MINNEAPOLIS — Supervalu here went outside the company to hire Craig Herkert as its chief executive officer “because we felt he was the best executive available at the time,” Jeff Noddle, executive chairman, told the company's annual meeting here.
“The board spent 15 months going through a diligent assessment of all internal candidates but ultimately determined that Craig's extensive retail experience made him the right choice,” he said.
Noddle's comments came in response to a shareholder question on why Supervalu had hired an executive search firm when it could have found “a cheaper alternative” inside the company. “Finding the best executive was more important than simply making a more economic decision,” Noddle explained.
Herkert was hired as CEO in May from his post heading Wal-Mart Stores' Latin American and Canadian divisions. Before that he had a 23-year career with Albertsons and American Stores.
In brief remarks at the beginning of the meeting, Herkert said it will be “some time” before he announces his vision for Supervalu. “Much work still lies ahead, but we are undertaking a full review of operations and the support network to get better leverage on our marketing and merchandising organization and our strong local store brands for long-term sustainable success.”
In response to a shareholder's question, Noddle said Supervalu still believes “the neighborhood supermarket has an important place in food retailing,” despite gains by mass merchants. “If we didn't believe that, we wouldn't have made the Albertsons acquisition three years ago.”
He said the ability of mass merchants to lower grocery prices means Supervalu must offer more value to compete. “We've had to sequence some decisions sooner than we would have liked to as we brought the two companies together, and that's why we anticipate a shortfall going forward as we become more aggressive on pricing in certain key markets.
“We have to convince people that we can deliver value on everyday items along with fresh produce, meat and deli, plus service.”
Shareholders voted in favor of an advisory that will allow them to voice their opinions on executive salaries. Noddle pointed out that he and his executive staff did not receive bonuses or pay raises last year “because we did not hit our performance metrics.”
Gerald Armstrong, the shareholder who proposed the so-called “say on pay” amendment, told SN last week that shareholders at only about 15 out of 200 companies that have voted on the measure have approved it. If a significant number of shareholders do not approve of executives' salaries at next year's annual meeting, he told SN, “then it will be up to the conscience of the directors” to seek to change the pay rates.