Release Date: June 23, 2004
New York, NY Kroger (NYSE: KR) shareholders will vote tomorrow on a proposal urging repeal of the company's classified board of directors. If adopted, the proposed bylaw change filed by Amalgamated Bank's LongView Collective Investment Funds, would require all of the company's directors to stand for election annually. Under the current system roughly a third of the directors face election each year.
Kroger shareholders put forward similar board declassification proposals between 1999 and 2002. All four years, the resolutions won a majority of the yes-and-no votes cast. Each year, upon review of the vote, the board recommended that no action be taken. "The board's failure to adopt a reform that a majority of its shareholders consistently support highlights director accountability as a serious issue at Kroger," said LongView's Chief Economist Melissa Moye. "Annual elections provide investors with a regular opportunity to register views on the performance of individual directors and the board as a whole."
In 2003, Kroger's net earnings fell approximately $246 million as a result of a grocery workers' strike in California. Kroger also incurred an after-tax charge of $75 million for an asset writedown related to 74 underperforming stores, some of which will close in 2004.
Institutional Shareholder Services (ISS), the national proxy voting advisory service, supports the declassification of corporate boards. ISS recommends a "yes" vote on this proposal. Such resolutions submitted at companies in 2003 received the highest average of votes cast for-and-against among all shareholder proposals, according to the Washington, D.C. based Investor Responsibility Research Center (IRRC).
The LongView Funds currently hold 330,000 shares of Kroger common stock. The annual shareholder meeting will be held tomorrow morning in Cincinnati, Ohio.
Founded in 1923, Amalgamated Bank invests workers' retirement savings through its LongView Funds. With $8 billion in assets under management, LongView actively votes its proxies and sponsors shareholder initiatives for corporate reform. Amalgamated Bank is available online at www.amalgamatedonline.com.
