Pension officials from New York, Illinois, Connecticut and California have kicked off a campaign to oust Steven Burd, Safeway’s chairman and chief executive, and two outside directors, the Financial Times reported. The funds are trying to convince shareholders to hold back their votes from Burd as well as directors Robert MacDonnell and William Tauscher, at the retailer’s May annual meeting. Collectively, the funds hold 7 million Safeway shares or 2% of the total.
The move is the latest sign of growing shareholder activism by pension funds following their ultimately successful effort to convince Disney to split Eisner’s former combined role of chairman and CEO (See Eisner Protest Vote Reaches 43% ). The funds are continuing push Disney to make changes (See Disney Board Will Meet With Institutions ).
In the latest initiative, the funds joining to challenge Safeway are also pushing the US Securities and Exchange Commission (SEC) to speed consideration of new rules which would allow shareholders to nominate company board members (See Both Sides Unsatisfied With SEC Dissident Director Proposal ).
“Investors have realized an evaporation of biblical proportion of their shareholder value and we have no other option but to exercise our rights,” Bill Atwood, executive director for the Illinois Board of Investment, told the Times
Atwood said the company’s poor performance was because of a lack of directon. “We hold [Steven Burd] accountable but can’t move to replace the chairman and chief executive because we do have not have confidence in the succession policy for the board,” Atwood said. “The first thing have we have to do is reform the board.”
While Safeway said the pension funds’ initiative was politically motivated, fund officers sought to stress that their campaign was based on poor performance and the need for corporate governance reform. The funds blame bad management for the company’s precipitous share price plunge from $60 five years ago to around $20 today.
Safeway was recently involved in a bitter four-month strike by 70,000 Kroger, Albertsons and Safeway workers in southern California. At the time, several pension officials criticized Safeway’s management. The strike cost hundreds of millions of dollars and may have resulted in permanent market share losses for Safeway.
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