retail news in context, analysis with attitude

The New York Times reports that Safeway Inc. is scheduled to name three independent directors, and will establish the role of “lead independent director.”

The company also will announce that once these new directors are brought on board, current directors George Roberts, James H. Greene Jr., and Hector Ley Lopez will leave the board. Roberts and Greene have been on the board for nearly 20 years, are partners of Kohlberg Kravis Roberts & Company, the buyout firm, and have been criticized for not being independent enough from company CEO Steve Burd.

The moves are being made to assuage shareholder groups that have been critical of the company’s performance, saying that investors have lost $20 billion in value over the past five years and that the board is filled with people too loyal to Burd.

Shareholders like the California Public Employees' Retirement System and New York's Common Retirement Fund have said that they will withhold votes from Safeway's chairman and chief executive, Steven Burd, and two other board members, William Tauscher and Robert MacDonnell.

According to the NYT, Paul Hazen, the former chairman of Wells Fargo & Company, will become lead independent director. Tauscher and MacDonnell will remain as independent board members, but Tauscher will step down as chairman of the executive compensation committee and MacDonnell will no longer serve on the audit panel.
KC's View:
There is no question that the pension funds have their own conflict of interest, since they represent unionized employees that own stock in a company that is portrayed as being anti-union.

When you think about it, though, wouldn’t it make more sense to simply not own stock in such a company if you were a public employee pension fund? Wouldn’t you prefer to invest in companies that you believe are supportive of your goals and priorities?

Just asking…