SAN RAMON, Calif. -- Safeway won praise from animal rights activists and criticism from other shareholders at a stormy annual meeting here.
Shareholders also demonstrated their independence by passing a proposal to require management to seek shareholder approval before adopting a "poison pill" plan, despite management's recommendation against the proposal.
The meeting lasted two-and-a-half hours and was punctuated by questions and comments from Evelyn Y. Davis, a shareholder activist, and Nick Rossi, the shareholder who presented the "poison pill" proposal. Both repeatedly challenged Steve Burd, Safeway chairman, president and chief executive officer and other Safeway officials to respond to their questions immediately, despite indications from the chain's general counsel that the question-and-answer period would take place later in the meeting.
In fact, Rossi walked out of the meeting early, long before the results of his proposal were disclosed, after hurling a copy of the meeting's rules at the feet of the general counsel.
The unusual circumstances of the meeting were evident even before it started, with two groups of demonstrators outside the hotel where the meeting was held here -- one criticizing Safeway for its use of genetically modified foods, the other holding signs of thanks and offering champagne because of the chain's agreement earlier in the week to agree to monitor its suppliers to ensure animals were being treated humanely.
During the meeting, Bruce Friedrich, speaking on behalf of People for the Ethical Treatment of Animals, commended Safeway for its actions, noting that he had originally planned to make a statement about Safeway's refusal to change its policies.
His comments were followed by remarks from Simon Harris, representing the Organic Consumers Association, who said his group has asked Safeway to remove genetically modified ingredients from corporate-brand products.
In his response, Burd said Safeway tries to offer consumers what they want to buy, "and we haven't gone so far as to ensure that our private-label ingredients are all natural because no one has concluded scientifically that that approach is harmful, so we're simply following government standards."
During the meeting, Safeway shareholders voted on five stockholder proposals that were opposed by management. Only the poison pill proposal passed, with a preliminary vote of 71.08%.
According to the proxy statement, the advocates of the proposal wrote: "A poison pill can insulate management at the expense of shareholders. A poison pill is such a powerful tool that shareholders should be able to vote on whether it is appropriate. We believe a shareholder vote on poison pills will avoid an unbalanced concentration of power in our directors, who could focus on narrow interests at the expense of the vast majority of shareholders."
Speaking on behalf of the proposal during the meeting, Rossi said, "Safeway needs to do a lot of work on corporate governance. What makes U.S. companies best is that shareholders have ownership rights, and while management may argue that shareholders are not smart enough to know when to sell or merge a company, we believe shareholders should be able to decide that."
