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California-based Safeway Inc. has announced that it is changing its corporate structure so that its entire nine-member board of directors will face re-election annually.

Currently, the company's board breaks the nine members into three categories, each of which serves for three years before facing re-election. Last year, company shareholders passed a nonbonding resolution urging Safeway to change its board policies, believing that the board had become too cozy with management to do its job effectively.

Four of Safeway's nine board members have ties to Kohlberg Kravis Roberts (KKR), which led a leveraged buyout of the company in 1986; three are company "insiders," including company CEO Steve Burd and former CEO (and current San Francisco Giants CEO) Peter Magowan; and one board member has gotten personal loans from company management.

In a statement, Burd said that "both the board and management of Safeway are committed to adhering to the highest corporate governance standards," he said.

Safeway, of course, is under a lot of pressure on other fronts. Its Dominick's chain in Chicago is facing declining market share after an aborted attempt to sell the company revealed how much the division's value has diminished since the company bought it, there have been questions raised about the performance of other company divisions, and it has been dealing since October with a strike/lockout in Southern California that has illustrated the fragility of its relationship with organized labor. And, of course, there is mounting competition in a number of markets, especially from Wal-Mart.
KC's View:
In an era where corporate governance is under so much scrutiny - and so many companies are being proven to be corrupt at various levels - decisions like the one made by Safeway seem utterly sensible.

The question is whether or not this is enough.