This excerpt taken from the SWY DEF 14A filed Apr 12, 2005.
STOCKHOLDER PROPOSAL REGARDING OFFICE OF THE BOARD OF DIRECTORS
The Company has been notified by the New York City Employees Retirement System, 1 Centre Street, New York, NY 10007-2341, which owns 558,917 shares of Common Stock, that it intends to present, jointly with the Connecticut Retirement Plans and Trust Funds and the Illinois State Board of Investment, the following proposal for consideration at the Annual Meeting:
WHEREAS, the board of directors is meant to be an independent body elected by shareholders and charged by law with the duty and authority to formulate and direct corporate policies; and
WHEREAS, in 2002, the Board of Directors of the New York Stock Exchange, recognizing the need to improve corporate governance, proposed a listing standard to empower non-management directors as a more effective check on management, and to facilitate direct communications between shareholders and the non-management directors; and
WHEREAS, in an August 8, 2003 release pertaining, in part, to disclosure of companies procedures for shareholder communications with the directors, the Securities and Exchange Commission stated that Providing security holders with disclosure about the process for communicating with board members would improve the transparency of board operations, as well as security holder understanding of the companies in which they invest; and
WHEREAS, a January 1994 study entitled: Improving Communications Between Corporations and Shareholders: Overall Findings and Recommendations, prepared on behalf the New Foundations Working Group, John F. Kennedy School of Government, Harvard University, recommended several mechanisms for direct communications between directors and shareholders. Among the recommendations were:
WHEREAS, we believe that the creation of a means for direct communications on corporate governance matters between shareholders and the non-management directors would benefit the company through constructive discussions of perspectives, enhanced understanding, valuable feedback, and the fostering of meaningful links between directors and the shareholders by whom they are elected;
NOW, THEREFORE, BE IT RESOLVED: that the shareholders request the board of directors to establish an Office of the Board of Directors to enable direct communications on corporate governance matters, including
meetings, between non-management directors and shareholders. The office shall report directly to a committee of the non-management directors.
Statement of Support
We believe that the confidence of investors in the U.S. capital markets has been deeply shaken by corporate malfeasance at companies, such as Enron and WorldCom. As long-term investors, we are concerned about the potential negative impact that continued erosion of investor confidence could have on the long-term interests of the company and the shareholders. This proposal is intended to improve investor confidence by improving director and shareholder communications on corporate governance matters, and strengthening the relationship between the Board of Directors and the shareholders.
The Board of Directors recommends a vote AGAINST this proposal for the following reasons:
In 2004, the Board of Directors of Safeway adopted a policy and procedures to facilitate stockholder communications with directors. The policy is incorporated into the Companys Corporate Governance Guidelines, a complete copy of which is available on the Companys web site at www.safeway.com/investor_relations.
The Companys policy provides a mechanism by which any stockholder may send a communication to the Board, the Lead Independent Director, a committee of the Board, the non-management directors or any individual director. Rather than establishing an Office of the Board of Directors as suggested by the proposal, the Company has designated the General Counsel as the point person to receive and distribute to the appropriate person(s) all such communications. We believe this is the most efficient and practical approach for our Company, in that our directors are not sited in one location and are not always immediately accessible. Notwithstanding this slight difference, we believe that Safeways policy is substantially similar to, and has the same effect as what is called for by, the proposal.
The proponent references an August 8, 2003 SEC release pertaining, in part, to disclosure of companies procedures for shareholder communications with directors. The final form of this release, which was adopted by the SEC on November 24, 2003 and was effective for filings after January 1, 2004, was revised from the August 8 preliminary release to take into account comments received from interested parties. Specifically, the final rule eliminated from the proposed rule, in consideration of the concern that the named directors could be targeted for inappropriate correspondence, the requirement that companies identify those particular directors to whom security holders could send communications. In addition, the final rule specifies that if all stockholder communications are not sent directly to board members, the company must describe the process for determining which communications will be relayed to board members. The SEC release specifically allows for filtering the communications that ultimately are delivered to the Board to eliminate correspondence that relates to improper or irrelevant topics.
The proponent also notes that the NYSE listing standards require a company to have a process in place to facilitate communications between stockholders and the board. NYSE Rule 303A(3) provides, in part: In order that interested parties may be able to make their concerns known to the non-management directors, a listed company must disclose a method for such parties to communicate directly with the presiding director or with the non-management directors as a group. Such disclosure must be made in the listed companys annual proxy statement or, if the company does not file an annual proxy statement, in the companys annual report on Form 10-K filed with the SEC.
The Company has implemented a mechanism that is in full compliance with the standards promulgated by the SEC and the NYSE. In addition, the Company has implemented numerous other corporate governance
enhancements during the past couple of years, including amending its Corporate Governance Guidelines to provide for the annual election of a Lead Independent Director. The non-management directors elected Paul Hazen as Lead Independent Director for 2005. One of his specific duties is to ensure that he is available for consultation and direct communication if requested by large stockholders. The Company meets frequently with its major stockholders and has never rejected a request by a major stockholder for a meeting. As recently as January of 2005, the Lead Independent Director, along with management representatives, met with representatives of the proponents of this proposal at their request.
The Board believes that the policy it has in place adequately addresses the concerns raised by this proposal and allows for an efficient process by which stockholders may communicate with the Board.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL, and your Proxy will be so voted unless you specify otherwise.