Safeway (SWY)

Board Meetings and Committees

The Board of Directors held five meetings in fiscal 2008. Except for Mr. Herringer who, due to a pre-existing commitment when he joined the Board in March 2008, attended 67% of the total number of Board and committee meetings that he was eligible to attend in 2008, each director attended 75% or more of the total number of Board meetings and meetings of Board committees on which the director served during the time such director served on the Board or committees. Each director standing for election is expected to attend our Annual Meeting of Stockholders in person, absent extraordinary circumstances. Nine of the 11 directors who served as Board members during 2008 attended the 2008 Annual Meeting. In 2008, the Board of Directors had the following standing committees: Audit Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee; Executive Committee; and Committee on Strategic Initiatives. The Committee on Strategic Initiatives was disbanded effective July 1, 2008. The Board has affirmatively determined that each member of the Audit, Executive Compensation and Nominating and Corporate Governance committees has no material relationship with us and is “independent” under our Director Independence Standards and the “independent director” standards of the NYSE currently in effect. The Audit, Executive Compensation and Nominating and Corporate Governance committees operate pursuant to written charters, available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

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The current composition of each Board committee is:

Audit Committee:    The functions of the Audit Committee include selecting, evaluating and, where appropriate, replacing independent auditors engaged by the Company; conferring with the independent auditors regarding their audit of the Company and the independent auditors’ opinions; meeting with the independent auditors and management to review and discuss the Company’s annual and quarterly financial statements, including the Company’s specific disclosure under management’s discussion and analysis; approving the audit and non-audit services of such auditors and other terms of their engagement; considering the adequacy of internal financial controls and the results of fiscal policies and financial management of the Company; meeting with our internal auditors; reviewing with the independent and internal auditors the results of their examinations; recommending changes in financial policies or procedures as suggested by the auditors; and preparing the report that is required by SEC rules to be included in this Proxy Statement. During fiscal 2008, the Audit Committee held eight meetings.

The Report of the Audit Committee is included in this Proxy Statement.

Audit Committee Financial Experts:    Pursuant to Section 407 of the Sarbanes-Oxley Act, the SEC has adopted rules requiring companies to disclose whether their Audit Committee has at least one “audit committee financial expert,” as that term is defined in SEC rules. The Board of Directors has determined that each of Mohan Gyani and Robert I. MacDonnell qualifies as an “audit committee financial expert” and that each of them is “independent,” as noted above.

Executive Compensation Committee:    The Executive Compensation Committee reviews and approves our goals and objectives relevant to compensation of our executive officers, stays informed as to market levels of compensation and, based on evaluations submitted by management, sets compensation levels for our executive officers that correspond to our goals and objectives. With respect to our Executive Vice Presidents, our Chief Executive Officer assesses the individual performance of each such executive and proposes base salaries for each. The Executive Compensation Committee then sets these salaries. The Executive Compensation Committee also evaluates the Company’s goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and makes a recommendation to the Board regarding the Chief Executive Officer’s base salary for the next fiscal year. The Executive Compensation Committee makes recommendations to the Board with respect to incentive compensation plans and equity-based plans. In addition, it approves grants of stock options and other equity awards to our executive officers, including the Chief Executive Officer, in accordance with Rule 16b-3 under the Securities Exchange Act of 1934 (“Rule 16b-3”). The Executive Compensation Committee also adopts performance goals with respect to performance-based compensation for our executive officers, including the Chief Executive Officer, and certifies whether performance goals are met before performance-based compensation is paid to our executive officers in accordance with Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). The Executive Compensation Committee is also responsible for administering the 1999 Equity Plan and our 2007 Equity and Incentive Award Plan (the “2007 Equity Plan”). The Committee is also responsible for evaluating and recommending to the Board the compensation of our non-employee directors. During fiscal 2008, the Executive Compensation Committee held four meetings.

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The Executive Compensation Committee participates in the preparation of the Compensation Discussion and Analysis for inclusion in this Proxy Statement and our Annual Report on Form 10-K and also produces a Report of the Executive Compensation Committee for inclusion in this Proxy Statement, each in accordance with applicable rules and regulations. The Executive Compensation Committee performs any other action required to be performed by a committee or subcommittee of “non-employee directors” (pursuant to Rule 16b-3) and “outside directors” (pursuant to Section 162(m) of the Code).

The Executive Compensation Committee has retained a compensation consulting firm, Frederic W. Cook & Co., Inc. (“Cook & Co.”), to act as the Committee’s consultant on executive and director compensation matters. Cook & Co. was retained directly by the Committee and reports directly and exclusively to the Committee. With regard to executive and director compensation, Cook & Co. was engaged to advise the Committee on the reasonableness of our compensation levels in comparison with those of other similarly situated companies and on the appropriateness of our compensation program structure in supporting our business objectives. Cook & Co. did not determine or recommend the specific amounts or forms of compensation for executive officers or directors. Cook & Co. does not provide any consulting services to Safeway or our executive officers or management.

The Executive Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors, consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities.

The Report of the Executive Compensation Committee is included in this Proxy Statement.

Nominating and Corporate Governance Committee:    The functions of the Nominating and Corporate Governance Committee are to propose nominees for election to the Board of Directors and consider the qualifications of director nominees, including any stockholder nominees. The Nominating and Corporate Governance Committee recommended to the Board the slate of directors for election at this Annual Meeting. Other duties and responsibilities of the Nominating and Corporate Governance Committee include: reviewing proposals submitted by stockholders; assessing the size and composition of the Board and its committees; overseeing the annual evaluation of the Board; and making recommendations to the Board regarding matters such as our Certificate of Incorporation, By-Laws, Corporate Governance Guidelines and the charters of the Board committees. During fiscal 2008, the Nominating and Corporate Governance Committee held three meetings.

Executive Committee:    The Executive Committee was established in 2004 to provide a forum for regular communication between our Chief Executive Officer and the Board in addition to the regularly scheduled Board meetings. The Executive Committee has the authority to exercise the power of the Board, except as prohibited by Delaware law, or except as is more appropriately within the duties of the Audit Committee, the Executive Compensation Committee or the Nominating and Corporate Governance Committee of the Board. During fiscal 2008, the Executive Committee held five meetings.

Committee on Strategic Initiatives:    The Committee on Strategic Initiatives was established in 2005 to provide strategic advice and oversight with respect to new business ventures. During fiscal 2008 and prior to its dissolution on July 1, 2008, the Committee on Strategic Initiatives held two meetings.

Non-Management Executive Sessions:    The non-management directors meet in executive session on a periodic basis, but no less than two times a year, without management directors or management present. The Lead Independent Director presides at these meetings. In his absence, the non-management directors select a director to preside over the meeting at the beginning of the executive session. During fiscal 2008, the non-management directors held three executive sessions. The Lead Independent Director, Paul Hazen, acted as Chairman of each of those sessions.

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Board Meetings and Committees

The Board of Directors held five meetings in fiscal 2006. Each director attended 75% or more of the total number of Board meetings and meetings of Board committees on which the director served during the time such director served on the Board or committees. Each director is expected to attend in person Safeway’s Annual Meeting of Stockholders, absent extraordinary circumstances. All nine directors attended the 2006 Annual Meeting. In 2006 the Board of Directors had the following standing committees: Audit Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee; Executive Committee; and the Committee on Strategic Initiatives. The Board has affirmatively determined that each member of the Audit, Compensation and Nominating and Corporate Governance committees has no material relationship with Safeway and is “independent” under Safeway’s Director Independence Standards and the “independent director” standards of the NYSE currently in effect.

Audit Committee:  Mohan Gyani, Chair; Janet E. Grove; Robert I. MacDonnell; and Rebecca A. Stirn. The functions of the Audit Committee include selecting, evaluating and, where appropriate, replacing independent auditors employed by the Company; conferring with the independent auditors regarding their audit of the Company and the independent auditors’ opinions; meeting with the independent auditors and management to review and discuss the Company’s annual and quarterly financial statements, including the Company’s specific disclosure under management’s discussion and analysis; approving the audit and non-audit services of such auditors and other terms of their engagement; considering the adequacy of internal financial controls and the results of fiscal policies and financial management of the Company; meeting with the Company’s internal auditors; reviewing with the independent and internal auditors the results of their examinations; recommending changes in financial policies or procedures as suggested by the auditors; and preparing the report that is required by Securities and Exchange Commission (“SEC”) rules to be included in this Proxy Statement. During fiscal 2006, the Audit Committee held eight meetings.

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The Report of the Audit Committee is included herein. The Audit Committee has a charter which is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Audit Committee Financial Expert:  Pursuant to Section 407 of the Sarbanes-Oxley Act, the SEC has adopted rules requiring companies to disclose whether the Company’s Audit Committee has at least one “audit committee financial expert,” as that term is defined in SEC rules. The Board of Directors has determined that each of Mohan Gyani and Robert I. MacDonnell qualifies as an “audit committee financial expert” and that each of them is “independent,” as noted above.

Executive Compensation Committee:  Raymond G. Viault, Chair; Paul Hazen; Robert I. MacDonnell; Rebecca A. Stirn; and William Y. Tauscher. The Executive Compensation Committee reviews and approves the Company’s goals and objectives relevant to compensation of executive officers, stays informed as to market levels of compensation and, based on evaluations submitted by management, sets compensation levels for the Company’s executive officers that correspond to the Company’s goals and objectives. With respect to the Executive Vice Presidents, the Chief Executive Officer assesses the individual performance of each such executive and proposes base salaries for each. The Executive Compensation Committee then sets these salaries. The Executive Compensation Committee also evaluates the Company’s goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and makes a recommendation to the Board regarding the Chief Executive Officer’s base salary for the next fiscal year. The Executive Compensation Committee makes recommendations to the Board with respect to incentive compensation plans and equity-based plans. In addition, it approves grants of stock options and other equity awards to the Company’s executive officers, including the Chief Executive Officer, in accordance with Rule 16b-3 under the Securities Exchange Act of 1934 (“Rule 16b-3”). The Executive Compensation Committee also adopts performance goals with respect to performance-based compensation for executive officers, including the Chief Executive Officer, and certifies whether performance goals are met before performance-based compensation is paid to executive officers in accordance with Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). The Executive Compensation Committee is also responsible for administering the 1999 Equity Plan and will be responsible for administering the 2007 Equity and Incentive Award Plan, if approved by the Company’s stockholders. The Committee is also responsible for evaluating and recommending to the Board the compensation of the directors of the Company. During fiscal 2006, the Executive Compensation Committee held four meetings.

The Executive Compensation Committee participates in the preparation of the Compensation Discussion and Analysis for inclusion in this Proxy Statement and the Company’s Annual Report on Form 10-K and also produces a Compensation Committee Report for inclusion in this Proxy Statement, each in accordance with applicable rules and regulations. The Executive Compensation Committee performs any other action required to be performed by a committee or subcommittee of “non-employee directors” (pursuant to Rule 16b-3) and “outside directors” (pursuant to Section 162(m) of the Code).

During 2006 the Executive Compensation Committee engaged Towers Perrin, an independent global human resources consulting firm, to conduct a comprehensive review of the Company’s current executive compensation programs and the processes that the Executive Compensation Committee and management use in administering such programs. In its review, Towers Perrin focused on the Committee’s charter and its overall responsibilities to the Company’s Board of Directors and its stockholders. The review was intended to provide the Committee with an assessment of the effectiveness of the Company’s current executive compensation programs in meeting the Company’s overall executive compensation objectives and to identify any modifications that might be warranted in light of the Committee’s objectives, the Company’s business needs and/or current and emerging expectations with respect to corporate governance. Also during 2006, the Executive Compensation Committee engaged Towers Perrin to conduct a competitive analysis of the Company’s non-employee director compensation program. Towers Perrin analyzed the following compensation elements: Board retainers and meeting fees; retainers and meeting fees for committee chairs and members; and equity compensation for Board members. The Executive Compensation Committee has authority under its charter to retain, approve fees for and terminate

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advisors, consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities. The Executive Compensation Committee reviews annually the total fees paid to outside consultants to ensure they maintain their objectivity and independence when rendering advice to the Committee.

The report of the Executive Compensation Committee is included in this Proxy Statement. The Executive Compensation Committee has a charter which is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Nominating and Corporate Governance Committee:  Paul Hazen, Chair; Janet E. Grove; Mohan Gyani; and Raymond G. Viault. The functions of the Nominating and Corporate Governance Committee are to propose nominees for election to the Board of Directors and consider the qualifications of director nominees, including any stockholders’ nominees. The Nominating and Corporate Governance Committee recommended to the Board the slate of directors for election at this Annual Meeting. Other duties and responsibilities of the Nominating and Corporate Governance Committee include: reviewing proposals submitted by stockholders; annually, along with non-management members of the Board, evaluating the performance of the Chairman and Chief Executive Officer; assessing the size and composition of the Board and its committees; overseeing the annual evaluation of the Board; and making recommendations to the Board regarding matters such as the Company’s Certificate of Incorporation, Bylaws, Corporate Governance Guidelines and the charters of the Board committees. During fiscal 2006, the Nominating and Corporate Governance Committee held two meetings.

The Nominating and Corporate Governance Committee has a charter which is available on the Company’s Web site at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Executive Committee:  Steven A. Burd, Chair; Paul Hazen; Robert I. MacDonnell; and William Y. Tauscher. The Executive Committee was established in June 2004 to provide a forum for regular communication between the Company’s Chief Executive Officer and the Board in addition to the regularly scheduled Board meetings. The Executive Committee has the authority to exercise the power of the Board, except as prohibited by Delaware law, or except as is more appropriately within the duties of the Audit Committee, the Executive Compensation Committee or the Nominating and Corporate Governance Committee of the Board. During fiscal 2006, the Executive Committee held three meetings.

Committee on Strategic Initiatives:  Douglas J. Mackenzie, Chair; Mohan Gyani; Paul Hazen; and William Y. Tauscher. The Committee on Strategic Initiatives was established in October 2005 for purposes of providing strategic advice and oversight with respect to new business ventures. During fiscal 2006, the Committee on Strategic Initiatives held three meetings.

Non-Management Executive Sessions:  The non-management directors meet in executive session on a periodic basis, but no less than two times a year, without management directors or management present. The Lead Independent Director presides at these meetings. In his absence, the non-management directors select a director to preside over the meeting at the beginning of the executive session. During fiscal 2006, the non-management directors held two executive sessions. The Lead Independent Director, Paul Hazen, acted as Chairman of each of those sessions.

Board Meetings and Committees

The Board of Directors held five meetings in fiscal 2005. Each director attended 75% or more of the total number of Board meetings and meetings of Board committees on which the director served during the time such director served on the Board or committees. Each director is expected to attend in person Safeway’s Annual Meeting of Stockholders, absent extraordinary circumstances. All nine directors attended the 2005 Annual Meeting. In 2005, the Board of Directors had the following standing committees: Audit Committee, Executive Compensation Committee, Nominating and Corporate Governance Committee, Executive Committee, the Section 162(m) Subcommittee which was dissolved on March 10, 2005, and the Committee on Strategic Initiatives which was established on October 27, 2005. The Board has affirmatively determined that each member of the Audit, Compensation, and Nominating and Corporate Governance Committees has no material relationship with Safeway and is “independent” under Safeway’s Director Independence Standards and the NYSE listing standards currently in effect.

Audit Committee:  Mohan Gyani, Chair; Janet E. Grove, Robert I. MacDonnell and Rebecca A. Stirn. The functions of the Audit Committee include selecting, evaluating and, where appropriate, replacing independent auditors employed by the Company; conferring with the independent auditors regarding their audit of the Company and the independent auditors’ opinion; meeting with the independent auditors and management to review and discuss the Company’s annual and quarterly financial statements, including the Company’s specific disclosure under management’s discussion and analysis; approving the audit and non-audit services of such auditors and other terms of their engagement; considering the adequacy of internal financial controls and the results of fiscal policies and financial management of the Company; meeting with the Company’s internal auditors; reviewing with the independent and internal auditors the results of their examinations; recommending changes in financial policies or procedures as suggested by the auditors; and preparing the report that is required by SEC rules to be included in this Proxy Statement. During fiscal 2005, the Audit Committee held eight meetings.

The Report of the Audit Committee is included herein. The charter of the Audit Committee is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790. It also is included as Appendix A to this Proxy Statement.

Audit Committee Financial Expert:  Pursuant to Section 407 of the Sarbanes-Oxley Act, the SEC has adopted rules requiring companies to disclose whether the Company’s Audit Committee has at least one “audit committee financial expert”, as that term is defined in SEC rules. The Board of Directors has determined that each of Mohan Gyani and Robert I. MacDonnell qualifies as an “audit committee financial expert” and that each of them is “independent,” as noted above.

Executive Compensation Committee:  Raymond G. Viault, Chair; Paul Hazen, Robert I. MacDonnell, Rebecca A. Stirn and William Y. Tauscher. The functions of the Executive Compensation Committee include those which it assumed when the Section 162(m) Subcommittee was dissolved on March 10, 2005. The Executive Compensation Committee reviews and approves the Company’s goals and objectives relevant to compensation of executive officers, stays informed as to market levels of compensation and, based on evaluations submitted by management, sets compensation levels for the Company’s executive officers that correspond to the Company’s goals and objectives. The Executive Compensation Committee also evaluates the Company’s goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and sets the Chief Executive Officer’s compensation level based on this evaluation. The Committee makes recommendations to the Board with respect to incentive compensation plans and equity-based plans. The Committee also produces an annual report on executive compensation for inclusion in the Proxy Statement, in accordance with applicable rules and regulations. In addition, the Committee approves grants of stock options and other equity awards to the Company’s executive officers, including the Chief Executive Officer, in accordance with Rule 16b-3 under the Securities Exchange Act of 1934. The Committee also adopts performance goals with respect to performance-

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based compensation for executive officers, including the Chief Executive Officer, and certifies whether performance goals are met before performance-based compensation is paid to executive officers in accordance with Section 162(m) of the Internal Revenue Code of 1986. The Committee is also responsible for administering the 1999 Amended and Restated Equity Participation Plan. The Committee performs any other action required to be performed by a committee or subcommittee of “non-employee directors” (pursuant to Rule 16b-3) and “outside directors” (pursuant to Section 162(m)). Before the Section 162(m) Subcommittee was dissolved, it held two meetings in fiscal 2005. During fiscal 2005, the Executive Compensation Committee held three meetings.

The report of the Executive Compensation Committee is included in this Proxy Statement. The charter of the Executive Compensation Committee is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Nominating and Corporate Governance Committee:  Paul Hazen, Chair; Janet E. Grove, Mohan Gyani and Raymond G. Viault. The functions of the Nominating and Corporate Governance Committee are to propose nominees for election to the Board of Directors and consider the qualifications of director nominees, including any stockholders’ nominees. The Nominating and Corporate Governance Committee recommended to the Board the slate of directors for election at this Annual Meeting. Other duties and responsibilities of the Nominating and Corporate Governance Committee include: reviewing proposals submitted by stockholders; annually, along with non-management members of the Board, evaluating the performance of the Chairman and Chief Executive Officer; assessing the size and composition of the Board and its committees; overseeing the annual evaluation of the Board; and making recommendations to the Board regarding matters such as the Company’s Certificate of Incorporation, Bylaws, Corporate Governance Guidelines and the charters of the Board committees. During fiscal 2005, the Nominating and Corporate Governance Committee held one meeting.

The charter of the Nominating and Corporate Governance Committee is available on the Company’s web site at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Executive Committee:  Steven A. Burd, Chair; Paul Hazen, Robert I. MacDonnell and William Y. Tauscher. The Executive Committee was established in June of 2004 to provide a forum for regular communication between the Company’s CEO and the Board in addition to the regularly scheduled Board meetings. The Committee has the authority to exercise the power of the Board, except as prohibited by Delaware law, or except as is more appropriately within the duties of the Audit Committee, the Executive Compensation Committee, or the Nominating and Corporate Governance Committee of the Board. During fiscal 2005, the Executive Committee held five meetings.

Committee on Strategic Initiatives:  Douglas J. Mackenzie, Chair; Mohan Gyani, Paul Hazen and William Y. Tauscher. The Committee on Strategic Initiatives was established on October 27, 2005 for purposes of providing strategic advice and oversight with respect to new business ventures. During fiscal 2005, the Committee on Strategic Initiatives held one meeting.

Non-Management Executive Sessions.  The non-management directors meet in executive session on a periodic basis, but no less than two times a year, without management directors or management present. The Lead Independent Director presides at these meetings. In his absence, the non-management directors select a director to preside over the meeting at the beginning of the executive session. During fiscal 2005, the non-management directors held three executive sessions. The Lead Independent Director, Paul Hazen, acted as Chairman of each of those sessions.

Board Meetings and Committees

The Company’s Board of Directors held nine meetings in fiscal 2004. Each director attended 75% or more of the total number of Board meetings and meetings of Board committees on which the director served during the time such director served on the Board or committee. Each director is expected to attend in person Safeway’s annual meeting of stockholders, absent extraordinary circumstances. Eight directors attended the 2004 annual meeting. In 2004, the Board of Directors had the following standing committees: Audit Committee, Executive Compensation Committee, Nominating and Corporate Governance Committee, Executive Committee, and the Section 162(m) Subcommittee which was dissolved on March 10, 2005. The Board has affirmatively determined that each member of each of the Audit, Compensation, and Nominating and Corporate Governance Committees has no material relationship with Safeway and is “independent” within the meaning of Safeway’s Director Independence Standards and the NYSE listing standards currently in effect.

Audit Committee:  Paul Hazen, Chair; Janet E. Grove, Mohan Gyani, Robert I. MacDonnell and Rebecca A. Stirn. The functions of the Audit Committee include selecting, evaluating and, where appropriate, replacing independent auditors employed by the Company; conferring with the independent auditors regarding their audit of the Company and the independent auditors’ opinion; meeting with the independent auditors and management to review and discuss the Company’s annual and quarterly financial statements, including the Company’s specific disclosure under management’s discussion and analysis; approving the audit and non-audit services of such auditors and other terms of their engagement; considering the adequacy of internal financial controls and the results of fiscal policies and financial management of the Company; meeting with the Company’s internal auditors; reviewing with the independent and internal auditors the results of their examinations; recommending changes in financial policies or procedures as suggested by the auditors; and preparing the report that is required by SEC rules to be included in this Proxy Statement. During fiscal 2004, the Audit Committee held ten meetings.

The report of the Audit Committee is included herein. The charter of the Audit Committee is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790. It also is included as Appendix A to this Proxy Statement.

Audit Committee Financial Expert:  Pursuant to Section 407 of the Sarbanes-Oxley Act, the SEC has adopted rules requiring companies to disclose whether the Company’s Audit Committee has at least one “audit committee financial expert”, as that term is defined in the SEC’s rules and regulations. The Board of Directors has determined that each of Paul Hazen, Robert I. MacDonnell and Mohan Gyani qualify as audit committee financial experts, as defined in the SEC’s rules and regulations.

Executive Compensation Committee:  William Y. Tauscher, Chair; Paul Hazen, Robert I. MacDonnell, Rebecca A. Stirn and Raymond G. Viault. The functions of the Executive Compensation Committee are to review and approve the Company’s goals and objectives relevant to compensation of executive officers, stay informed as to market levels of compensation and, based on evaluations submitted by management, set compensation levels for the Company’s executive officers that correspond to the Company’s goals and objectives. The Executive Compensation Committee also evaluates the Company’s goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and sets the Chief Executive Officer’s compensation level based on this evaluation. The committee makes recommendations to the Board with respect to incentive-compensation plans and equity-based plans. The committee also produces an annual report on executive compensation for inclusion in this Proxy Statement, in accordance with applicable rules and regulations. During fiscal 2004, the Executive Compensation Committee held two meetings.

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Section 162(m) Subcommittee of the Executive Compensation Committee:  William Y. Tauscher, Chair; Paul Hazen, Robert I. MacDonnell, Rebecca A. Stirn and Raymond G. Viault. The functions of the Subcommittee in 2004 were to approve grants of stock options and other equity awards to the Company’s executive officers, including the Chief Executive Officer, in accordance with Rule 16b-3 under the Securities Exchange Act of 1934. The Section 162(m) Subcommittee also adopted performance goals with respect to performance-based compensation for executive officers, including the Chief Executive Officer, and certified whether performance goals were met before performance-based compensation was paid to executive officers in accordance with Section 162(m) of the Internal Revenue Code of 1986. The Section 162(m) Subcommittee was responsible for administering the 1999 Amended and Restated Equity Participation Plan. The Section 162(m) Subcommittee performed any other action required to be performed by a committee or subcommittee of “non-employee directors” (pursuant to Rule 16b-3) and “outside directors” (pursuant to Section 162(m)). During fiscal 2004, the Section 162(m) Subcommittee held two meetings. This Subcommittee was dissolved on March 10, 2005 and its functions are now performed by the Executive Compensation Committee.

The report of the Executive Compensation Committee and Section 162(m) Subcommittee is included herein. The charter of the Executive Compensation Committee is available at www.safeway.com/investor_relations, or in print to any stockholder by calling 925-467-3790.

Nominating and Corporate Governance Committee:  Paul Hazen, Chair; Janet E. Grove, Mohan Gyani and Raymond G. Viault. The functions of the Nominating and Corporate Governance Committee are to propose nominees for election to the Board of Directors and consider the qualifications of director nominees, including stockholder nominees. The Nominating and Corporate Governance Committee recommended to the Board the slate of directors for election at this Annual Meeting. During 2004, the Nominating and Corporate Governance Committee also evaluated and recommended to the Board certain corporate governance enhancements to the Company’s Corporate Governance Guidelines, including election of a Lead Independent Director. Other duties and responsibilities of the Nominating and Corporate Governance Committee include: reviewing proposals submitted by stockholders; annually, along with non-management members of the Board, evaluating the performance of the Chairman and Chief Executive Officer; assessing the size and composition of the Board and its committees; overseeing the annual evaluation of the Board; and making recommendations to the Board regarding matters such as the Company’s certificate of incorporation, Bylaws and the charters of the Company’s committees. During fiscal 2004, the Nominating and Corporate Governance Committee held four meetings.

Executive Committee:  Steven A. Burd, Chair; Paul Hazen, Robert I. MacDonnell and William Y. Tauscher. The Executive Committee was established in June of 2004 to provide a forum for regular communication between the Company’s CEO and the Board in addition to the regularly scheduled Board meetings. The Committee has the authority to exercise the power of the Board, except as prohibited by Delaware law, or except as more appropriately within the duties of the Audit Committee, the Executive Compensation Committee, or the Nominating and Corporate Governance Committee of the Company. The Executive Committee met four times during 2004.