This excerpt taken from the SWY DEF 14A filed Mar 27, 2009.
STOCKHOLDER PROPOSAL REGARDING DEATH BENEFITS
We have been notified by the AFSCME Employees Pension Plan, 1625 L Street, NW, Washington, DC 20036, which owns 3,301 shares of our Common Stock, that it intends to present the following resolution for consideration at the Annual Meeting:
RESOLVED, that shareholders of Safeway Corporation (Safeway) urge the board of directors compensation committee to adopt a policy that Safeway will not make or promise to make any golden coffin payments (as defined below) to its senior executives estates or beneficiaries. A golden coffin is defined as any (a) promised post-death payment of unearned future salary or bonus or (b) promised post-death payment of perquisites, in each case where the payment is not available to Safeway management employees generally. The policy should be implemented in a way that does not violate any existing contractual obligation of Safeway or the terms of any compensation or benefit plan currently in effect.
As long-term Safeway shareholders, we support compensation programs that tie pay closely to performance and that deploy company resources efficiently. In our view, golden coffin payments making payouts to senior executives beneficiaries based on salary and bonus that have not been earned by the executive prior to death and/or making post-death payments in lieu of perquisites are not consistent with these principles. According to the 2008 proxy statement, Safeway provides a special death benefit to all named executive officers that results in a payment of four times salary if the executive dies in office or after retirement. For Chairman and CEO Steven Burd, this lump sum death payment would be $3,000,000.
Because the payment of golden coffin benefits depends on the death of the executive and not on company performance golden coffins sever the pay/performance link. Companies often claim that pay packages that include death benefits are designed for executive retention. But death severs any retention rationale. This basic fact led compensation consultant Steven Hall to comment if the executive is dead, youre certainly not retaining them. (Mark Maremont, Companies Promise CEOs Lavish Posthumous Payouts, Wall Street Journal (June 10, 2008))
We believe paying unearned amounts after death to executives is not fair or reasonable compensation. National Association of Corporate Directors CFO Peter Gleason has called golden coffin payouts a bad idea (Nicholas Rummel, Making Peace Between Boards and Investors Financial Week (June 16, 2008)), while compensation consultant Alan Johnson has called them part of the ugly, seamy side of executive compensation. (Andrew McIlvaine, Golden Coffins Offer Big Payouts, Human Resource Executive Online, (July 23, 2008)) This proposal does not seek to eliminate golden coffins or similar payments that are available broadly to Safeway management employees.
We urge shareholders to vote FOR this proposal.