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1.	To elect as directors the nine nominees named in the attached Proxy Statement to serve for a term of one year and until their successors are elected and qualified;

2.	To consider and vote on an advisory basis on the compensation of our named executive officers;

3.	To consider and vote upon the re-approval of the Amended and Restated Capital Performance Bonus Plan for Executive Officers and Key Employees of Safeway Inc.;

4.	To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2012;

5.	To consider and vote upon three stockholder proposals, if properly presented at the Annual Meeting, which are opposed by the Board of Directors; and

6.	To transact such other business as may properly come before the meeting and any adjournments or postponements.

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•	Salaries: Given the economic uncertainty in early 2011, the Committee deferred annual merit salary increases, which were not granted until early 2012. Each of the named executive officers other than our CEO received a base salary increase of three or four percent for 2012. Mr. Burd's 2012 salary level will remain the same as in 2011.

•	Operating Bonus Plan: Based on the improvement in our earnings per share and identical-store sales in 2011, consistent with the bonus targets established by the Committee at the beginning of 2011, in early 2012 the Committee approved a bonus for 2011 performance under our operating performance bonus plan equal to 71% of the maximum amount payable.

•	Capital Bonus Plan: Based on the strong performance of our capital projects, consistent with the bonus targets established by the Committee at the beginning of 2011, in early 2012 the Committee approved a bonus for 2011 performance under our capital performance bonus plan equal to 87% of the maximum amount payable.

•

New Performance Share Plan: The Committee redesigned our Long-Term Incentive Plan (LTIP) by instituting a new Performance Share Plan that will take effect in 2012 to replace time-vested restricted stock awards. The performance share awards will constitute at least half of our LTIP equity shares granted to the named executive officers (approximately 80% of the grant value) in combination with stock option grants for the remainder.

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(a)	A director will not be deemed independent if he or she has any of the following relationships:

(i)	the director is, or has been within the preceding eight years, employed by Safeway;

(ii)	the director has received, during the current calendar year or any of the three immediately preceding calendar years, remuneration of more than $100,000 for service by the director as an advisor, consultant or legal counsel to Safeway or to an executive officer of Safeway;

(iii)	the director holds more than 5% of the equity of an entity that has received, during the current calendar year or any of the three immediately preceding calendar years, remuneration of more than $100,000 for service as an advisor, consultant or legal counsel to Safeway or to an executive officer of Safeway;

(iv)	the director is employed or self-employed (other than as a director) by an entity that has received, during the current calendar year or any of the three immediately preceding calendar years, remuneration of more than $100,000 for service as an advisor, consultant or legal counsel to Safeway or to an executive officer of Safeway;

(v)	the director has a personal services contract(s) with Safeway, which results in payments of more than $100,000 during the current or preceding calendar year;

(vi)	the director has received, during any 12-month period within the last three years, more than $100,000 in direct compensation from Safeway, other than for former service as an interim Chairman or Chief Executive Officer or other executive officer;

(vii)	an immediate family1 member of the director has received, during any 12-month period within the last three years, more than $100,000 in direct compensation from Safeway for serving as an executive officer of Safeway;

(viii)	an immediate family member of the director was employed by Safeway as an executive officer within the preceding eight years;

(ix)

(A) the director or an immediate family member is a current partner of a firm that is Safeway’s internal or external auditor; (B) the director is a current employee of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on Safeway’s audit within that time;

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(x)	a present Safeway executive officer is or was within the past three years on the board of directors of a company which employed the Safeway director or an immediate family member of the director as an executive officer at the same time;

(xi)

a Safeway director is a current employee, director, partner and/or holder of a greater than 5% equity interest, or an immediate family member is an executive officer, of another company which, during any of the last three fiscal years, received payments from Safeway, or made payments to Safeway, or was indebted to Safeway, or to which Safeway was indebted, and such payments were more than the greater of $1,000,000 or 1% of the other entity’s consolidated annual gross revenues, or the total amount of either company’s indebtedness to the other is greater than $1,000,000 or 1% of the total consolidated assets of such company; or

(xii)	a Safeway director serves as an officer, director or trustee of a charitable organization, and Safeway’s discretionary charitable contributions to the organization, in any of the three preceding fiscal years, were greater than the lesser of $500,000 or 1% of that organization’s total annual charitable receipts.

(b)

For relationships covered by the guidelines in subsection (a) above, compensation received by a director as a director of Safeway (including director and committee fees) and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) shall not be considered in determining independence. Further, the fact that a director of Safeway also serves as a director of one or more of Safeway’s subsidiaries shall not be considered in determining independence, provided that such director is otherwise independent with regard to such subsidiary or subsidiaries in accordance with the guidelines in subsection (a) above and other applicable rules and regulations.

(c)

For relationships not covered by the guidelines in subsection (a) above, the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors who satisfy the independence guidelines set forth in subsection (a) above. We will specifically explain in our annual proxy statement the basis for any board determination that a relationship was immaterial despite the fact that it did not meet the categorical standards of materiality set forth in subsection (a) above.

(d)	References to Safeway in the described standards include any parent or subsidiary in a consolidated group with Safeway.

(e)	References to the director in subsections (ii), (iii), (iv), (v) and (xii) of subsection (a) include immediate family members of the director.

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•	Presiding at all meetings of the Board at which the Board’s Chairman is not present, including executive sessions of the independent directors;

•	Serving as a liaison between the Chairman and the independent directors;

•	Approving and including information sent to the Board and working to ensure that the directors have information necessary to perform their duties;

•	Approving agendas for meetings of the Board and its committees (if the Lead Independent Director directs that an item(s) be included on the agenda, such item(s) will be included);

•	Approving schedules for Board meetings to assure that there is sufficient time for discussion of all agenda items;

•	Having the authority to call meetings of the independent directors;

•	Recommending to the Chairman the retention of consultants, as necessary, who report directly to the Board;

•	Assisting the Board or the Nominating and Corporate Governance Committee, as appropriate, and our executives in assuring compliance with and implementation of our Corporate Governance Guidelines;

•	Coordinating, developing the agendas for and moderating executive sessions of the Board’s independent directors;

•	Evaluating, along with the members of the Executive Compensation Committee and the Board, the performance of the Chief Executive Officer, and meeting with the CEO to discuss the Board’s evaluation;

•	Recommending to the Chairman of the Nominating and Corporate Governance Committee the membership of the various Board committees, as well as selection of the committees’ chairs;

•	If requested by large stockholders, ensuring that he or she is available for consultation and direct communication; and

•	Such other duties and rights as the Board may from time to time authorize.

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•	Any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company;

•	Any person who is known to be the beneficial owner of more than 5% of any class of our voting securities;

•

Any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner; and

•	Any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or principal or is in a similar position or in which such person has a 5% or greater beneficial ownership interest.

•	Compensation:

•	to an executive officer or director of the Company if the compensation is required to be reported in our proxy statement pursuant to Item 402 of Regulation S-K promulgated under the Securities Exchange Act of 1934; or

•	to an executive officer of the Company, if such compensation would have been required to be reported under Item 402 of Regulation S-K as compensation earned for services to the Company if the executive was a “named executive officer” in the proxy statement, and such compensation has been approved, or recommended to our Board of Directors for approval, by the Executive Compensation Committee.

•	Transactions that are in our ordinary course of business and where the interest of the Related Party arises only:

•	from the Related Party’s position as a director of another corporation or organization that is a party to the transaction;

•	from the direct or indirect ownership by such Related Party and all other Related Parties, in the aggregate, of less than a 5% equity interest in another person (other than a partnership) which is a party to the transaction;

•	from both such positions and ownership described above; or

•	from the Related Party’s position as a limited partner in a partnership in which the Related Party and all other Related Parties, in the aggregate, have an interest of less than 5%, and the Related Party is not a general partner of and does not have another position in the partnership.

•	Transactions that are in our ordinary course of business and where the interest of the Related Party arises solely from the ownership of a class of our equity securities and all holders of such class of equity securities will receive the same benefit on a pro rata basis.

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*	Less than 1%

(1)

For purposes of this table, a person or a group of persons is deemed to have “beneficial ownership” of any shares that such person has the right to acquire as of May 15, 2012 (60 days after March 16, 2012). For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any shares that such person or persons has the right to acquire within 60 days after such date are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. For purposes of this table, stock units (into which directors’ fees are deferred under the Deferred Compensation Plan for Safeway Non-Employee Directors II) are not included in directors’ beneficial ownership of our Common Stock. For a discussion of directors’ stock units, see “Director Compensation” later in this Proxy Statement. The address of each of the directors and executive officers included in this table is c/o Safeway Inc., 5918 Stoneridge Mall Road, Pleasanton, CA 94588-3229.

(2)

Includes shares issuable upon the exercise of stock options that are exercisable as of May 15, 2012, as follows: Mr. Burd, 3,000,000; Ms. Grove and each of Messrs. Gyani, Herringer and Oder, 20,000; Mr. Hazen, 6,000; Mr. Rogers, 0; each of Messrs. Sarin and Shannon, 13,331; Mr. Tauscher, 12,700; Ms. Dietz, 456,050; Mr. Edwards, 683,150; Mr. Everette, 797,200; Ms. Renda, 807,650; and all executive officers and directors as a group, 7,467,412. Mr. Hazen, a current Safeway Board member, will not stand for reelection at the Annual Meeting.

(3)

In addition to the shares of Safeway Common Stock reflected in the table above, certain of our executive officers hold shares of restricted Common Stock of Blackhawk, as follows: Mr. Burd, 100,000; Ms. Dietz, Mr. Edwards, Mr. Everette and Ms. Renda, 167,000; and all executive officers and directors as a group, 768,000. None of these individuals, nor all executive officers and directors as a group, holds more than 1% of the outstanding Common Stock

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(4)	200,000 shares are subject to a pledge agreement with Mr. Burd’s broker.

(5)

All information regarding BlackRock, Inc. is based on the Schedule 13G filed with the SEC on February 10, 2012 by BlackRock, Inc. on behalf of itself and its subsidiaries, BlackRock Japan Co. Ltd., BlackRock Advisors (UK) Limited, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Asset Management Australia Limited, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock Financial Management, Inc., BlackRock Investment Management, LLC, BlackRock Investment Management (Australia) Limited, BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Fund Managers Limited, BlackRock Pensions Limited, BlackRock Asset Management Ireland Limited, BlackRock International Limited and BlackRock Investment Management (UK) Limited. At December 30, 2011, BlackRock, Inc. had sole voting and dispositive power over all 24,769,152 shares.

(6)

All information regarding The Vanguard Group, Inc. is based on the Schedule 13G filed with the SEC on February 10, 2012 by The Vanguard Group, Inc. on behalf of itself and its subsidiary, Vanguard Fiduciary Trust Company ("VFTC"). At December 31, 2011, VFTC was the beneficial owner of 479,140 of such shares as a result of serving as an investment manager of collective trust accounts. The Vanguard Group, Inc. has sole dispositive power over 18,315,620 of such shares, shared dispositive power over 479,140 of such shares and sole voting power over 479,140 of such shares.

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•	Earnings per Share Improvement:  Our diluted earnings per share increased almost 15% in fiscal 2011 versus 20102.

•	Identical-Store Sales Improvement: Our identical-store sales, excluding fuel, increased 1.0% during 2011 versus a decrease of 2.0% during 2010.

•	Return of Cash to Stockholders: We returned approximately $1.55 billion to our stockholders through stock repurchases and approximately $188 million through dividends. In May 2011, we increased the amount of our quarterly dividend by approximately 21%.

•	Free Cash Flow:  Free cash flow continued to be strong, at $751 million3.

•	Salaries: Given the economic uncertainty in early 2011, the Committee deferred annual merit salary increases, which were not granted until early 2012. Each of the named executive officers other than our CEO received a base salary increase of three or four percent for 2012. Mr. Burd's 2012 salary level will remain the same as in 2011.

•	Operating Bonus Plan: Based on the improvement in our earnings per share and identical-store sales in 2011, consistent with the bonus targets established by the Committee at the beginning of 2011, in early 2012 the Committee approved a bonus for 2011 performance under our operating performance bonus plan equal to 71% of the maximum amount payable.

•	Capital Bonus Plan: Based on the strong performance of our capital projects, consistent with the bonus targets established by the Committee at the beginning of 2011, in early 2012 the Committee approved a bonus for 2011 performance under our capital performance bonus plan equal to 87% of the maximum amount payable.

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New Performance Share Plan: The Committee redesigned our Long-Term Incentive Plan (LTIP) by instituting a new Performance Share Plan that will take effect in 2012 to replace time-vested restricted stock awards. The performance share awards will constitute at least half of our LTIP equity shares granted to the named executive officers (approximately 80% of the grant value) in combination with stock option grants for the remainder.

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•	To align our named executive officers' compensation with the interests of our stockholders, a substantial portion of their compensation is "at risk" and performance-based;

•	We currently do not have employment agreements with any executive officers;

•	We currently do not provide contractual change in control or severance benefits to any executive officer;

•	We have a policy that we will not enter into any severance agreement with an executive officer that provides severance benefits in excess of 2.99 times that executive’s most recent annual salary plus bonus, without stockholder approval;

•

We have adopted double-trigger vesting acceleration in the event of a change in control for equity awards made in 2012 and going forward. Award agreements will provide that upon a change in control, the awards will become fully vested only if the acquirer does not agree to assume the awards. If the awards are assumed, they will become fully vested only in the event the executive's employment is terminated by the acquirer without cause or the executive terminates his or her employment for good reason within one year following the change in control;

•	We have a policy for "clawing back" bonuses paid to executive officers under certain circumstances;

•	We do not make gross-up payments to cover our executives’ personal income taxes that may pertain to any of the moderate perquisites we offer;

•	We have officer and director equity ownership guidelines that we expect our officers and directors to meet within five years of accepting a covered position;

•	Our insider trading policy prohibits our directors, named executive officers and other key executive officers from hedging the economic interest in the Company securities that they hold; and

•	The Committee's consultant is retained directly by the Committee and performs services solely in support of the Committee.

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•	His actual total cash (salary + bonus) placed him at the 19th percentile;

•	His actual LTIP grant value placed him at the 29th percentile; and

•	His actual total direct compensation (total cash + LTIP) placed him at the 25th percentile.

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•	Provide our executives with base salaries, retirement and other benefits and perquisites that are competitive with those provided by other companies with whom we compete for executive talent;

•	Pay annual bonuses that reward our executives for the attainment of our annual financial, operational and strategic goals, when met or exceeded;

•	Grant our executives equity-based compensation that will motivate them to improve our long-term performance and, specifically, to increase our earnings per share and the market value of our stock price over time, in addition to helping retain those executives; and

•	Motivate our executives to improve their individual performances.

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•	To provide base salaries in the aggregate that are slightly below the median of our compensation peer group (described below);

•	To set target total cash compensation (salary + target bonus) at, or slightly below, the compensation peer group median to encourage strong performance;

•	To pay performance-based compensation and long-term equity compensation in excess of the compensation peer group median when we outperform others in the industry or other appropriate measurement groups; and

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To subject a significant portion of each executive’s target total direct compensation (salary + target annual bonus + long-term equity grant value) to variability based on our financial performance. The components of total direct compensation that vary in value based on our financial performance are annual bonuses and long-term equity. In general, these portions of target total direct compensation are progressively greater for more highly-compensated positions. The portions of 2011 target total direct compensation that were variable based on our financial performance for the named executive officers are set forth above.

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•	Base salary;

•	Annual bonus;

•	Equity awards, and

•	Retirement benefits

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•	If our EPS CAGR is less than 80% of the median of the EPS CAGRs of the companies in the S&P 500 during the performance period, no performance shares will be earned;

•	If our EPS CAGR is equal to 80% of the median of the EPS CAGRs of the companies in the S&P 500, 50% of the target number of performance shares will be earned;

•	If our EPS CAGR is equal to the median of the EPS CAGRs of the companies in the S&P 500, 100% of the target number of performance shares will be earned; and

•	If our EPS CAGR is in the top quartile of the EPS CAGRs of the companies in the S&P 500, the maximum number of shares subject to the performance share award will be earned.

•	Notwithstanding our EPS CAGR results, if our TSR during the performance period is negative, then the number of performance shares earned based on our EPS CAGR results will be no more than 100% of the target number of performance shares.

•	Notwithstanding our EPS CAGR results, no performance shares will be earned and awarded above 100% of the target number of performance shares unless our TSR for the performance period equals or exceeds the median TSR of the companies in the S&P 500.

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(1)

This amount is the named executive officer’s base compensation, which consists of the regular weekly base salary rate, excluding moving expenses, bonus pay and other payments that are not considered part of the computation of regular weekly salary rate, multiplied by the number of weeks worked during 2011, 2010 and 2009 (52 weeks). This amount also includes amounts earned but deferred at the election of the executive officer under our Executive Deferred Compensation Plans. See the discussion of the Executive Deferred Compensation Plans under “Executive Compensation – Post-Employment Compensation – Non-Qualified Deferred Compensation” later in this Proxy Statement.

(2)	The amount shown is the aggregate grant date fair value and does not reflect compensation actually received by the named executive officer.

(3)

This amount consists of the aggregate grant date fair value of grants of our restricted stock and restricted Common Stock of Blackhawk in fiscal years 2011, 2010 and 2009, as applicable, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, “Compensation – Stock Compensation.” The value of Blackhawk restricted stock for purposes of computing the grant date fair value in fiscal year 2009 is based on an independent valuation, using methodologies described in footnote 13 on page 43 of this Proxy Statement. No grants of Blackhawk restricted stock were made to any of the named executive officers in 2011 or 2010.

(4)	This amount consists of the aggregate grant date fair value of grants of stock options in fiscal years 2011, 2010 and 2009, as applicable, computed in accordance with FASB ASC Topic

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(5)

This amount consists of the cash bonuses awarded under our Operating Bonus Plan and our Capital Bonus Plan to each of the named executive officers for 2011, 2010 and 2009, as applicable. The amounts disclose the actual bonuses earned for 2011, 2010 and 2009 performance which were paid in March 2012, March 2011 and April 2010, respectively, and do not reflect the amounts shown in the Grants of Plan-Based Awards Table below. These amounts also include amounts earned but deferred at the election of the executive officer under our Executive Deferred Compensation Plans. Additional explanation of the non-equity incentive plan compensation amounts paid can be found under the caption, “Compensation Discussion and Analysis – Elements of Compensation – Bonuses” earlier in this Proxy Statement.

(6)	This amount shows the change in pension value in fiscal years 2011, 2010 and 2009, as applicable. There were no above-market or preferential earnings for any of the named executive officers in fiscal years 2011, 2010 or 2009 under our Executive Deferred Compensation Plans.

(7)

This amount consists of all other compensation for the named executive officers. Included are amounts reflecting the aggregate incremental cost to the Company of providing personal use of Company aircraft to the named executive officers. Such aggregate incremental cost is calculated on the basis of the additional variable operating costs to us, including fuel costs, mileage, trip-related maintenance, on-board catering, landing/ramp fees and other miscellaneous variable costs, resulting from such personal use. Fixed costs, which do not change based on usage, such as aircraft purchase costs, pilot salaries and the cost of maintenance not related to trips, are excluded from the calculation of incremental cost. Pursuant to a resolution of the Board of Directors, Mr. Burd, as our Chief Executive Officer, is to use Company aircraft for all air travel, both business and personal, for security reasons. For 2011, our aggregate incremental cost related to Mr. Burd’s personal use of Company aircraft was $101,029. There were no incremental costs for personal use of Company aircraft for the other named executive officers. In 2011, this amount also includes $3,783 with respect to Mr. Burd’s commuting use of a Company-leased automobile, calculated by allocating the total costs associated with operating the vehicle on a proportionate basis between Mr. Burd’s business and personal uses. No other named executive officer makes use of a Company-provided automobile for non-business purposes. This amount further includes the 2011 capitalized amount of $6,644 related to security equipment installed in Mr. Burd’s residences, as well as $13,564 for service, repair, parts and back-up equipment required for the installation of the security equipment.  The monthly maintenance charges related to Mr. Burd’s home security are paid by Mr. Burd and are not reimbursed by us.  No other named executive officer has a Company-provided home security system.  For Ms. Renda, 2011 includes our cost for financial planning services provided by a financial planning firm. Included for all named executive officers are dividends earned on restricted stock.

(8)	Mr. Burd also serves on the Board; however, he does not receive additional compensation for his service as a director.

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(1)	In accordance with our policy regarding the timing of stock option grants, the grant date for fiscal year 2011 grants under our LTIP program was the first day of our insider trading window period after the Executive Compensation Committee meeting at which such grants were approved.

(2)	We maintain the Operating Bonus Plan, the Capital Bonus Plan, the 2007 Equity Plan, the 2011 Equity Plan and a Blackhawk Network Holdings, Inc. 2006 Restricted Stock Plan for Safeway Executives (the “Blackhawk Plan”). Additional descriptions of each plan can be found below this table.

(3)

Payouts under the non-equity incentive plans were based on performance in 2011. The information in the Threshold, Target and Maximum columns reflects the range of possible payouts when the performance goals were set in February 2011. The amounts actually paid under the Operating Bonus Plan and Capital Bonus Plan for 2011 are reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

(4)

Pursuant to the Operating Bonus Plan and Capital Bonus Plan, performance below a specific threshold will result in no payment with respect to that performance goal. Performance at or above these minimums would result in a payment from $0 up to the maximum bonus amounts. The target levels under the Operating Bonus Plan (i.e., for payment of 50% of the maximum bonus) were for identical-store sales growth of 1.5% (excluding fuel) and earnings per share of $1.65 (excluding the effects of the Canadian dividend). Target performance under the Capital Bonus Plan for the 2011 fiscal year (i.e., for payment of 50% of the maximum bonus) was set at 16.1% as the weighted-average return on assets for first-year projects and 25.5% as the weighted-average return on assets for third-year projects.

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(5)	Pursuant to the Operating Bonus Plan and Capital Bonus Plan, the amounts shown in this column for Mr. Burd represent 200% of his base compensation for 2011. The amounts shown in this column for Mr. Edwards, Ms. Dietz, Mr. Everette and Ms. Renda represent 125% of their base compensation for 2011.

(6)	Represents restricted stock granted to the named executive officers during 2011 pursuant to the 2007 Equity Plan. Such restricted stock awards vest in annual installments of 20%, commencing one year from the date of grant, with full vesting occurring on the fifth anniversary of the date of grant.

(7)	Represents options granted to the named executive officers during 2011 pursuant to the 2007 Equity Plan. Such option awards have a ten-year term and become exercisable in annual installments of 20%, commencing one year from the date of grant, with full vesting occurring on the fifth anniversary of the date of grant.

(8)	Represents the fair market value of our Common Stock on the date of grant, based on the closing market price of our Common Stock on such date as reported in The Wall Street Journal.

(9)	See Note I to the Consolidated Financial Statements in the 2011 10-K for an explanation of the assumptions made in the valuation of these stock and option awards.

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(1)

This amount represents the difference between the closing market price of our Common Stock as reported in The Wall Street Journal on the option exercise date, and the option exercise price, multiplied by the number of shares of Common Stock covered by the exercised option. The closing market price of our Common Stock on the option exercise date was $22.85 per share. This option would have expired on August 27, 2011.

(2)

This amount represents the difference between the closing market price of our Common Stock as reported in The Wall Street Journal on the option exercise date, and the option exercise price, multiplied by the number of shares of Common Stock covered by the exercised option. The closing market prices of our Common Stock on the option exercise dates ranged from $24.77 to $24.78 per share. This option would have expired on August 27, 2011.

(3)

This amount includes the difference between the closing market price of our Common Stock as reported in The Wall Street Journal on the date released to the employee and the award price, multiplied by the number of shares of Safeway Common Stock covered by the vested award. The closing market price of our Common Stock on the stock release date was $21.83 per share. Safeway restricted stock granted on March 5, 2010 and March 4, 2009 vested 20% on March 5, 2011 and March 4, 2011, respectively.

(4)	This amount includes the difference between $9.45, the estimated value of each share of Blackhawk restricted stock on May 13, 2011 based on an independent valuation, and the award price, multiplied by the number of shares of Blackhawk Common Stock covered by the vested award. Blackhawk restricted stock vested 20% on May 13, 2011.

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(1)

We provide our eligible executives with retirement benefits that are in addition to those provided to our employees generally. These retirement benefits are provided using a combination of a qualified defined benefit pension plan and non-qualified defined benefit pension plans. Mr. Burd is also covered by the SERP, an agreement for a supplemental retirement benefit. No other executive officer has a supplemental retirement benefit other than the RRP. Under the ERP, upon termination of employment for any reason (including in connection with a change in control), a participant may elect to receive his or her vested benefit via a lump sum payment or an annuity paid monthly. Under the RRP, upon termination of employment for any reason (including in connection with a change in control), a participant will receive his or her vested benefit via an annuity paid monthly. Under the ERP, in the event of termination of employment for any reason, a participant must have at least three years of service with us or must have reached age 55 to receive his or her accumulated benefits, and under the RRP, a participant must have reached age 55 to receive his or her accumulated benefits.

(2)	The number of years of credited service and the present value of accumulated benefits are calculated as of December 31, 2011, which is the measurement date used for reporting purposes in the 2011 10-K.

(3)	Account-based cash benefits were projected to the assumed retirement age using the appropriate interest rate. No future contributions were assumed. These projected accounts were converted to annuities at the assumed retirement age using the annuity conversion mortality and interest assumptions used in our financial disclosures (e.g., cash balance accounts are converted using the end of fiscal

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(4)

Since benefits under this plan are not tenure-based, there are no creditable years of service related to this plan. Mr. Burd’s SERP benefit was valued by calculating the gross benefit payable at the assumed retirement age and offsetting ERP and RRP benefits that would be payable at the same age. The net SERP benefit was then valued as an immediately payable annuity using the assumptions described previously. Upon termination of employment for any reason other than for cause, Mr. Burd will receive his accumulated net SERP benefit as an annuity paid monthly (commencing within 90 days of the first day of the seventh month after such termination of employment for any reason or, if earlier, within 90 days of his death). In the event of a termination of Mr. Burd’s employment for cause, Mr. Burd would not receive a payment under the SERP. Cause is defined in the SERP as: (i) an act of fraud, dishonesty, misappropriation, illegal conduct or gross misconduct that has a material impact on our assets or reputation; or (ii) a conviction of, or plea of nolo contendere to, a felony or misdemeanor involving moral turpitude and materially impacting the Company.

(5)	These amounts were not vested as of December 31, 2011. In the event the named executive officer’s employment had been terminated as of December 31, 2011, voluntarily, involuntarily (with or without cause) or as a result of a change in control, the named executive officer would have received $0 under this benefit.

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(1)	This amount reflects the credited earnings (loss) for Ms. Renda that accrued under our Executive Deferred Compensation Plan and Executive Deferred Compensation Plan II.

(2)	This amount reflects the aggregate balance as of December 31, 2011 that has previously been reported as compensation for Ms. Renda in the Summary Compensation Table in prior years.

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(1)	Based on the fiscal year-end closing price of our Common Stock of $21.04 as of December 30, 2011.

(2)	Includes only the value of stock options for which the exercise price was below $21.04 as of fiscal year-end 2011.

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•	appropriate pay philosophy, compensation peer group and other market comparability data and market positioning to align with and support business objectives;

•	effective balance in: (i) cash and equity pay mix, (ii) short- and longer-term performance focus, (iii) corporate, business unit and individual performance focus and measurement; and (iv) financial and non-financial performance measurement together with top management and Board discretion to manage pay appropriately;

•	equity grant guidelines, equity ownership guidelines and incentive plan recoupment policy; and

•	Executive Compensation Committee oversight of our compensation policies and practices

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(1)	Consists of the fees earned in cash through December 31, 2011.

(2)	Represents the total fees earned in stock units in fiscal year 2011 pursuant to the Directors Deferred Compensation Plan through December 31, 2011, including dividends, based on the December 30, 2011 closing price of our Common Stock. Each director's stock

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(3)

Prior to February 2010, each new director received an initial grant of stock options to purchase 20,000 shares of our Common Stock, which vested ratably over three years. There were no grants of options made to directors in connection with their Board service during fiscal year 2011. The following numbers of Safeway stock options were outstanding and held by each of the following non-employee directors serving as such as of December 31, 2011: Ms. Grove and Messrs. Gyani, Herringer, Oder, Sarin and Shannon, 20,000; and Mr. Hazen, 6,000. The following numbers of Blackhawk stock options were outstanding and held by each of the following non-employee directors serving as such as of December 31, 2011: Mr. Gyani, Mr. Hazen and Mr. Sarin, 100,000. Such stock options vest ratably over five years.

(4)	The directors received no perquisites or other personal benefits in fiscal year 2011.

(5)	Mr. Hazen will not stand for reelection at the Annual Meeting.

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(1)	Audit Fees represent fees for professional services provided in connection with the audit of our consolidated annual financial statements and internal control over financial reporting and reviews of our quarterly financial statements, as well as audits of subsidiary financial statements (including statutory audits), regulatory filings, consents and other SEC matters.

(2)	Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” In 2011 and 2010, this category consisted primarily of services related to employee benefit plan audits.

(3)

Tax Fees consist of fees billed for professional services rendered for tax compliance and tax planning and advice. Fees for tax compliance services totaled $236,000 and $301,000 in 2011 and 2010, respectively. Tax compliance services included federal, state, local and international income tax return assistance, sales and use tax return assistance and assistance with tax audits. Fees for tax planning and advice services totaled $1,214,000 and $1,219,000 in 2011 and 2010, respectively.

(4)	All Other Fees consist of services related to international due diligence.

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(1)	Reflects securities to be issued under the 1999 Equity Plan, the 2007 Equity Plan and the 2011 Equity Plan. Includes shares issuable under the 1999 Equity Plan pursuant to awards of stock options made under prior plans we maintained, which were consolidated into the 1999 Equity Plan upon approval by our stockholders.

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•	The annual election of all directors;

•	A majority voting standard for the election of directors;

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•	Director nomination procedures and qualification criteria for director candidates;

•	A policy to submit any stockholder rights plan to a stockholder vote;

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A By-Law providing that the amendment of any stockholder rights plan that has the effect of extending the term of the stockholder rights plan shall require the approval of three quarters of the independent members of the Board, and further providing that any stockholder rights plan adopted after the effective date of the By-Law will expire if not so amended no later than one year following the later of the date of its adoption and the date of its last such amendment, in each case where the plan or amendment was not approved or ratified by our stockholders; and

•	A policy regarding stockholder communications with the Board, the Lead Independent Director, any Board committee or any individual director.

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•	recruit, retain and properly incentivize talented, high-performing executive personnel; and

•	ensure the stability and continuity of our executive management team and its objective input to our Board of Directors in the event of a potential change in control transaction, free of distractions and potential conflicts of interest.

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•	The Board of Directors will review the plan annually;

•	The Board will develop criteria for the CEO position which will reflect the Company's business strategy and will use a formal assessment process to evaluate candidates;

•	The Board will identify and develop internal candidates;

•	The Board will begin non-emergency CEO succession planning at least 3 years before an expected transition and will maintain an emergency succession plan that is reviewed annually;

•	The Board will annually produce a report on its succession plan to shareholders.

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•	The Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board, President and Chief Executive Officer, periodically reviews the succession plans relating to positions held by our entire executive management team; and

•	The entire Board plans for succession with respect to the CEO position and reviews management's succession planning for the other executive officers.

•	The Board reviews our succession plan on an ongoing basis;

•	The Board is continually engaged in efforts to review and develop internal and external candidates; and

•	The Board reviews the performance criteria established by the Executive Compensation Committee annually for the CEO position, which criteria is developed to reflect, among other things, our business strategy and which is used in our internal assessment process to evaluate potential internal and external candidates.

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