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Union Seeking Job Guarantees in Takeover Battle

September 17, 1985

WASHINGTON (AP) _ The AFL-CIO, in a precedent-setting move, is trying to force a supermarket chain in the South to guarantee jobs to its workers for one year if the company becomes the target in a corporate takeover battle.

″The recent rash of hostile takeovers and tender offers has devastated the job security of millions of Americans,″ said Robert F. Harbrant, president of the Food and Allied Services Trade Department of the 13.7 million-member labor federation.

″Our solicitation represents the first effort to provide workers with substantial protection if their employer is taken over.″

Harbrant’s department is waging a proxy fight against Delchamps Inc., a Mobile, Ala.,-based concern whose 86 stores are clustered predominantly in Gulf Coast cities in Louisiana, Mississippi, Alabama and Florida.

The department has bought 50 shares of stock in Delchamps and is soliciting the votes of other shareholders, especially the nearly 13 percent of stock owned by 1,800 of the company’s almost 5,000 employees, in an attempt to amend the corporation’s by-laws at the annual meeting Oct. 4.

The federation’s proposal would establish contracts of employment similar to ″golden parachute″ agreements that many corporations have adopted for their senior executives. Like most of those arrangements, the employment contracts would become effective during any effort to take over or restructure the company.

Once triggered, the contract would guarantee employees their average salary and benefits for one year.

The supermarket chain is urging stockholders to vote against the proposal, saying it is simply a campaign of ″continued harassment″ of the company and an attempt to organize the non-union work force.

Unions have tried unsuccessfully to organize Delchamps employees on at least two occasions in the past 15 years.

Delchamps said in its proxy statement that employment contracts ″breed complacency and reduce productivity. Since the company was founded in 1921, no employee, from the newly associated to the most senior, has ever had a contract of employment.″

But Harbrant said the company’s top officers have ″built-in golden parachutes″ through their stock ownership. The company’s president, board chairman and chief executive officer is A.F. Delchamps Jr., son of one of the founders.

″We’re just asking the workers to be included in the family,″ Harbrant told a reporter. ″This proposal is a substantial safety net for workers and not the windfall-type golden parachute that you find for corporate executives.″

Joel O. Swanson, company vice president and secretary, said the Delchamps family and company management control at least 50 percent of the stock and that the proposal has little chance of success.

The AFL-CIO’s figure is substantially less, 37 percent, but federation officials concede it is difficult to identify all the shares controlled by the family or their relatives.

Even if the proposal fails, ″we would bring to the attention of all the shareholders the fact that the employees do not have any employment protection should the company be taken over by an outside party,″ said Mark Atkinson, an assistant director for corporate affairs at the AFL-CIO who helped launch the proxy campaign at Delchamps.

The labor federation acknowledges that it hopes to create a favorable environment for organizing the workers.

Delchamps said it is not a takeover target, but Atkinson said the company is experiencing rapid growth and would be ripe for a takeover bid.

Delchamps workers who have been with the company at least three years can buy into an employee stock ownership plan which now controls 12.9 percent of the shares.

The AFL-CIO, operating in the proxy fight as the Delchamps Shareholder Protection Committee, suffered a setback last week when a circuit judge in Mobile rejected the labor federation’s request for a list of employee participants in the stock plan.

The company is circulating both the labor federation’s and its own proxy material to the employees by hand on company property.

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