Fleming Cos., parent of Jubilee Foods supermarkets and wholesaler to dozens of independent markets, is undertaking sweeping internal changes to cut costs.
Chief among the reorganizationing moves is the reduction of management units from 57 to 14 companywide. Eight of those reconfigured units will handle the company's wholesale operations, while the remaining six will handle retail operations.
The realignment is expected to save in excess of $20 million annually. Earlier this month, Fleming announced it will eliminate more than 220 positions throughout the company, saving at least another $10 million.
Joseph A. Scrivo Jr., of Fleming's New York Division, headquartered in Cheektowaga, said the changes will not affect the company's nearly 300 local employees or area operations.
The company initiated a similar job-cutting effort in 1996, which also left the Buffalo-area unit intact.
Mark Hansen, chairman and chief executive officer of the Oklahoma City-based food conglomerate, said the restructuring will help the company build on its strategic plan and improve service to both wholesale and retail customers.
"Our new operating structure creates a way for Fleming to address the cost of goods and act like the large company we are," Hansen said.
Fleming, which is considered the nation's second-largest grocery wholesaler, also announced that it supports two proposals that could increase executive accountability for the company's financial performance as it continues to cut costs.
It recommends that shareholders approve a change making all board members stand for election annually, rather than holding separate elections in different years. Under the new election policy, there's a risk that a dissident shareholder could propose an entire slate of new board nominees.
"It really puts management on the spot," said Robert Izmirlian, an analyst with Standard & Poor's Corp., who currently rates Fleming shares as "accumulate."
But the fact that Fleming management supports the change demonstrates that top executives are confident in their strategies, according to Izmirlian.
Fleming spokeswoman Nancy Del Regno said a turnover of the board in a single vote by shareholders in not a primary concern.
The Fleming board also adopted a policy that all new employee stock-option plans must be approved by shareholders. Letting shareholders have a say on stock operations means executives may have their compensation more closely scrutinized in relation to the company's performance.
The proposed changes will be put before stockholders in May.