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The Los Angeles Times reports that a meeting took place earlier this week between disgruntled investors in Safeway Inc. and a majority of the company's stockholders - representing about 55 percent of the company's outstanding shares - as the disenchanted shareholders look to force a change in company management.

The goal of the meeting was to generate support for a move to unseat company chairman Steve Burd and two directors seen as too beholden to management to be truly independent. Much of the impetus for the move comes from public pension funds that are connected to organized labor, which has had a fractious relationship with Burd and Safeway that led to a four-month strike of the company in Southern California.

New York State Comptroller Alan Hevesi, one of the meeting's leaders, told the LAT that additional shareholders will be contacted in the coming weeks, as anti-Burd forces hope to marshal their support in time for Safeway's May 4 annual meeting.

While the owners of only seven million Safeway shares — less than two percent of the company's stock — have indicated they would withhold their votes from Burd and the other directors, the meeting this week seems to suggest that anti-Burd forces are gathering some momentum.

Safeway made a brief statement assuring that "efforts to maximize shareholder value are well underway."
KC's View:
We're trying to be fair here, and we realized as perusing these reports that it certainly could be argued that the anti-Burd forces are concerned about short-term results, while Burd is positioning the company for long-term advantage. And since we normally side with those who take a more long-term approach, you'd think that we'd be on Burd's side in this case.

But we can't go there.

The fact is that with few exceptions, knowledgeable people we talk to in the industry firmly believe that Safeway is a company moving in the wrong direction. (These same people say that Kroger is moving in the right direction, and they're simply not sure about Albertsons.)

This isn’t to suggest that Safeway is clueless. In fact, we know some people at Safeway who say that the company in involved with various initiatives that will serve it well…but the company refuses to talk about what those might be.

The sum result of the past few years - the problems at Dominick's, Genuardi's and Texas, and all the labor issues that the company faces - is that Safeway seems to be a troubled company. It is hard to see Burd surviving long-term. He may make it through the May 2004 meeting…but if things don't reverse themselves soon, it is hard to see the upside of this thing.