THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Safeway Inc. (SWY)

4/12/2006 Proxy Information

In 1998, Mr. Tauscher purchased 4,467 shares of Common Stock of the Company pursuant to the 1999 Equity Plan. In connection with such purchase, Mr. Tauscher delivered to the Company a full recourse promissory note in the amount of $133,070 which matures in 2008 and bears interest at 5.75% per annum. There have been no alterations or modifications to the terms of the loan since 1998; nor have there been any extensions of the loan. Such amount (plus accrued interest) represents the largest aggregate amount of indebtedness outstanding since the beginning of fiscal 2005 for Mr. Tauscher, and he remained indebted to the Company for such amount (plus accrued interest) as of March 27, 2006.

4/12/2005 Proxy Information

In July 1999, the Company entered into a loan agreement with Dick W. Gonzales, Senior Vice President, pursuant to which the Company loaned Mr. Gonzales $400,000 under a promissory note in connection with Mr. Gonzales’ relocation to northern California. The note was secured by Mr. Gonzales’ residence, bore no interest and was due in July 2004. Mr. Gonzales paid off this loan in full on June 1, 2004.

4/13/2004 Proxy Information

Mr. MacDonnell and Mr. Roberts are brothers-in-law.

Rebecca A. Stirn is a business consultant for Safeway, Inc.

Safeway has a strategic alliance with, and 50% voting interest in, GroceryWorks Holdings, Inc. ("GroceryWorks"), a company that serves as Safeway's exclusive on-line grocery channel. Accel-KKR Company, LLC owns approximately 2.9% of the equity of GroceryWorks. Mr. Hazen is Chairman of Accel-KKR, and is senior adviser to KKR. Mr. Roberts also is a director of Accel-KKR. Messrs. Greene, MacDonnell and Roberts have indirect equity interests in Accel-KKR through indirect interests in the managing member of Accel-KKR and indirect investments in Accel-KKR. In the aggregate, their interests represent approximately 2% of the equity of Accel-KKR, that is, less than 2% of Accel-KKR's 2.9% interest in GroceryWorks.

Pacific Realty Associates, L.P. ("PacTrust") is a limited partnership, the sole general partner of which is a corporation owned by approximately 45 individuals, including Messrs. Roberts, Greene and MacDonnell. Through their ownership interest in the corporate general partner, the collective ownership interest of Messrs. Roberts, Greene and MacDonnell in PacTrust is approximately 4.9%. None of these directors is involved in the day-to-day management of PacTrust or in the negotiations related to the purchase of Safeway non-operating properties or negotiations of Safeway lease or other payments. Messrs. Roberts and MacDonnell hold two of four director positions of the corporate general partner, but do not hold an officer position. PacTrust had gross revenues in 2003 of approximately $111 million.

In May 2000, the Company entered into a three-year service agreement, as amended in April 2002, with Willis of Arizona, Inc. ("Willis Arizona"), a subsidiary of a public company, and one of the world's leading insurance brokerage firms. Willis Arizona was previously controlled by an affiliate of KKR, and Messrs. Roberts, Greene and MacDonnell are shareholders of that KKR affiliate. Mr. Hazen is on the board of directors of Willis Group Holdings Ltd., the parent company of Willis Arizona, of which KKR previously held a 22% ownership interest. In February 2004, KKR's ownership interest in Willis Group Holdings Ltd. was reduced to 7.5% pursuant to a secondary offering. Willis Group Holdings Ltd. had revenues of $2.076 billion in 2003. Willis Arizona assists the Company in the design of loss control programs and performs other risk management-related services in exchange for a fee under the terms of the service agreement. During fiscal 2003, the Company paid Willis Arizona approximately $382,667 in fees pursuant to the agreement. The Company believes that the rates charged with respect to the foregoing service agreement were at least as favorable as the rates that could be obtained from other unrelated third parties.

Mr. Magowan resigned from his position as Chief Executive Officer of the Company effective April 30, 1993 and from his position as Chairman of the Board of the Company on May 12, 1998. He continues to serve as a director of the Company and commenced receiving an annual director’s fee effective January 1, 1998. Mr. Magowan continues to receive insurance benefits. Upon his retirement from the Company in April 1997, he took retirement benefits in a lump sum amount of $730,300 in accordance with the terms of the Company’s qualified retirement plan and became entitled to receive $488,968 per year from the Company’s non-qualified retirement plan.

During 2003, the Company sold approximately $12 million in products to Casa Ley for resale in Casa Ley’s retail stores. It is anticipated that sales of a similar magnitude will be made in 2004. Mr. Ley Lopez, a member of the Company’s Board of Directors, is the General Director of Casa Ley. Since 1981, Safeway has had a 49% ownership interest in Casa Ley. The remaining 51% is owned by adult members of the Ley family, including Mr. Ley Lopez (who individually has a less than 10% equity interest in Casa Ley).

In October 2000, pursuant to Mr. Prabhu’s employment agreement, the Company loaned Mr. Prabhu $1,000,000 under a promissory note in connection with Mr. Prabhu’s relocation to northern California. The note was secured by Mr. Prabhu’s residence and bore no interest. Twenty percent of the principal amount was repaid on September 1, 2001, 40% was repaid on April 30, 2003 and 40% was due on September 1, 2004. However, as a result of Mr. Prabhu’s resignation, the remaining 40% under the note became due and payable on March 31, 2004. Since the beginning of fiscal 2003, the largest aggregate amount of indebtedness outstanding for Mr. Prabhu was $800,000, which Mr. Prabhu paid off during 2003 and 2004.

In May 2000, Mr. Ley Lopez purchased 3,868 shares of Common Stock of the Company pursuant to the 1999 Equity Plan. In connection with such purchase, Mr. Ley Lopez delivered to the Company a full recourse promissory note in the amount of $139,900 which matures in 2010 and bears interest at 8.3% per annum. Such amount (plus accrued interest) represents the largest aggregate amount of indebtedness outstanding since the beginning of fiscal 2003 for Mr. Ley Lopez, and he remained indebted to the Company for this amount (plus accrued interest) as of March 25, 2004.

In July 1999, the Company entered into a loan agreement with Dick W. Gonzales, Senior Vice President, pursuant to which the Company loaned Mr. Gonzales $400,000 under a promissory note in connection with Mr. Gonzales’ relocation to northern California. The note is secured by Mr. Gonzales’ residence, bears no interest and is due in July 2004. Since the beginning of fiscal 2003, the largest aggregate amount of indebtedness outstanding for Mr. Gonzales was $400,000, and Mr. Gonzales remained indebted to the Company for this amount as of March 25, 2004.

In June 1998, the Company loaned Bruce L. Everette, Executive Vice President, $650,000 in connection with his relocation to northern California. The largest aggregate amount of indebtedness outstanding under the note since the beginning of fiscal 2003 was $650,000. Mr. Everette paid off this loan in full on June 24, 2003.

4/4/2003 Proxy Information

Mr. Robert I. MacDonnell and Mr. Roberts are brothers-in-law.

Mr. Magowan resigned from his position as Chief Executive Officer of the Company effective April 30, 1993 and from his position as Chairman of the Board of the Company on May 12, 1998. He continues to serve as a director of the Company and commenced receiving an annual director’s fee effective January 1, 1998. Mr. Magowan continues to receive insurance benefits. Upon his retirement from the Company in April 1997, he took retirement benefits in a lump sum amount of $730,300 in accordance with the terms of the Company’s qualified retirement plan and became entitled to receive $488,968 per year from the Company’s non-qualified retirement plan.

During 2002, the Company sold approximately $19 million in products to Casa Ley for resale in Casa Ley’s retail stores. It is anticipated that sales of a similar magnitude will be made in 2003. Mr. Ley Lopez, a member of the Company’s Board of Directors, is the General Director of Casa Ley. Since 1981, Safeway has had a 49% ownership interest in Casa Ley. The remaining 51% is owned by adult members of the Ley family, including Mr. Ley Lopez (who individually has a less than 10% equity interest in Casa Ley).

In September 2000, pursuant to Mr. Prabhu’s employment agreement, the Company loaned Mr. Prabhu $1,000,000 under a promissory note in connection with Mr. Prabhu’s relocation to northern California. The note is secured by Mr. Prabhu’s residence and bears no interest. Twenty percent of the principal amount was repaid on September 1, 2001, 40% is due on April 30, 2003 and 40% is due on September 1, 2004. Since the beginning of fiscal 2002, the largest aggregate amount of indebtedness outstanding for Mr. Prabhu was $800,000, and Mr. Prabhu remained indebted to the Company in that amount as of March 20, 2003.

In May 2000, the Company loaned Mr. Dreiling, former Executive Vice President, $500,000 in connection with the purchase and construction of a new residence in northern California. In May 2001, the Company loaned Mr. Dreiling $1,270,000, out of which the original $500,000 loan was paid off. The current note is secured by Mr. Dreiling’s residence, bears no interest and is due in May 2007. Since the beginning of fiscal 2002, the largest aggregate amount of indebtedness outstanding for Mr. Dreiling was $1,270,000, and Mr. Dreiling remained indebted to the Company for this amount as of March 20, 2003.

In May 2000, Mr. Ley Lopez purchased 3,868 shares of Common Stock of the Company pursuant to the 1999 Equity Plan. In connection with such purchase, Mr. Ley Lopez delivered to the Company a full recourse promissory note in the amount of $139,900 which matures in 2010 and bears interest at 8.3% per annum. Such amount (plus accrued interest) represents the largest aggregate amount of indebtedness outstanding since the beginning of fiscal 2002 for Mr. Ley Lopez, and he remained indebted to the Company for this amount (plus accrued interest) as of March 20, 2003.

In July 1999, the Company entered into a loan agreement with Dick W. Gonzales, Senior Vice President, pursuant to which the Company loaned Mr. Gonzales $400,000 under a promissory note in connection with Mr. Gonzales’ relocation to northern California. The note is secured by Mr. Gonzales’ residence, bears no interest and is due in July 2004. Since the beginning of fiscal 2002, the largest aggregate amount of indebtedness outstanding for Mr. Gonzales was $400,000, and Mr. Gonzales remained indebted to the Company for this amount as of March 20, 2003.

In June 1998, the Company loaned Bruce L. Everette, Executive Vice President, $650,000 in connection with his relocation to northern California. The note is secured by a second deed of trust on his residence, bears no interest and is due in June 2003. The largest aggregate amount of indebtedness outstanding under the note since the beginning of fiscal 2002 was $650,000, and Mr. Everette remained indebted to the Company for this amount as of March 20, 2003.

Several of the transactions described below involve various affiliates of Kohlberg, Kravis, Roberts & Co. (“KKR”). As reported in this proxy statement, two of the Company’s directors are executives of KKR, one director is a retired executive of KKR, and one director is a senior advisor to KKR. As shown by the detailed discussion below, the transactions are insignificant to these directors and to Safeway.

The history of the Company’s relationship with KKR provides a useful starting point for understanding these transactions. In an attempt to improve stockholder value, Safeway was acquired and taken private in 1986 by partnerships formed by KKR and Safeway senior management. Over the next several years, the Company improved its operations, reduced debt and became a public company again in 1990. Beginning in 1996, KKR gradually reduced its ownership of Safeway stock through a sale to the Company and a series of secondary stock offerings and other public sales. For the past two years, neither KKR nor any of its affiliated partnerships or companies has owned any shares of Safeway stock.

All of the transactions described below involving KKR affiliates are ordinary course transactions for Safeway. The number of transactions and the amounts involved are insignificant to Safeway and to the KKR affiliates. None of the directors participates in the day-to-day operations of these businesses, and each has only a small indirect ownership interest.

Safeway has a strategic alliance with, and 50% voting interest in, GroceryWorks Holdings, Inc. (“GroceryWorks”), a company that serves as Safeway’s exclusive on-line grocery channel. Accel-KKR Company, LLC owns approximately 2.9% of the equity of GroceryWorks. Mr. Hazen is Chairman of Accel-KKR, and is senior adviser to KKR. Mr. Roberts also is a director of Accel-KKR. Messrs. Greene, MacDonnell and Roberts have indirect equity interests in Accel-KKR through indirect interests in the managing member of Accel-KKR and indirect investments in Accel-KKR. In the aggregate, their interests represent approximately 2% of the equity of Accel-KKR, that is, less than 2% of Accel-KKR’s 2.9% interest in GroceryWorks.

Pacific Realty Associates, L.P. (“PacTrust”) is a limited partnership, the sole general partner of which is a corporation owned by approximately 45 individuals, including Messrs. Roberts, Greene and MacDonnell. Through their ownership interest in the corporate general partner, the collective ownership interest of Messrs. Roberts, Greene and MacDonnell in PacTrust is approximately 3.8%. None of these directors is involved in the day-to-day management of PacTrust or in the negotiations related to the purchase of Safeway non-operating properties or negotiations of Safeway lease or other payments. Messrs. Roberts and MacDonnell hold two of four director positions of the corporate general partner, but do not hold any officer position.

In March 2002, Safeway sold eight non-operating properties to PacTrust for an aggregate purchase price of $2,560,000. Safeway’s Audit Committee reviewed these proposed transactions, including the amount of consideration to be paid, and approved them.

PacTrust is the landlord of a Safeway store and gas station in Woodburn, Oregon, which opened in September 2002. During fiscal year 2002, Safeway paid PacTrust $144,616 in ground rent and contributed $1,842,124 for site improvements with respect to the ground lease.

PacTrust, together with an entity controlled by PacTrust, owns an 80% general partnership interest in Sparks Center Associates, which owns a shopping center in Sparks, Nevada where Safeway owns and operates a grocery store. During fiscal year 2002, Safeway paid approximately $47,600 in common area operating expenses to Sparks Center Associates with respect to that store.

PacTrust controls another entity which owns an 80% general partnership interest in Carmel Valley Partners, which leases a grocery store to Safeway in Carmel, California. Safeway has operated a grocery store at this location since 1968. During fiscal year 2002, Safeway paid Carmel Valley Partners $404,079 in rent under the lease for that store.

Safeway believes that the amounts paid with respect to the foregoing real estate purchases and leases were at least as favorable as the rates that could have been obtained from unrelated third parties.

In May 2000, and amended in April 2002, the Company entered into a three-year service agreement with Willis of Arizona, Inc. (“Willis Arizona”), a subsidiary of a public company, and one of the world’s leading insurance brokerage firms. Willis Arizona is controlled by an affiliate of KKR. Messrs. Roberts, Greene and MacDonnell are shareholders of the KKR affiliate that controls Willis Arizona. Mr. Roberts and Mr. Hazen are on the board of directors of Willis Group Holdings Ltd., the parent company of Willis Arizona. Willis Group Holdings Ltd. had revenues of $1.735 billion in 2002. Under the agreement, Willis Arizona assists the Company in the design of loss control programs and performs other risk management-related services in exchange for a fee. During fiscal 2002, the Company paid Willis Arizona approximately $72,800 in fees pursuant to the agreement. The Company believes that the rates charged with respect to the foregoing service agreement were at least as favorable as the rates that could be obtained from unrelated third parties.

In 1998, Mr. Tauscher purchased 4,467 shares of Common Stock of the Company pursuant to the 1999 Equity Plan. In connection with such purchase, Mr. Tauscher delivered to the Company a full recourse promissory note in the amount of $133,070 which matures in 2008 and bears interest at 5.75% per annum. Such amount (plus accrued interest) represents the largest aggregate amount of indebtedness outstanding since the beginning of fiscal 2002 for Mr. Tauscher, and he remained indebted to the Company for such amount (plus accrued interest) as of March 20, 2003.

In 1999, Ms. Stirn purchased 3,457 shares of Common Stock of the Company pursuant to the 1999 Equity Plan. In connection with such purchase, Ms. Stirn delivered to the Company a full recourse promissory note in the amount of $139,900, which matures in 2009 and bears interest at 5.5% per annum. Such amount (plus accrued interest) represents the largest aggregate amount of indebtedness outstanding since the beginning of fiscal 2002 for Ms. Stirn, and she remained indebted to the Company for such amount (plus accrued interest) as of March 20, 2003.

The following Reports of the Compensation Committee and of the Section 162(m) Committee, Report of the Audit Committee and the Stock Performance Graph are not to be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act except to the extent the Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.