LABOR LEADERS QUESTION SUPERVALU POLICIES

Frank Jossi

MINNEAPOLIS [FNS] -- Protesters representing labor and religious groups and ex-employees of bigg's, a Cincinnati-area grocery store chain owned by Supervalu, spoke out against labor practices at Supervalu's annual shareholder meeting here late last month.

During a question-and-answer session following the meeting, ex-employees charged that the company had fired them for union organizing, and union officials asked why the company would not meet with labor to discuss a proposal allowing bigg's workers to vote on becoming part of a union.

Jeffrey Noddle, chief executive officer, Supervalu, said he had visited Cincinnati twice within the past nine months and heard employees tell him they do not want a union. After reaffirming his support for bigg's senior management, he said Supervalu could not "impose" a union upon the grocery chain's employees. Not one of the 100 complaints filed with the National Labor Relations Board against bigg's has resulted in federal charges against the company, said Noddle.

Meanwhile, United Food and Commercial Workers Union Local 1099 officials at the meeting said some complaints were settled before the NLRB could investigate them. Thirty cases have been filed against bigg's with the NLRB, they said.

The board meeting was also marked by a decision by shareholders to have management expense stock options. Sponsored by the United Brotherhood of Carpenters Pension Fund, the resolution won 62% of the vote with around half the shareholders voting. The fund's representative, Dan Morris, explained that stock options should be expensed because, when exercised, they do cost the company money.

If Supervalu reported stock options as an expense, its net earnings in the most recent fiscal year would have declined by 3.7%, or $9.5 million, according to a report in the Minneapolis-St. Paul Star Tribune.

Supervalu's board argued against the proposal in its proxy statement. Noddle said the board wanted to wait for clarification from the Securities and Exchange Commission on valuing of stock options and promised to "look into it" in the future.

Federal Reserve Chairman Alan Greenspan and investor Warren Buffett have called on corporations to expense options, and several have agreed to do so, among them Coca-Cola, Kohl's, General Electric, Apple and US Bancorp.

Supervalu shareholders also approved the election of four directors and ratified the appointment of KPMG LLP as independent auditors.

Noddle concentrated much of his presentation on the company's growth strategy, pointing out the company plans to open 75 to 100 Save-A-Lot/Deal$-Nothing Over a Dollar combination stores -- mixing grocery items with general merchandise priced at $1 -- this year and next. The company acquired Deal$ last year, and has been rolling out stores combining general merchandise from Deal$ with the limited-assortment grocery offerings of Save-A-Lot.

The company has seen "outstanding customer response to this new format," he said. The company owns 257 grocery stores, said Noddle, and plans to add eight to 12 new stores this year in the Baltimore-Washington, Twin Cities and St. Louis markets.

These urban areas "are growing markets" that will add to the company's growth, as will Supervalu's association with supplying products to 67 SuperTarget stores, a number that will grow to 82, he said.

The company plans to continue promoting its supply chain solution, Advantage Logistics, now in use at 4,200 grocery retail stores in 47 states, he said.

"This approach allows us to leverage both our retail and logistics core competencies," he said.

Despite a small drop in sales from 2002, Supervalu managed to see net earnings rise 29.8%, to $257 million, this year.