NEWS WATCH: SAFEWAY ADVISES KEEPING CEO, CHAIRMAN TOGETHER...KROGER, UNION REACH TENTATIVE AGREEMENT IN INDIANA...WEIS BOOSTS CAP-EX 28%, PLANS FIVE NEW STORES

SAFEWAY ADVISES KEEPING CEO, CHAIRMAN TOGETHER

rs of Safeway here last week recommended that shareholders vote against a proposal to split the company's chairman and chief executive officer roles. In its proxy statement mailed to shareholders and filed with the Securities and Exchange Commission, Safeway's board said its current corporate-governance structure "makes it unnecessary" to separate the two positions. As previously reported, a group of pension funds that own stock in Safeway is seeking to remove Burd and two other directors from the board, citing the company's poor performance and alleged conflicts of interest. Meanwhile Edward Lampert, founder of ESL Investments, the New York hedge fund that helped Kmart, Troy, Mich., out of bankruptcy, has accumulated a 2% stake in Safeway, according to a report last week. Lampert also owns stakes in Sears, AutoZone and AutoNation.

KROGER, UNION REACH TENTATIVE AGREEMENT IN INDIANA

INDIANAPOLIS -- Representatives from United Food and Commercial Workers Local 700 here and Kroger, Cincinnati, last week reached a tentative agreement on a new contract that calls for some employees to begin paying up to $15 per week for their health insurance, the union said. The new contract, which was scheduled to go before a vote on Friday, also includes, among other changes to the pension and health care plans, a pay raise of $1.50 per hour for department heads over the life of the contract, according to Lew Piercey, president, Local 400. New employees also will progress to higher pay at a faster rate, he said. The 4 1/2-year contract, covering 4,000 workers in 58 stores, was the result of 11 months of negotiations. Separately, UFCW Local 227, Lexington, Ky., has signed an extension with Kroger after its labor contract expired April 10, according to Marv Russow, president, Local 227.

WEIS BOOSTS CAP-EX 28%, PLANS FIVE NEW STORES

SUNBURY, Pa. -- Weis Markets here last week said it planned to augment its capital expenditures to $92.7 million, an increase of 28% over year-ago levels. The company said its plans call for 14 remodels, nine expansions and five new stores, some of which may not open until 2005. The company operates 158 stores in six Mid-Atlantic states. Weis also said it would make investments in its distribution center and in technology. Among the initiatives planned are an expanded loyalty marketing program; enhancements to the data warehouse; and the addition of about self-checkout lanes to about 20 stores, for a total of 100 outlets with the service.

GOVERNOR CALLS FOR WORKERS' COMP REFORM

ISSAQUAH, Wash. -- Costco Wholesale Corp. here allowed California Gov. Arnold Schwarzenegger to campaign outside two of its warehouses in Burbank and Sacramento, Calif., on successive days last week in favor of a petition aimed at workers' compensation reform, despite a company policy prohibiting all political activity on the stores' property, according to press reports. Company officials could not be reached for comment last week but reportedly acknowledged their failure to enforce their own policy and offered 30 minutes to any group opposing the petition drive to argue outside one of the two stores Schwarzenegger visited.

EMPLOYEE SUIT VS. KMART EXPECTED TO BE CLASS-ACTION

DETROIT -- A federal district court judge here was expected to grant class-action status to a lawsuit filed in 2002 by a former Kmart employee in Alabama against former executives of the retailer, according to published reports. Some of the defendants in the lawsuit reportedly include former Chief Executive Officer Charles Conaway and his replacement, James Adamson. The allegations centered on certain misrepresentations about the company's financial condition, and the company's continued investments in Kmart stock. The suit would cover more than 50,000 employees who lost over $100 million in their 401(k) retirement plan. The court set a tentative trial for April 2005.