Despite its vast debt, Albertsons plans to give a $4 billion payout to shareholders and top executives. The 2,270-store grocery chain owes $4.9 billion to worker pension funds and another $7.5 billion in debt.
The $4 billion payout to top execs follows a buyout from Kroger, expected to be completed in 2024, as reported by The Dallas Express. If regulators approve Kroger’s $24.6 billion merger, Kroger will reimburse the remaining worker’s pension.
Critics say that Albertsons, which includes Safeway, Tomb Thumb, and Jewel-Osco, is taking advantage of the expected merger to pay their top executives rather than workers.
“They’re essentially looting this company,” said Jonathan Williams, communications director at United Food and Commercial Workers Local 400, a labor union that represents Albertsons’ employees. Williams claimed the $4 billion would be better spent on employees who “risked their lives to keep the stores open during the pandemic.”
However, Albertsons maintains the large payout is designed merely to act in the “best interests” of shareholders. Under U.S. law, public companies must maximize shareholder return. Failure to do so risks litigation.
Furthermore, Albertsons maintains that the payout will not impede Albertsons’ ability to remain strong and grow as a company.
“Albertsons Cos. will continue to be well capitalized with a low debt profile and a strong free cash flow,” the company said in a statement.
Moreover, Albertsons rejects the notion that they are failing to cover pensions. “We always have and will continue to make cash contributions to the multi-employer pension plans we participate in,” the company added.
However, the attorneys general of Washington, Illinois, California, and D.C. filed lawsuits to “stop this cash grab,” according to D.C. Attorney General Karl A. Racine.
Although a judge ruled against the objection from the D.C. attorney general, other litigation still prevented the payout from occurring immediately.
The State of Washington filed a motion for a temporary restraining order (TRO) alleging “this dividend is 57 times as large as the most recent quarterly dividend issued in October 2022.”
On November 3, the Superior Court of Washington agreed to grant the motion. Following the decision, Washington Attorney General Bob Ferguson said, “Huge victory! Putting the brakes on this $4 billion payment is the right thing for Americans shopping at their local grocery store.”