CINCINNATI -- Kroger's annual shareholders meeting here last week marked a changing of the guard as David Dillon, chief executive officer, assumed the additional mantle of chairman from Joseph Pichler, who retired as chairman.
The meeting was light on business: Per the board's recommendation, shareholders rejected a proposal that would prevent the same person from serving as both chairman and CEO, and one that called for the annual election of directors. However, it was long on sentiment.
A 15-minute video tribute noted the hallmarks of Pichler's Kroger career. During his tenure, Pichler, who also served as CEO until last year, helped the chain grow to become nearly nationwide in reach with more than 2,500 stores. The highlights of his professional career include Kroger's 1986 merger with Dillon Stores, where Pichler served as president; his deft restructuring of the company in the wake of a 1988 hostile takeover bid; and the $7 billion acquisition of Fred Meyer Stores in 1999.
When Pichler assumed Kroger's reins in 1990, the supermarket retailer was laden with debt it had assumed to fend off New York investment bank Kohlberg Kravis Roberts. Pichler earned the nickname "Cash-Flow Joe" among Wall Street analysts for his dogged focus on making Kroger efficient, keeping costs low, and generating cash to repay the debt.
The video also outlined Kroger's many community contributions under Pichler's leadership. In light of Pichler's civic involvement, Dillon said the company would make a contribution to Xavier University here to support multicultural scholars and one to St. Francis Seraph school, an inner-city school where Pichler's wife, Susan, volunteers.
Although the newly elected Dillon may not have a poison pill to contend with as Pichler did, the challenges he faces are manifold. Dillon described 2003 as a "difficult year" to shareholders gathered in Cincinnati's Music Hall. Competitive pressures from supercenters, discounters, club stores and dollar stores are chiseling away at Kroger's markets. Health care and pension benefit costs are on the rise.
To combat these forces, Dillon said Kroger would stick to its strategic plan, which focuses on reducing costs -- through energy conservation, reduced administrative spending and other methods -- improving product offerings and lowering product costs.
In making his tribute to Pichler, Dillon noted the former chairman and CEO was a professor at the University of Kansas when he was a student there. "I didn't take his class," Dillon quipped. "I regret that."
Those lessons might have been useful in helping Dillon guide Kroger through the competitive shoals of a new era.