This excerpt taken from the SWY DEF 14A filed Apr 2, 2008.
STOCKHOLDER PROPOSAL REGARDING RETIREMENT ARRANGEMENTS FOR SENIOR EXECUTIVES
The Rolyan Fund, c/o Bartlett Naylor, 1255 N. Buchanan, Arlington, VA 22205, which owns more than $2,000 worth of our Common Stock, has given notice that it intends to present the following proposal for consideration at the Annual Meeting:
RESOLVED: Shareholders request that the Board adopt a policy to seek shareholder approval of any future supplemental executive retirement plan (SERP) or individual retirement arrangement for senior executives that provides preferential benefit formulas, or supplemental pension benefits, not provided to other managers under the Companys regular tax-qualified pension plan. Implementation of this policy shall not breach any existing employment agreements or vested benefits.
According to Safeways 2007 proxy statement, the present value of accumulated benefit of the CEOs SERP is $8,508,087. We believe this is a substantial sum. It is greater, for example, than the grant date fair value of stock and option awards, according to the 2007 proxy statement.
Safeways proxy statement explains: Under the terms of the Supplemental Retirement Agreement, Mr. Burds total retirement benefit is calculated as a percentage of his final average compensation (defined as the average of Mr. Burds base salary and bonus for the five consecutive years during his final ten years of service during which the total of his base salary and bonus is the highest).
Institutional Shareholder Services has recommended that bonus pay be excluded from calculation of the SERP.
While pension plans are commonly viewed as retirement security and acknowledged as such by government policy through tax advantages, a SERP is different. It does not enjoy the same tax advantages, and therefore is a greater burden on shareholders. Moreover, it is our view that the Safeway SERP effectively serves as a primary source of executive compensation, not as an unimportant or incidental feature.
Our resolution simply asks that shareholders be provided a vehicle to approve such executive compensation plans as they are considered in the future.