" campaign seeking to oust Burd before Safeway's annual meeting May 20.
Spearheading the campaign with counterparts from at least three other states is New York state comptroller Alan Hevesi, who contends that the pension funds are intent on instituting change within Safeway's management ranks and want an independent board of directors.
In published reports Hevesi says he is optimistic the Safeway campaign will gain wider support along the lines of shareholder actions under way at Walt Disney Co. to strip the chairman title from Michael Eisner.
An outspoken critic of Eisner and trustee of the New York state pension funds, Hevesi says the "vote no" campaign is aimed at Safeway's "lack of performance over the last five years." Remarking on Safeway's position that the campaign stems from Burd's hard-line stance during the recent Southern California grocery strike, Hevesi was quoted as saying, "This company has lost value and has made a substantial number of business decisions that were wrong and have failed," citing a 60 percent drop in Safeway's stock over the past five years.
Connecticut state treasurer Denise Nappier said the pension funds would welcome the splitting of Burd's c.e.o. and chairman positions or having a new executive lead the company. "The first thing that needs to happen, Safeway needs to separate the chairman from the c.e.o. position, and I think we need truly independent directors that would evaluate the merits of retaining the chairman or replacing him," she told Reuters.
For its part, Safeway issued a statement contending that it is committed to good corporate governance and has put in place an ongoing process to listen to shareholders while maximizing value for them.
In addition to their interest in ousting Burd, the pension funds have also asked fellow investors to withhold support for directors Robert MacDonnell and William Tauscher, who, they charge, lack independence.