Mention Steven Burd's name to picketing grocery workers and you'll hear such invective as "evil," "incompetent" and "rat."
The chief executive officer of Vons' parent company, Safeway, "is destroying the company," the strike captain at the Vons on Fletcher Parkway said the other day.
Burd has become the focus of rage among many Southern California members of the United Food and Commercial Workers union because of his hard-line stance during the two-week-long labor dispute, which also involves Albertsons and Ralphs.
Union officials said they decided to call a strike against only Vons on Oct. 11 largely because the firm's negotiators were the toughest at the bargaining table on such issues as health care costs and a two-tier pay and benefits system with lower wages for future hires.
Albertsons and Ralphs' parent company, Kroger, which were spared from union walkouts, subsequently locked out their employees in a show of corporate solidarity with Safeway.
Burd "is leading the other two chains down a very dangerous road," union spokeswoman Ellen Anreder said.
Burd - who joined Safeway's executive ranks in 1992 - has been the supermarket companies' point man on the imperative of wresting concessions from unionized workers to better compete with non-union grocers such as Wal-Mart and Target.
Wal-Mart said recently it is stepping up the opening of at least 40 hybrid grocery-general merchandise Supercenters in California, from the previously announced time range of four to six years to within three to five years.
Analysts said the threat is likely pushing Safeway to hold tight on negotiations because, for one thing, it has the largest store concentration among the three chains in Southern California, with 326 Vons outlets.
The stores account for an estimated 19 percent of Safeway's sales, according to a recent research note by Lehman Brothers.
Some industry observers consider the regional labor dispute a test case for rolling back grocery workers' gains in other parts of the country.
Safeway and the other chains "have to get labor costs down in order to survive," said George Whalin, president of Retail Management Consultants in San Marcos.
In a conference call with analysts Oct. 16, Burd said the companies' last contract proposal, which union members had earlier rejected by a near-unanimous vote, would be their best and final offer.
"We don't have to stick with the offer," he said. "I'm not promising that it will be less good, but it could be less good. It will not be better."
Safeway spokesman Brian Dowling said Burd would not be available for interviews during the labor dispute.
"Vilifying chief executive officers is a fairly common union tactic when they don't have the facts on their side and they find themselves forced to resort to emotional arguments and personal attacks," Dowling said in a statement.
Union officials "are conveniently forgetting that under Steve Burd's leadership, Safeway has created more UFCW jobs in the last ten years than any other company in the grocery sector," Dowling said. "In fact, the majority of our employees view Steve as a tough-minded but very fair guy who has been exceptionally good for Safeway."
Analysts credit Burd with executing a dramatic turnaround at Safeway in the early 1990s, when the company was hurting from declining sales and profits.
"He brought increased efficiency to the operation and achieved the best margins in the industry," said analyst Mark Hugh Sam, who covers the supermarket industry for Morningstar.
But the 1,700-store chain has in recent years experienced some unappetizing setbacks, including the acquisitions of chains such as Dominick's in Chicago and Genuardi's in Philadelphia.
Moreover, the traditional supermarket industry - which has long survived on razor-thin margins of as little as 2 percent - has struggled with increased competition and fragmentation in key markets.
Safeway recently reported that third-quarter earnings dipped by 28 percent because of soaring costs for health care and other worker benefits.
Net income at the company declined to $202.5 million, or 45 cents a share, compared with $281.3 million, or 60 cents a share, during the same period a year earlier. Sales climbed 3.6 percent to $7.78 billion.
Such news has unsettled some Safeway investors, who have sent shares of the company down from the $60-plus range in late 2000 to the $20 range last week.
Burd's bonus shrunk from $1.15 million in 2001 to $258,000 in cash and stock last year, the company's proxy report said. His salary last year was $1 million.
Union officials are especially riled that Burd sold 250,000 shares of stock for $23.16 to $25.71 apiece in the weeks leading up to the strike.
Safeway said that Burd sold the stock because the options on the shares were about to expire.
The union also has accused the executive of using Wal-Mart as a smoke screen to hide his own company's failings and to prop up the business on the backs of labor.
Wal-Mart's planned incursion into California is "a problem," acknowledged Mickey Kasparian, president of United Food and Commercial Workers local 135 in San Diego County.
However, Kasparian said the behemoth retailer would have a very small market share in the region by the time a new three-year contract would expire.
Burd, who was born in 1949 and grew up in North Dakota, was a relative outsider in the grocery industry when he became president of Safeway 11 years ago.
After earning his master's degree in economics from the University of Wisconsin in 1973, he was a management consultant at Arthur D. Little from 1982 to 1987.
Burd later was a consultant for the retailers Stop and Shop, Fred Meyer and Safeway before being recruited to run Safeway by Kohlberg Kravis Roberts & Co., which had taken the company private in 1986 in a leveraged buyout.
"He saw that too much expense remained in the business, including in-store costs that were not productive or visible to the consumer," KKR partner George Roberts once noted in a history of the company. "He pared expenses but instead of keeping the savings remodeled stores, improved service, lowered prices and trained employees in areas that mattered to the consumer.
"In other words, he reinvested the cost savings back into the business," Roberts said.
Analysts soon were crediting Burd with transforming the chain into the top operator in the industry, with some of the highest gains in sales at stores open at least a year, approaching 5 percent.
Burd oversaw a two-for-one stock split in 1996, as well as a merger with Vons, which created a 1,377-store supermarket chain with 140,000 workers - at the time second in size only to Kroger.
But analysts said Burd began to make missteps a year later in an acquisition binge that included the $1.8 billion purchase of the 113-outlet Dominick's chain.
Known as a micromanager of his stores all the way down to how many varieties of ketchup are stocked, Burd allowed the popular Dominick's to overhaul it stores, radically altering floor plans and adding a slew of new Safeway signature products.
"Despite spending $294 million in capital improvements, shoppers hated just about everything Safeway did to remake Chicago's No. 2 chain," reported Forbes magazine last year.
Forbes estimated that Dominick's market share dropped from 28 percent to 23 percent from 1998 to 2002, largely at the expense of inroads made by market leader Jewel and other competitors.
Moreover, Burd alienated the chain's unionized employees by seeking large pay and benefits concessions.
"It's very clear that he thought he could make headway with the unions, and he got a rude awakening," Morningstar's Hugh Sam said. "His stance (in the current Southern California dispute) may have been shaped by all that."
Safeway, which put Dominick's up for sale last year, said it has a bidder for the company. It won't disclose a name, but the potential buyer also is having trouble reaching agreements with union leaders.
"We did pick a winning bidder and that bidder did sit down with (the union), and they haven't reached any kind of agreement," Burd said during the Oct. 16 conference call with analysts.
Many supermarket analysts nevertheless are sticking by Burd and Safeway, supporting the hardball attitude that gaining concessions from labor now will greatly benefit the long-term profit outlook for the industry.
For instance, even after Safeway posted its dismal third-quarter results, Merrill Lynch issued a relatively glowing report titled the "Top 6 Reasons Why We Like Safeway."
The company said it issued a "buy" recommendation because it foresees a cyclical recovery in Safeway's sales, among other factors. Merrill Lynch noted Safeway's willingness to endure a strike in the region to avert huge cost increases.
"If the Southern California contract was negotiated on a business-as-usual basis, costs would escalate by $130 million over the next three years," Merrill Lynch said.
The strike and the pending sale of Dominick's "are essentially distractions from the core issues where we are beginning to see positive traction," the company said.
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