Safeway Inc. chairman and chief executive Steven A. Burd beat back a shareholder attempt to dump him from the grocery chain's board yesterday, winning 83 percent of the vote at the company's contentious annual meeting in Pleasanton, Calif.

But big pension funds and shareholder groups still declared victory, calling the 17 percent opposition a "wake-up call" and saying pressure on Burd and other board members already had wrung significant concessions from the company, including pledges to begin counting stock options as an expense, to elect three new non-management board members and to appoint a lead independent director as a counterweight to Burd's power.

Safeway shareholders had complained about the company's financial performance as well as what they said were poor decisions by Burd and conflicts of interest facing other directors.

The action at Safeway highlights what investor groups say are the two big trends of the 2004 proxy season: vigorous campaigns against individual directors and an increased willingness on the part of companies to cut deals rather than face nasty public fights.

Investor groups say these trends are finally tilting the corporate power dynamic more in the direction of stockholders after decades in which companies could safely treat shareholder activists as little more than annoying pests.

"This year is a good curtain raiser for the future of shareholder activism," said Patrick S. McGurn, senior vice president and special counsel at Institutional Shareholder Services, a proxy advisory firm. "These aren't just meaningless protest votes anymore. They are leading to meaningful change."

In one of the biggest examples of this year's trend, about 45 percent of Walt Disney Co. shareholders withheld votes from chief executive Michael D. Eisner in March, leading the company to strip Eisner of the chairmanship. Disney board members are meeting today with state pension fund officials, who control large numbers of shares, to discuss the company's performance and the makeup of the board.

In another example, just days before its annual meeting, credit card giant MBNA Corp. announced it would add two new independent directors to its board, including a former acting chairman of the Securities and Exchange Commission.

At the meeting, 56 percent of MBNA shareholders endorsed a proposal from teachers pension firm TIAA-CREF calling on the company to expand the number of directors with no ties to the company. Shareholders withheld over 40 percent of the vote from each of two MBNA directors viewed by some as having conflicts of interest.

Corporate lobbying groups, meanwhile, have criticized many of the proxy campaigns led by public pension funds and other activists. "Safeway and thousands of other public companies are under attack by union officials and union sympathizers who have been unable to win big concessions at the bargaining table," U.S. Chamber of Commerce Senior Vice President David Hirschmann said in a statement yesterday.

"Withholding votes on the appointment of corporate directors is less about board performance than it is about political power."

Shareholder groups say their efforts this year have been aided by two pending regulatory changes: the Aug. 31 deadline for mutual funds and money managers to start disclosing how they vote on proxy issues (including how they voted this year) and a proposed rule that would make it easier for shareholders to nominate representatives to corporate boards.

Observers of the process say big mutual fund companies, which have typically scorned proxy voting as an ineffective way to alter corporate behavior, are casting more votes against management this year so as not to appear lazy or indifferent to management issues when they disclose their votes.

"There's been a phrase in the business, particularly in the mutual fund and money management business, that 'Real men and women don't vote proxies,' because if you were a great stock picker you didn't worry about proxies," said North Carolina Treasurer Richard H. Moore. "That has changed."

At Vanguard Group Inc., one of the largest mutual fund companies, spokesman Brian Mattes declined to discuss how the firm voted on Eisner or Burd or any other issue this year. But he said the company voted in favor of full slates of director nominees only 29 percent of the time last year, compared with 90 percent in 2002.

Companies also are anticipating the implementation of a Securities and Exchange Commission rule making it easier for shareholders to nominate candidates for corporate boards.

One provision of the rule, which has not been finalized, would allow an investor or group of investors holding more than 5 percent of a company's stock to nominate directors if at least 35 percent of the votes were withheld from a board member at the previous annual meeting. The proposed change has been opposed by business groups, which have argued that it would give too much power to special-interest groups such as unions or environmentalists.

Experts say that because the rule would be retroactive to this year, companies are eager to appease shareholders and avoid the 35 percent threshold. "Companies have been seeking quiet diplomacy in earnest," said William B. Patterson, head of the office of investment at the AFL-CIO.

Examples of companies cutting deals, as Safeway did, abound.

In March, Marsh & McLennan Cos., parent of troubled mutual fund firm Putnam Investments, agreed to nominate former federal prosecutor and white-collar crime specialist Zachary W. Carter to its board.

Earlier this week, Frank Savage, a former Enron Corp. director, said he would resign from the board at wireless-chip maker Qualcomm Inc. Pension funds had been demanding Savage's removal for two years.

Meanwhile, Richard Ferlauto, director of pension policy for the American Federation of State, County and Municipal Employees, said he has brokered deals with several firms, including Circuit City Stores Inc. and Pitney Bowes Inc., to eliminate "poison pill" provisions in corporate bylaws. Poison pills help block takeover bids and are generally opposed by shareholders.

"The trend is really toward companies being much more willing to engage shareholders and come to some kind of agreement," Ferlauto said. "Everything is evolving toward much more direct communication" with board members and executives.

Of course, some companies are still content to ignore majority shareholder votes. Intel Corp., for instance, said this week that it would not count stock options as an expense despite a 54 percent vote among the company's shareholders urging such a move.

And even some veteran shareholder activists say that in some cases the "vote no" campaigns have gone too far.

Most of the criticism has been lodged against the California Public Employee Retirement System (Calpers), the nation's largest public pension fund.

Citing its strict policy of voting against directors who sign off on audit firms conducting non-audit-related services, Calpers opposed the reelection of Berkshire Hathaway Inc. chief executive Warren E. Buffett for the board at Coca-Cola Co.

"I cordially disagreed" on the Buffett position, said Nell Minow, a veteran investor advocate and co-founder of the Corporate Library. "I get concerned about taking an overly formulaic approach to corporate governance."

Minow said Buffett was a strong director and was instrumental in Coca-Cola's decision to become among the first big companies to count stock options as an expense. Buffett is a board member and major shareholder of The Washington Post Co.

Patricia K. Macht, a spokeswoman for Calpers, said the fund was being criticized for consistency on what it views as a central tenet of good corporate oversight: that when accounting firms earn non-audit fees from companies they audit, they face an obvious conflict of interest.

"The single biggest lesson learned from Enron, WorldCom and the rest was that if you can't depend on the validity of the books, then you can't depend on anything," she said. "That's why we drew that really hard line in the sand."

Demonstrators hold up an effigy of Safeway Chairman Steven A. Burd outside the grocery store chain's annual meeting.