Burd’s re-election to the board with 83% of the shareholder vote represented a setback for several pension fund officials who had led a campaign to boot Burd and directors Robert MacDonnell and William Tauscher, Bloomberg reported (See Oregon Fund Joins Safeway Ouster Effort ).
Investors denied MacDonnell and Tauscher only 15% of the ballots, the Number three U.S. grocer said after a preliminary tally at its annual meeting in Pleasanton, California. New York State Common Retirement Fund and three other pension funds have said the directors’ business ties to the company compromised their independence and hurt Safeway’s share price (See Activist Funds Set Governance Sights on Safeway ).
Investors said Burd’s years of experience in the industry and board changes made by Safeway after the launch of the campaign compelled them to support the directors. Last month, Safeway announced that directors George Roberts and James Greene, two of four members with ties to buyout firm Kohlberg Kravis Roberts & Co., Safeway’s former owner, would step down.
“I think there were some in the dissident group that wanted to make this a referendum on Burd’s continued tenure as CEO,” said Patrick McGurn, senior vice president of Rockville, Maryland- based Institutional Shareholder Services, the largest U.S. adviser to fund managers on proxy votes. “I think that may have backfired against the dissidents to a degree.(See Proxy Advisors Back Pension Funds’ Safeway Opposition )”
“Regardless of the size of the vote, we accomplished a lot,” said Maria Grove, a spokeswoman for the Connecticut Retirement Plans and Trust Fund, one of the pension plans leading the protest. “Our position was endorsed by two major proxy advisors and Safeway has already taken steps to reform its corporate governance.”
The state pension funds have said eight of nine Safeway board members have business ties to the grocery chain that limit their independence. The funds also complained about poor acquisitions, a strike by workers, and the company’s loss of about half its market value since 2001.
Tauscher will be replaced on the board’s executive compensation committee and MacDonnell will leave the audit committee, the company said. Both will remain on the board.