ALBERTSONS INC /DE/
PRE 14A, 1998-03-27
GROCERY STORES
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ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P.O. BOX 20
BOISE, IDAHO  83726

- --------------------------------------------------------------------------------
                                                                 April 17, 1998

Dear Fellow Stockholder:

It is  our  pleasure  to  invite  you to  attend  the  1998  Annual  Meeting  of
Stockholders.  This year's Annual Meeting will be held on Friday,  May 22, 1998,
at 10:00 a.m., Mountain Daylight Time, in the Eyries Room at the Boise Centre on
the Grove, 850 Front Street, Boise, Idaho.

Information  about the  business of the meeting and the nominees for election as
members of the Board of  Directors is set forth in the Notice of Meeting and the
Proxy  Statement  on the  following  pages.  This  year  you are  asked to elect
directors; to approve an increase in the authorized Common Stock of the Company;
and to ratify the appointment of independent auditors for the fiscal year ending
January 28, 1999. In addition,  one  stockholder  proposal,  which is opposed by
your Board of Directors, may be presented for consideration and voting.

It is important  that your shares be  represented  at the meeting.  Accordingly,
whether or not you plan to attend the meeting, we urge you to complete, date and
sign the enclosed proxy card, and return it in the envelope provided.

We look forward to personally greeting those stockholders able to attend.

                                            Very truly yours,

                                            ALBERTSON'S, INC.

                                            /s/ Gary G. Michael
                                            Gary G. Michael
                                            Chairman of the Board
                                            and Chief Executive Officer



<PAGE>
                                     


TABLE OF CONTENTS                                                   PAGE

Notice of Annual Meeting of Stockholders

Proxy Statement

Voting Securities and Principal Holders Thereof

Election of Directors (Proposal 1)

Nominees for Election as Class III Directors

Continuing Class I Directors

Continuing Class II Directors

Certain Transactions

Committees and Meetings of the Board of Directors

Directors' Fees

Compensation of Executive Officers

Summary Compensation Table

Option Grants in Last Fiscal Year

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

Retirement Benefits

Compensation Committee/Executive Committee Report

Compensation Committee and Executive Committee Interlocks and Insider
Participation

Performance Graph

Approval of Amendment of the Restated  Certificate of  Incorporation to Increase
Authorized Shares of Common Stock (Proposal 2)

Ratification of Appointment of Independent Auditors (Proposal 3)

Stockholder Proposal (Proposal 4)

Board of Directors' Statement in Opposition




<PAGE>
                                     


TABLE OF CONTENTS (continued)                                        PAGE

Other Matters

Section 16(a) Beneficial Ownership Reporting Compliance

Deadline for Receipt of Stockholders' Proposals

Proposed Amendment to Article Fourth of the
  Restated Certificate of Incorporation  (Exhibit A)                  A-1



<PAGE>
                                     


                            FREE PARKING FOR MEETING

For three hours of free parking at the Eastman  Garage,  Capital Terrace Garage,
Statehouse Inn (roof-top only) and surface parking areas as indicated on the map
below, your admittance badge for the Meeting will include a validation  sticker.
Handicap  parking is available as indicated on the map. Parking is not available
at Boise Centre on the Grove.

                    [Map of Convention Center and surrounding
              parking to be included in copy sent to Stockholders]



<PAGE>
                                      


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998, AT BOISE, IDAHO

- --------------------------------------------------------------------------------

TO THE STOCKHOLDERS OF ALBERTSON'S, INC.:

The Annual Meeting of Stockholders of Albertson's,  Inc., a Delaware corporation
("Company"),  will be held on Friday,  May 22,  1998,  at 10:00  a.m.,  Mountain
Daylight  Time,  in the Eyries Room at the Boise Centre on the Grove,  850 Front
Street, Boise, Idaho, for the following purposes:

(1) To elect five Class III directors to hold office for three years;

(2)  To act upon a proposal to amend Article  Fourth of the  Company's  Restated
     Certificate of  Incorporation to increase the Company's  authorized  Common
     Stock from 600 million shares to 1.2 billion shares;

(3)  To  ratify  the  appointment  of  Deloitte  & Touche  LLP as the  Company's
     independent auditors for the fiscal year ending January 28, 1999;

(4)  To consider and act upon, if properly presented, one proposal, submitted by
     a single stockholder, and opposed by the Board of Directors; and

(5)  To transact such other business as may properly come before the meeting or
     any adjournments or postponements thereof.

All of the above  matters are more fully  described  in the  accompanying  Proxy
Statement.

Stockholders  of record  at the  close of  business  on April 7,  1998,  will be
entitled to notice of, and to vote at, the meeting.

A complete list of the stockholders entitled to vote at the meeting will be open
to the examination of any  stockholder,  for any purpose germane to the meeting,
during ordinary business hours, for the ten-day period ending  immediately prior
to the date of the meeting at 250 Parkcenter Boulevard, Boise, Idaho.

All stockholders are cordially invited to attend the meeting in person.  WHETHER
OR NOT YOU PLAN TO ATTEND,  PLEASE RETURN YOUR PROXY  PROMPTLY.  It is important
that you mark, sign, date and return the accompanying  Proxy,  regardless of the
size of your holdings,  as promptly as possible.  A postage prepaid envelope (if
mailed in the United States) is enclosed for your convenience.

Any stockholder of record  attending the meeting may vote in person even if that
stockholder  returned a proxy  card.  If you plan to attend the meeting and your
shares  are held in the  name of a  broker  or  other  nominee,  please  bring a
statement  or letter from the broker or nominee  confirming  your  ownership  of
shares.

                                         By Order of the Board of Directors


                                         /s/ Kaye L. O'Riordan
                                         Kaye L. O'Riordan
                                         Vice President and Corporate Secretary
                                            
                                         April 17, 1998

                YOUR COPY OF THE COMPANY'S ANNUAL REPORT FOR THE
                 FISCAL YEAR ENDED JANUARY 29, 1998 IS ENCLOSED.


<PAGE>
                                     


PROXY STATEMENT

- --------------------------------------------------------------------------------

This Proxy Statement and the accompanying  proxy card, which are being mailed to
stockholders  on or about April 17, 1998,  are furnished in connection  with the
solicitation  of proxies  by the Board of  Directors  of  Albertson's,  Inc.,  a
Delaware corporation ("Company"),  for use at the Annual Meeting of Stockholders
to be held on May 22, 1998, including any adjournments or postponements thereof.

The Annual Meeting is called for the purposes stated in the accompanying  Notice
of Meeting.  All  stockholders of record of the Company's Common Stock as of the
close of business on April 7, 1998 are  entitled to vote at the  meeting.  As of
that date, there were 000,000,000  shares of Common Stock  outstanding.  On each
matter coming before the meeting, a stockholder is entitled to one vote for each
share of stock held of record as of the record date.

If the  accompanying  proxy card is  properly  signed and is not  revoked by the
stockholder,  the shares it represents will be voted at the meeting by the proxy
holder in accordance with the  instructions of the  stockholder.  If no specific
instructions  are  designated,  the shares will be voted as  recommended  by the
Board of Directors.

A proxy  may be  revoked  at any time  before  it is voted at the  meeting.  Any
stockholder  who attends the meeting and wishes to vote in person may revoke his
or her proxy at that time.  Otherwise,  revocation  of a proxy must be mailed or
delivered to the Corporate Secretary of the Company at 250 Parkcenter Boulevard,
P.O. Box 20, Boise, Idaho 83726 and received prior to the meeting.

This  solicitation  is made on behalf of the Board of Directors and all expenses
of this solicitation will be paid by the Company.  Initial solicitations will be
made by mail.  However,  in  order to  assure  sufficient  representation,  some
directors,  officers or regular  employees of the Company may solicit proxies in
person or by  telephone,  facsimile or telegram  without  special  compensation.
Also,  to assist  in the  solicitation  of  proxies,  the  Company  has  engaged
Georgeson  and Company,  Inc.  for a fee  estimated  not to exceed  $25,000 plus
reimbursement  of  expenses.  In  addition,  arrangements  have  been  made with
brokerage  houses and other  custodians  to send proxies and proxy  solicitation
material to their  principals,  and the Company will  reimburse  such  brokerage
houses and custodians for their expenses in doing so.

Under Delaware law and the Company's Restated Certificate of Incorporation, if a
quorum is present at the meeting (i) there will be an election of directors and,
if they receive a plurality of the votes cast in the election of directors,  the
five nominees will be elected;  and (ii)  proposals 2 and 3 and the  stockholder
proposal,  if  properly  brought  before the  meeting,  must be  approved by the
affirmative  vote of a majority of the shares  present in person or by proxy and
entitled  to vote on the  matter.  With  regard to the  election  of  directors,
abstentions and broker  non-votes will be disregarded and will have no effect on
the outcome of the vote.  With regard to  proposals 2 and 3 and the  stockholder
proposal,  if properly  brought  before the meeting,  and other matters that may
properly come before the meeting,  abstentions will be counted and will have the
same  effect  as a vote  against  the  matter,  and  broker  non-votes  will  be
disregarded and will have no effect on the outcome of the vote.

                                       2

<PAGE>
                                      


VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

- --------------------------------------------------------------------------------

The  following  table shows the persons  (including  any group deemed a "person"
under  Section  13(d)(3) of the  Securities  Exchange  Act of 1934) known to the
Company who beneficially own more than 5% of the Company's Common Stock. It also
shows beneficial  ownership for each director,  for each executive officer named
in the Summary  Compensation  Table and for the executive officers and directors
as a group.

                     SHARES BENEFICIALLY OWNED AND NATURE OF
                  BENEFICIAL OWNERSHIP AS OF MARCH 26, 1998(1)


<TABLE>
      <S>                         <C>             <C>          <C>                <C>            <C>             <C>
                                                                                                   Aggregate
           Name (and Address                         Shared          Sole             Shared         Amount       Percent
            for Beneficial          Sole Voting      Voting       Investment        Investment    Beneficially      of
            Owners over 5%)            Power          Power         Power             Power          Owned2        Class
- --------------------------------- --------------- ------------ ---------------    -------------  --------------  ----------
   
      Markus Stiftung(3)          29,152,800             ---     29,152,800              ---     29,152,800       11.85%
        Timmasper Weg
        2353 Nortorf
        Federal Republic of
        Germany

      J.A. & Kathryn Albertson
        Foundation, Inc.(4)       21,422,446             ---     21,422,446              ---     21,422,446        8.71%
        501 Baybrook  Court,
        P.O. Box 70002
        Boise, ID 83707-0102

      Kathryn Albertson                4,000(5)          ---          4,000(5)           ---          4,000(5)         +
      A. Gary Ames                    11,000(5)          ---         11,000(5)           ---         11,000(5)         +
      Cecil D. Andrus                  9,300(5)          800          9,300(5)           800         10,100(5)         +
      John B. Carley                 518,942             ---        517,950(6)           ---        518,942            +
      Paul I. Corddry                  6,000(5)       10,000          6,000(5)        10,000         16,000(5)         +
      John B. Fery                    23,285(5)          ---         23,285(5)           ---         23,285(5)         +
      Clark A. Johnson                26,850           4,000         26,850            4,000         30,850            +
      Charles D. Lein                 13,925(5)       14,200         13,925(5)        14,200         28,125(5)         +
      Warren E. McCain             1,135,970(5)          ---      1,135,970(5)           ---      1,135,970(5)         +
      Gary G. Michael                251,203             ---        250,311(6)           ---        251,203            +
      Beatriz Rivera                   6,000(5)          ---          6,000(5)           ---          6,000(5)         +
      J.B. Scott                       4,000(5)    6,003,600          4,000(5)     6,003,600      6,007,600(5)     2.44%
      Thomas L. Stevens, Jr.           2,500(5)          ---          2,500(5)           ---          2,500(5)         +
      Will M. Storey                  11,000(5)          ---         11,000(5)           ---         11,000(5)         +
      Steven D. Symms                  4,000(5)        3,502          4,000(5)         3,502          7,502(5)         +
      Richard L. King                  4,636          16,472          4,139(6)        16,472         21,108            +
      Carl W. Pennington              20,923(7)      162,000         20,000(6,7)     162,000        182,923(7)         +
      Ronald D. Walk                  14,808(7)      251,876         13,885(6,7)     251,876        266,684(7)         +
      All directors (including     2,462,479(5,7)  6,755,114      2,451,141(5,6,7) 6,755,114(7,8) 9,217,593(5,7)   3.75%
       nominees) and all
       executive officers as a
       group
       (31)

</TABLE>

+ Indicates that the percentage of shares beneficially owned does not exceed one
percent of the Company's outstanding Common Stock.

(1) Beneficial  ownership is determined in accordance  with Rule 13d-3 under the
Securities  Exchange Act of 1934.  Shares are  considered  to be  "beneficially"
owned if the person has the sole or shared power to vote or direct the voting of
the  securities  or the  sole or  shared  power  to  dispose  of or  direct  the
disposition of the securities.  A person is also considered to be the beneficial
owner of shares if that person has the right to acquire beneficial  ownership of
the shares within 60 days following March 26, 1998.

                                       3

<PAGE>
                                      


(2) Each director and executive  officer disclaims  beneficial  ownership of any
shares owned by his or her spouse,  children or grandchildren  and by trusts for
such persons,  whether or not the director or officer is a trustee or co-trustee
thereof.

(3)  According  to a  Schedule  13D  filed  with  the  Securities  and  Exchange
Commission on or about January 18, 1990,  Mr. Theo Albrecht is also a beneficial
owner of these  shares.  Mr.  Albrecht's  address  is the same as that of Markus
Stiftung.

On February 15, 1980,  the Company  entered into an agreement with Theo Albrecht
Stiftung,  the name of which was changed to Markus  Stiftung on April 22,  1988,
relating to its  ownership of the  Company's  voting  securities.  As amended on
April 11, 1984, September 25, 1989 and December 5, 1994, this agreement provides
that until  February  14, 2000  (subject to earlier  termination  under  certain
limited  circumstances),  (i) Markus  Stiftung  shall not  acquire or permit its
affiliates to acquire any additional shares of the Company's Common Stock or any
other voting securities of the Company if such acquisition would cause it or its
affiliates  to own  directly  or  indirectly  more  than  14%  of the  Company's
outstanding  voting  securities;  provided  that,  if the number of  outstanding
voting securities is reduced for any reason,  including purchases by the Company
of its voting  securities,  Markus  Stiftung shall not be required to dispose of
any of its holdings of voting  securities  even if such reduction in outstanding
voting  securities  results  in Markus  Stiftung  owning in excess of 14% of the
outstanding voting securities, and (ii) the Company has a right of first refusal
with respect to the voting  securities of the Company held by Markus Stiftung if
it should desire to dispose of such  securities.  This  agreement also restricts
the manner in which the voting  securities  of the Company may be sold by Markus
Stiftung in the event the Company does not elect to exercise such right of first
refusal.

(4) The Chairman of the Board of the J.A. and Kathryn Albertson Foundation, Inc.
(the "Foundation") is J.B. Scott and Kathryn Albertson is a Vice President and a
director of the Foundation. Cecil D. Andrus is a director of the Foundation.

On May 21, 1997,  Alscott Limited  Partnership #1, a Texas limited  partnership,
transferred   20,842,446  shares  of  the  Common  Stock  of  the  Company  (the
"Foundation  Stock") to Kathryn  Albertson.  On May 22, 1997,  Kathryn Albertson
transferred the Foundation Stock to the Foundation. On May 21, 1997, the Company
and the Foundation  entered into an agreement  giving the Company certain rights
of first refusal  should the Foundation  wish to sell the Foundation  Stock (the
"Foundation Agreement").

The Foundation  Agreement provides that in the event the Foundation  proposes to
sell or dispose of (other than through gift) any of the  Foundation  Stock,  the
Company shall be given notice and an  opportunity  to purchase  such  Foundation
Stock for a specified  period at a price that is  approximately  96% of the then
market price and upon terms set forth in the notice.  Should the Company decline
to exercise its option to purchase all of such Foundation Stock offered for sale
within the specified  period,  the Foundation may sell such Foundation  Stock on
terms and at a price  equivalent  to or  exceeding  that  offered to the Company
within 45 days.

The  Foundation  may make  charitable  donations of up to 5% of the Common Stock
held by the Foundation each year,  provided that each donee of Foundation  Stock
must  agree to (i)  offer to sell to the  Company  all of the  Foundation  Stock
received as a charitable  donation at a price that is  approximately  96% of the
then market price and (ii) sell all of such Foundation  Stock on the open market
within 30 days following receipt of the charitable  donation if the Company does
not accept the offer.

Except as summarized  above,  the  Foundation  Agreement does not in any respect
deprive the  Foundation  of the rights of  ownership  of the  Foundation  Stock,
including  unrestricted  voting  rights and the right to receive  and retain all
cash and stock dividends.

(5) Includes 2,000 shares in the case of Thomas L. Stevens, Jr.; 3,730 shares in
the  case of  Beatriz  Rivera;  4,000  shares  in the  case  of each of  Kathryn
Albertson, Warren E. McCain, J.B. Scott and Steven D. Symms, and 6,000 shares in
the case of each remaining  indicated Director (57,730 shares total) not held of
record on March 26,  1998,  but which  could have been  acquired  within 60 days
thereafter   under  the  Company's  1995  Stock  Option  Plan  for  Non-Employee
Directors.

                                       4

<PAGE>
                                       


(6) Shares  credited  to the  Employee  Stock  Ownership  Plan  accounts  of the
individuals named and all executive  officers as a group are not included in the
column  headed "Sole  Investment  Power" since the shares  cannot be sold.  Such
shares are included in the column  headed "Sole Voting  Power" and in the column
headed "Aggregate Amount Beneficially Owned."

(7) Includes 96,000 shares not held of record on March 26, 1998, but which could
have been acquired within 60 days thereafter  under the Company's 1982 Incentive
Stock Option Plan and 1986  Nonqualified  Stock Option Plan by certain executive
officers included in all executive officers as a group. Of these shares,  20,000
shares could have been acquired  within 60 days  thereafter  under the Company's
1986  Nonqualified  Stock Option Plan by Carl W.  Pennington;  and 10,000 shares
could have been acquired  within 60 days  thereafter  under the  Company's  1986
Nonqualified  Stock Option Plan by Ronald D. Walk.  Includes 21,609 shares as to
which certain  directors and  executive  officers  included in all directors and
executive  officers as a group have sole voting and  investment  power but which
are held for minor  children  and  relatives  and as to which they  disclaim any
other beneficial  interest.  None of these shares could have been acquired by or
are held by any of the named individuals.

                                       5

<PAGE>
                                       


- --------------------------------------------------------------------------------
Election of Directors
(Proposal 1)

- --------------------------------------------------------------------------------

The Board of  Directors  is  divided  into three  classes,  each  serving  for a
three-year term. Each class consists of five directors, and all the directors in
one class stand for election each year.  This year, the five Class III directors
are to be elected for three-year terms.

The Board of Directors  has  nominated  the  following  candidates  to stand for
election as Class III directors, all of whom are nominated for terms expiring in
2001:  Cecil D. Andrus,  John B. Fery,  Richard L. King,  J.B. Scott and Will M.
Storey.  Except as otherwise  specified in any proxy,  the proxies will be voted
for the election of all these nominees.

The Board of Directors is informed  that each of the five nominees has consented
to being named in this Proxy Statement as a nominee for director and to serve as
a director  if elected;  however,  if for any reason any of the  nominees  shall
become  unavailable  for  election,  the proxy will be voted as  directed by the
Board of Directors.  It is not anticipated  that any nominee will be unavailable
for election.

All of the nominees are now directors of the Company, except Richard L. King who
has been  nominated  by the  Board  upon the  recommendation  of the  Nominating
Committee for election as a Class III Director and who has not  previously  been
elected by the  stockholders.  Each of the other  nominees has  previously  been
elected by the stockholders.

Information  as to the  nominees and as to each other  director  whose term will
continue after the 1998 Annual Meeting of  Stockholders  is given on pages _-__.
Unless otherwise indicated, the nominees have been engaged in the same principal
occupation for the past five years. Directors' ages are as of March 26, 1998.

                                       6
<PAGE>
                                       


- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
TERM EXPIRING IN 2001

- --------------------------------------------------------------------------------
CECIL D. ANDRUS

Director
since 1995

Age 66
Chairman of the Andrus Center for Public  Policy,  a public policy forum located
at Boise State University dealing in natural resource issues, since January 1995
and of counsel to the Gallatin  Group, a consulting  firm,  since February 1995.
Elected  Governor of the State of Idaho in 1987 and served until  January  1995.
Served as  Secretary  of the  Interior  in the Carter  Administration  from 1977
through 1980.  Mr. Andrus is a director of Coeur d'Alene Mines Corp.,  KeyCorp.,
PCS  Learning  Centers and the J.A.  and  Kathryn  Albertson  Foundation,  Inc.,
focusing on education  within  Idaho.  Member of the Executive and Grantor Trust
Committees.


- --------------------------------------------------------------------------------
JOHN B. FERY

Director
since 1974

Age 68
Served as Chairman of the Board of Boise Cascade Corporation, a timber and paper
products company,  until his retirement in 1995 and Chief Executive Officer from
1972 to 1994.  Mr. Fery is a director  of  Hewlett-Packard  Company,  The Boeing
Company and U.S. Bancorp.  Chairman of the Compensation  Committee and member of
the Executive and Grantor Trust Committees.


- --------------------------------------------------------------------------------
RICHARD L. KING

Age 48
President  and Chief  Operating  Officer of the  Company  since  February  1996.
Formerly Senior Vice President and Regional Manager of the Company from November
1994; Group Vice President,  Merchandising of the Company from January 1994; and
Vice President, Rocky Mountain Division of the Company from 1992.


- --------------------------------------------------------------------------------
J.B. SCOTT

Director
since 1993

Age 44
Chairman  of the Board of  Directors  of  Alscott,  Inc.,  real estate and other
investments.  Grandson of Kathryn Albertson.  Mr. Scott is Chairman of the Board
and a director of the J.A. and Kathryn Albertson  Foundation,  Inc., focusing on
education within Idaho. Member of the Audit Committee.

                                       7

<PAGE>
                                       


- --------------------------------------------------------------------------------
WILL M. STOREY

Director
since 1992

Age 66
Served as  Executive  Vice  President  and  Chief  Financial  Officer,  American
President  Companies,  Inc.,  a provider of container  transportation  services,
until  his  retirement  in  1995.  Mr.  Storey  is a  director  of  Eagle-Picher
Industries, Inc. Member of the Audit and Compensation Committees.

- --------------------------------------------------------------------------------
CONTINUING CLASS I DIRECTORS
TERMS EXPIRING IN 1999

- --------------------------------------------------------------------------------
CLARK A. JOHNSON

Director
since 1989

Age 66
Chairman of the Board and Chief  Executive  Officer of Pier 1 Imports,  Inc.,  a
retailer of imported goods.  Mr. Johnson is a director of Pier 1 Imports,  Inc.,
Heritage Media Corporation,  InterTan, Inc. and Metromedia  International Group.
Member of the Compensation, Nominating and Grantor Trust Committees.


- --------------------------------------------------------------------------------
CHARLES D. LEIN

Director
since 1975

Age 56
President  and Chief  Operating  Officer of Stuller  Settings,  Inc.,  a jewelry
manufacturing  company,  and its  subsidiaries,  Stuller Service Centers,  Inc.,
Stuller   Thailand   Limited,   Stuller  Israel  Diamonds  Limited  and  Stuller
Manufacturing,  Inc.,  since  January  1994.  Formerly  Chairman  of the  Board,
President and Chief Executive  Officer of Black Hills Jewelry  Manufacturing Co.
from 1982 to 1993.  President,  University of South Dakota from 1977 to 1982 and
Dean of the College of Business,  Boise State  University from 1973 to 1977. Mr.
Lein is a  director  of  Stuller  Settings,  Inc.  and  First  National  Bank of
Lafayette.  Chairman  of  the  Audit  Committee  and  member  of  the  Executive
Committee.

- --------------------------------------------------------------------------------
GARY G. MICHAEL

Director
since 1979

Age 57
Chairman of the Board and Chief Executive Officer of the Company. Mr. Michael is
the  Chairman  of the Board of  Directors  of the  Federal  Reserve  Bank of San
Francisco and a director of Boise Cascade  Corporation and Questar  Corporation.
Chairman of the  Non-Employee  Directors'  Deferred  Compensation  Committee and
member of the Executive Committee.

                                       8
<PAGE>
                                       


- --------------------------------------------------------------------------------
THOMAS L. STEVENS, JR.

Director
since 1996

Age 64
Served as  President,  Los Angeles  Trade-Technical  College  (LATTC)  until his
retirement  in 1996.  Mr.  Stevens was a member of the Board of Directors of the
Federal  Reserve Bank of San Francisco,  Los Angeles Branch until his retirement
from LATTC. He is the Chairman of the Board of the  Achievement  Council and the
Los Angeles Opportunities Industrialization Center, Inc. Member of the Audit and
Nominating Committees.


- --------------------------------------------------------------------------------
STEVEN D. SYMMS

Director
since 1993

Age 59
President of Symms,  Lehn & Associates,  Inc., a consulting  firm, since January
1993.  Elected  United States Senator from the State of Idaho in 1980 and served
until January  1993.  Vice  President  and Secretary of Boise Air Service,  Inc.
since 1983. Mr. Symms is a director of Symms, Lehn & Associates, Inc., Boise Air
Service, Inc. and Symms Fruit Ranch, Inc. Member of the Audit Committee.

- --------------------------------------------------------------------------------
CONTINUING CLASS II DIRECTORS
TERMS EXPIRING IN 2000

- --------------------------------------------------------------------------------
KATHRYN ALBERTSON

Director
since 1958
Age 89
Vice  President  and a director of the J.A.  and Kathryn  Albertson  Foundation,
Inc.,  focusing  on  education  within  Idaho.  Prior to 1997,  President  and a
director of Alscott,  Inc.,  real estate and other  investments.  Grandmother of
J.B. Scott.


- --------------------------------------------------------------------------------
A. GARY AMES

Director
since 1988

Age 53
President   and   Chief   Executive   Officer,   U  S  WEST   International,   a
telecommunications  company and a  wholly-owned  subsidiary  of U S WEST,  Inc.,
since July 1995.  President and Chief Executive Officer, U S West Communications
from 1990 to 1995.  Mr.  Ames is a director of  Flextech,  Tektronix,  Inc.  and
Telewest. Chairman of the Grantor Trust Committee and member of the Compensation
and Nominating Committees.

                                       9
<PAGE>
                                       


- --------------------------------------------------------------------------------
JOHN B. CARLEY

Director
since 1979

Age 64
Chairman of the Executive  Committee of the Board of Directors since February 2,
1996 and formerly  President  and Chief  Operating  Officer of the Company.  Mr.
Carley is a director of Boise Cascade Office Products  Corporation,  Idaho Power
Company and AgriBeef Co.  Chairman of the Executive  Committee and member of the
Nominating and Non-Employee Directors' Deferred Compensation Committees.


- --------------------------------------------------------------------------------
PAUL I. CORDDRY

Director
since 1987

Age 61
Served as Senior Vice  President,  Europe,  of H.J. Heinz  Company,  a worldwide
provider of processed food products and services,  until his retirement in 1992.
Mr.  Corddry is a director of Ameristar  Casinos,  Inc.  Member of the Audit and
Grantor Trust Committees.


- --------------------------------------------------------------------------------
BEATRIZ RIVERA

Director
since 1995

Age 47
Member of the Public Utilities Commission of the State of New Mexico since 1995.
Formerly owner of Infiniti of Albuquerque,  an automobile dealership,  from 1990
to 1995. Ms. Rivera is a director of the Tomas Rivera  Center,  a trustee of the
University  of New  Mexico  Foundation  and a  member  of the  Defense  Advisory
Committee  on  Women  in the  Services.  Member  of  the  Audit  and  Nominating
Committees.

                                       10

<PAGE>
                                       


- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS

- --------------------------------------------------------------------------------

During the fiscal year ended  January 29, 1998,  two store leases and one office
space lease were held by Alscott Real Estate LLC, as landlord,  and Albertson's,
Inc., as tenant.  Alscott Real Estate LLC is managed by Alscott,  Inc., an Idaho
corporation of which J.B.  Scott, a director of the Company,  is Chairman of the
Board and has a majority ownership  interest.  The terms of the two store leases
are for periods of 37 and 46 years with  expiration  dates occurring in 2007 and
2005.  The office space lease is for a 20 year term expiring in 2017.  The total
rentals and common area maintenance fees paid by the Company under the leases to
this landlord during the fiscal year ended January 29, 1998 were $928,559.

Steven D. Symms, a director of the Company,  is a director of Symms Fruit Ranch,
Inc. During the fiscal year ended January 29, 1998, the Company paid Symms Fruit
Ranch $230,662 for food products purchased for resale in the Company's stores.

Richard Ogle,  son-in-law of Warren E. McCain, a director of the Company, is the
owner of The Office Environment  Company,  an office supply company.  During the
fiscal year ended  January 29, 1998,  the Company paid  $1,621,619 to The Office
Environment Company for office furniture, equipment and supplies.

James Smith,  brother-in-law  of Richard J.  Navarro,  Group Vice  President and
Controller of the Company,  is the owner of Tynick Services,  Inc., a retail and
wholesale  electronics  distributor.  During the fiscal  year ended  January 29,
1998,  the  Company  paid  $257,476 to Tynick  Services,  Inc.  for  electronics
equipment.

In the opinion of management,  all of the foregoing  transactions  were fair and
reasonable  and were  entered  into on terms not less  favorable  than  could be
obtained in transactions with responsible third parties.


- --------------------------------------------------------------------------------
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

- --------------------------------------------------------------------------------

The Board of Directors  held four regular  meetings and three  special  meetings
during  the last  full  fiscal  year of the  Company.  All  incumbent  directors
attended at least 75% of the total  meetings of the Board of  Directors  and the
committees of which they were members.

The Company has an  Executive  Committee,  which is a standing  committee of the
Board of Directors,  presently consisting of six members who are John B. Carley,
Chairman,  Cecil D. Andrus,  John B. Fery, Charles D. Lein, Warren E. McCain and
Gary G. Michael. There were five meetings of the Executive Committee held during
the last fiscal year.  The Executive  Committee was  established to exercise the
authority of the Board of Directors  between  meetings of the full Board subject
to limitations under Delaware law.

The Company has an Audit Committee,  which is a standing  committee of the Board
of  Directors,  presently  consisting  of seven members who are Charles D. Lein,
Chairman,  Paul I. Corddry,  Beatriz Rivera, J.B. Scott, Thomas L. Stevens, Jr.,
Will M. Storey and Steven D. Symms.  Four meetings of the Audit  Committee  were
held  during  the last  fiscal  year.  The  Audit  Committee's  responsibilities
include:  (i) reviewing the plan, scope and results of the independent audit and
reporting to the full Board whether  financial  information is fairly  presented
and  whether  generally  accepted  accounting  principles  are  followed;   (ii)
monitoring  the internal  accounting  and financial  functions of the Company to
assure quality of staff and proper internal  controls;  and (iii)  investigating
conflicts of interest,  compliance  with ethical  standards and compliance  with
laws and regulations.

The Company has a Compensation  Committee,  which is a standing committee of the
Board of Directors,  presently  consisting of four members who are John B. Fery,
Chairman, A. Gary Ames, Clark A. Johnson and Will M. Storey. Two meetings of the
Compensation  Committee were held during the last fiscal year. The  Compensation
Committee is responsible  for reviewing  annual salaries and bonuses paid to the
officers  appointed by the Board of Directors and certain other  officers of the
Company and for  selecting  key employees who are to receive stock option grants
and determining the terms thereof.

                                       11

<PAGE>
                                       


The Company has a  Nominating  Committee,  which is a standing  committee of the
Board of  Directors,  presently  consisting  of six  members  who are  Warren E.
McCain, Chairman, A. Gary Ames, John B. Carley, Clark A. Johnson, Beatriz Rivera
and Thomas L.  Stevens,  Jr. There was one meeting of the  Nominating  Committee
held during the last fiscal year.  The Nominating  Committee is responsible  for
selecting  nominees to fill Board vacancies and to replace  retiring  members of
the Board. The Nominating  Committee reviews possible nominees for membership on
the Board of Directors,  including any nominees  recommended  in good faith by a
registered  stockholder  with the  consent of the  proposed  nominee,  and makes
recommendations  concerning  nominees  to the Board of  Directors.  Stockholders
wishing to propose  director  candidates  for  consideration  by the  Nominating
Committee may do so by writing to the Corporate Secretary of the Company, giving
the candidate's name,  biographical data and  qualifications.  In addition,  the
Company's  By-Laws permit  stockholders  to make  nominations for directors at a
meeting of stockholders,  but only if, among other things, timely written notice
of an intent to make such a nomination  is given to the  Corporate  Secretary of
the Company. To be timely, such notice, except in certain circumstances, must be
received by the Company not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders.

The Company has a Grantor Trust Committee,  which is a special  committee of the
Board of Directors,  presently  consisting of five members who are A. Gary Ames,
Chairman,  Cecil D. Andrus, Paul I. Corddry,  John B. Fery and Clark A. Johnson,
none of whom, with the exception of Cecil D. Andrus, has a financial interest in
the deferred  compensation  plans and trusts  established by the Company for its
executives.  Mr. Andrus is receiving payments of compensation  deferred from his
service as a Director from 1984 to 1987 and will abstain from any decisions made
by the Grantor Trust Committee  which would affect such payments.  There was one
meeting of the Grantor  Trust  Committee  held during the last fiscal year.  The
Grantor Trust  Committee was  established to administer  the Company's  deferred
compensation  plans and pension  benefit  makeup plan for its executives and the
trusts established to protect the benefits to be received under these plans. The
plans and trusts are described more fully herein.

The Company has a Non-Employee  Directors' Deferred Compensation Committee which
is a  special  committee  created  to  administer  the  Non-Employee  Directors'
Deferred  Compensation Plan. The committee presently consists of two members who
are  Gary G.  Michael,  Chairman,  and  John B.  Carley,  neither  of whom has a
financial  interest in this plan. The committee held no meetings during the last
fiscal year.


- --------------------------------------------------------------------------------
DIRECTORS' FEES

- --------------------------------------------------------------------------------

Directors  who  are   employees  of  the  Company  do  not  receive   additional
compensation as directors.  Directors who are not employees  receive  directors'
fees of $30,000 per year plus $1,000 for each Board of Directors'  and committee
meeting attended.

Non-employee  directors may elect to defer payment of their directors' fees into
the Non-Employee  Directors' Deferred  Compensation Plan described in footnote 1
to the Summary Compensation Table on page __.

Pursuant  to the  Albertson's,  Inc.  1995 Stock  Option  Plan for  Non-Employee
Directors which became effective on May 26, 1995, each non-employee  director is
granted  an option on the first  business  day after each  annual  stockholders'
meeting of the Company  during the ten-year  term of the Plan.  Each such option
entitles the holder  thereof to purchase 2,000 shares of the Common Stock of the
Company  at the  closing  market  price  on the  date  of the  grant  and may be
exercised  for ten years  from the date of grant,  pursuant  to the terms of the
Plan.

                                       12


<PAGE>
                                       


- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS

- --------------------------------------------------------------------------------

The following table sets forth the  compensation  paid for each of the Company's
last three  fiscal years to (i) the Chief  Executive  Officer of the Company and
(ii) the four other most-highly  compensated  executive  officers of the Company
for the last completed fiscal year:

                           SUMMARY COMPENSATION TABLE
<TABLE>
    <S>                                   <C>       <C>          <C>              <C>             <C>             <C>
                                                                                                     Long-Term
                                                                     Annual                        Compensation
                                                                  Compensation                        Awards
                                                                                                    Securities
                                                                                   Other Annual     Underlying       All Other
                  Name and                Fiscal      Salary1        Bonus1        Compensation2     Options3      Compensation4
             Principal Position            Year         ($)            ($)              ($)             (#)             ($)
    -----------------------------------   ------    ---------    -------------    --------------  -------------   --------------
    Gary G. Michael                        1997       $750,000     $351,000                 ---        100,000         $135,892
     Chairman of the Board and Chief       1996        750,000      292,500              50,391              0          121,310
     Executive Officer and a director      1995        693,923      315,000                 ---         50,000          108,631

    John B. Carley 5                       1997        500,000            0                 ---              0          131,542
     Chairman of the Executive Committee   1996        500,423            0                 ---              0          119,485
     of the Board and a director           1995        610,000      256,200                 ---              0          108,558

    Richard L. King                        1997        450,000      195,000                 ---         50,000            2,275
     President and Chief Operating Officer 1996        387,692      175,500                 ---         50,000            1,575
                                           1995        229,616      105,000                 ---         50,000            1,100

    Carl W. Pennington                     1997        335,000       91,000                 ---         25,000           30,696
     Executive Vice President,             1996        326,692       87,100                 ---              0           24,901
     Corporate Merchandising               1995        287,616       91,000                 ---         25,000           19,846

    Ronald D. Walk                         1997        335,000       91,000                 ---         25,000           26,586
     Executive Vice President,             1996        326,692       87,100                 ---              0           21,430
     Retail Operations                     1995        283,462       91,000                 ---         25,000           17,039
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Certain  officers,  including  certain of the individuals named in the above
table,  were  entitled  to  defer  up to 50% of the  aggregate  amount  of their
salaries and bonuses and  non-employee  directors  were  entitled to defer up to
100% of their  directors' fees pursuant to two  substantially  similar  deferred
compensation plans for officers and directors approved by the Board of Directors
on December 5, 1983. A third plan,  the 1990 Deferred  Compensation  Plan ("1990
Plan") was approved by the Board of Directors on December 4, 1989,  effective as
of  January  1,  1990.  Under the 1990 Plan,  certain  officers,  including  the
individuals named in the above table, and certain highly compensated  employees,
are  entitled  to  defer  up to 35% of  their  salaries,  and  the  Compensation
Committee will defer, for "covered employees" as that term is defined in Section
162(m) of the  Internal  Revenue  Code of 1986,  as amended  (the  "Code")  that
portion  of the  annual  bonus  which,  in  the  judgment  of  the  Compensation
Committee,  would not be deductible by the Company pursuant to the provisions of
Section 162(m).  The Company does not expect to defer any such amounts in fiscal
year 1998.

Salaries,  bonuses and fees  deferred  into these plans  accrue  interest  until
benefits are completely  distributed at the monthly Corporate Bond Yield Average
with respect to average  corporations as determined from the Moody's Bond Record
published by Moody's Investor's Service,  Inc. ("Moody's Average"),  except when
benefits are paid upon termination of employment  following a change in control,
death,  retirement  or  (under  the  two  initial  plans)  disability  prior  to
termination of employment (collectively,  "Certain Events"). In the case of such
Certain Events,  deferred amounts accrue interest at a rate equal to the Moody's
Average plus 4% under the two initial plans or the Moody's Average plus 3% under
the 1990 Plan. A fourth plan, the Non-Employee  Directors' Deferred Compensation
Plan was  approved by the Board of Directors  and by a special  committee of the
Board  consisting  of three  employee  directors on December 4, 1989.  This plan
permits  non-employee  directors to defer up to 100% of their  directors'  fees.
Interest is accrued until  benefits are  completely  distributed  at the Moody's
Average plus 3% in the case of Certain Events and at the Moody's  Average in all
other cases.

                                       13
<PAGE>
                                       


The Company has purchased cost recovery life insurance to cover its  obligations
under the two initial  deferred  compensation  plans for officers and directors,
and the Company is the owner of these  policies.  The Company has also purchased
cost recovery life  insurance to cover its  obligations  under the 1990 Plan and
has transferred  ownership of these policies to the trustee of the grantor trust
established  for the 1990 Plan (see  discussion  below).  If  assumptions  as to
mortality,  experience,  interest  rates and other  factors  are  realized,  the
Company or the trustee of the grantor trust,  as  applicable,  will recover from
such policies an amount equal to the benefit  payments under these plans and the
premium  payments  on  the  insurance  policies.   The  plans,  except  for  the
Non-Employee  Directors'  Deferred  Compensation  Plan, are  administered by the
Grantor Trust Committee of the Board of Directors.  The Non-Employee  Directors'
Deferred  Compensation  Plan  is  administered  by the  Non-Employee  Directors'
Deferred  Compensation  Committee,  a committee of the Board  consisting  of two
directors, neither of whom has a financial interest in the plan.

Pursuant to the foregoing plans,  the individuals  named in the table on page __
have  deferred  the  following  amounts of salary paid or  allocated to them for
services  rendered  during the fiscal year ended January  29,1998:  Mr. Michael,
$73,558;  Mr. King, $23,150; Mr. Pennington,  $114,995;  and Mr. Walk, $111,832.
Pursuant to the foregoing plans,  the individuals  named in the table on page __
deferred the following  amounts of salary paid or allocated to them for services
rendered during the fiscal year ended January 30, 1997 (which includes,  for Mr.
Michael, $18,000 of bonus deferred by the Compensation Committee):  Mr. Michael,
$93,000;  Mr. King, $16,350;  Mr. Pennington,  $114,087;  and Mr. Walk, $97,933.
Pursuant to the foregoing plans,  the individuals  named in the table on page __
deferred the following  amounts of salary paid or allocated to them for services
rendered  during the fiscal year ended February 1, 1996: Mr.  Michael,  $61,442;
Mr. King, $10,900; Mr. Pennington, $99,514; and Mr. Walk, $91,504. These amounts
are included in the column for salary in the table on page __.

In order to secure the compensation  deferred and interest accrued thereon under
the deferred  compensation plans already described,  except for the Non-Employee
Directors' Deferred Compensation Plan, the Company has established the Executive
Deferred  Compensation Trust and the 1990 Deferred Compensation Trust ("Deferred
Compensation  Trusts"),  which are  grantor  trusts  within  the  meaning of the
Internal  Revenue  Code,  Section 671. The Company has or intends to  contribute
cash,  real  estate,  insurance  policies or other  property  into the  Deferred
Compensation  Trusts to provide  for  payment  of  benefits  under the  deferred
compensation  plans in the  event of a change in  control  of the  Company.  The
trusts  are  administered  by  the  Grantor  Trust  Committee  of the  Board  of
Directors. These trusts become irrevocable upon the occurrence of certain events
described in each trust as constituting a "potential change in control," and the
Company is required to make certain contributions of cash to each trust upon the
occurrence of certain  other events  described in each trust as  constituting  a
"change in control."

The  individuals  named in the  table on page __ are  eligible,  along  with all
"eligible"  employees (those who complete at least 1,000 hours of service during
the  twelve-month  period  commencing  with  their  date of  hire  or  with  any
anniversary  thereof,  are age 21 or over and (with certain  exceptions) are not
covered  by a  collective  bargaining  agreement),  to defer a portion  of their
salary into the Albertson's Tax Deferred  Savings Plan ("Savings Plan") which is
a salary deferral plan pursuant to Section 401(k) of the Code. During the fiscal
year ended  January  29,  1998,  the  individuals  named in the table on page __
deferred the following amounts into the Savings Plan: Mr. Michael,  $6,765;  Mr.
King,  $9,489;  and Mr. Walk,  $9,484.  During the fiscal year ended January 30,
1997,  the  individuals  named in the table on page __  deferred  the  following
amounts into the Savings Plan: Mr. Michael,  $6,620;  Mr. King,  $9,810; and Mr.
Walk,  $9,465.  During the fiscal year ended February 1, 1996,  the  individuals
named in the table on page __ deferred  the  following  amounts into the Savings
Plan: Mr. Michael,  $6,184;  Mr. King, $9,804; and Mr. Walk, $9,234. All amounts
deferred into the Savings Plan by these  individuals  are included in the column
for salary in the table on page __.

(2) This column  includes the value for income tax purposes of noncash  personal
benefits, except that amounts, which, when aggregated, did not exceed the lesser
of  $50,000  or 10% of  compensation  for any of the  named  executives  are not
included.  The amount  indicated  for Mr.  Michael for fiscal year 1996 includes
$28,922 for the value of personal use of corporate aircraft.

                                       14
<PAGE>
                                       


(3) The Company has granted  options to its  employees  for the  purchase of the
Company's  Common  Stock  pursuant to three  stock  option  plans:  (i) the 1982
Incentive Stock Option Plan ("1982 Plan"), which was adopted by the stockholders
in May 1982 and which  expired in  February,  1992;  (ii) the 1986  Nonqualified
Stock Option Plan ("1986 Plan"),  which was adopted by the  stockholders  in May
1986 and  expired in May 1996;  and (iii) the 1995  Stock-Based  Incentive  Plan
("1995 Plan"), which was adopted by the stockholders in May 1995 and will expire
in May 2005. The 1982 Plan and 1986 Plan provided for and the 1995 Plan provides
for the  issuance of stock  options  from time to time to key  employees  of the
Company, including executive officers,  designated by the Compensation Committee
of the  Board as (i)  holding  positions  of  substantial  responsibility,  (ii)
demonstrating  special  capabilities  and (iii)  contributing  significantly  to
fiscal  performance.  The stock  option  plans and  related  agreements  contain
provisions  that, in certain  circumstances,  may cause the date of exercise for
options  granted  thereunder  to  accelerate  in the event  there is a change in
control of the Company.  A description of the stock options granted to the named
executives is set forth under the heading "Option Grants in Last Fiscal Year."

(4) This column includes $22,000 in fiscal years 1997, 1996 and 1995 for each of
Gary G. Michael and John B. Carley,  which is a fixed annual amount, in addition
to salary and bonus,  contributed  by the Company and deferred into the deferred
compensation plans described in footnote 1. The remaining amount consists of the
"above-market" (as such term is defined in Item  402(b)(2)(iii)(C),  Instruction
3, of Regulation S-K  promulgated  by the  Securities  and Exchange  Commission)
portion of the interest  credited to the account of each of the named executives
under  the   deferred   compensation   plans   described   in  footnote  1.  The
"above-market"  portion of the interest accrued when benefits are paid following
the  occurrence  of "Certain  Events," as that term is defined in footnote 1, is
set forth in the table on page ___  because it is the larger  amount of interest
credited.

(5)  Effective  February 2, 1996,  John B.  Carley  entered  into an  employment
contract with the Company as Chairman of the Executive Committee of the Board of
Directors for an annual salary of $500,000 for a period of three years,  as well
as all perquisites  provided by the Company to senior executive officers and the
annual $22,000  contribution  to the deferred  compensation  plans  described in
footnote  1 for the  three-year  period.  No bonus  is to be paid  for  services
rendered during the three-year period.

- --------------------------------------------------------------------------------

                        OPTION GRANTS IN LAST FISCAL YEAR

- --------------------------------------------------------------------------------
<TABLE>

    <S>                                             <C>            <C>           <C>             <C>           <C>    
                                                                                 Individual Grants
                                                     Number of      % of Total
                                                    Securities        Options                                  Grant Date Value
                                                    Underlying      Granted to
                                                      Options        Employees      Exercise or                   Grant Date
                                                      Granted        in Fiscal      Base Price     Expiration   Present Value2
                   Name                                 (#)            Year           ($/Sh)1         Date            ($)
    ----------------------------------------------- -----------    ------------  --------------- ------------- -----------------
    Gary G. Michael                                     100,000           6.68%     $45.6875      11/30/02(3)    $1,126,500
      Chairman of the Board and Chief
      Executive Officer and a director
    -----------------------------------------------

    -----------------------------------------------
    Richard L. King                                      50,000           3.34       45.6875      11/30/07(4)       802,900
      President and Chief Operating Officer
    -----------------------------------------------

    -----------------------------------------------
    Carl W. Pennington                                   25,000           1.67       45.6875      11/30/00(5)       173,625
      Executive Vice President, Merchandising
    -----------------------------------------------

    -----------------------------------------------
    Ronald D. Walk                                       25,000           1.67       45.6875      11/30/00(5)       173,625
      Executive Vice President, Retail Operations
    -----------------------------------------------
</TABLE>


                                       15

<PAGE>
                                       


(1) The closing market price on the date the option was granted.

(2) In  accordance  with the rules of the  Securities  and Exchange  Commission,
"Grant Date Value" has been calculated using the  Black-Scholes  model of option
valuation,   adjusted  to  reflect  the  option  term   representative   of  the
individual's  grant.  The model also  assumes:  (a) a  risk-free  rate of return
represented  by the interest  rate on a U.S.  Treasury Bond with a maturity date
corresponding to that of the adjusted option term; (b) expected volatility using
the implied volatility for call options traded on the date of the grant; and (c)
a dividend yield determined by dividing the 1997 cash dividends  declared by the
option price.  The values which may  ultimately be realized by the holder of the
reported  option will depend on the market value of the  Company's  Common Stock
during  the  periods  during  which the  option is  exercisable,  which may vary
significantly from the assumptions underlying the Black-Scholes model.

(3) Gary G.  Michael  was  granted  100,000  shares of the  Common  Stock of the
Company at the closing market price of the Common Stock on December 1, 1997, the
date the option was  granted.  This  option  becomes  exercisable  in 50% annual
increments after it has been held for three years.

(4) Richard L. King was granted 50,000 shares of the Common Stock of the Company
at the closing  market price of the Common  Stock on December 1, 1997,  the date
the option was granted. This option becomes exercisable in 20% annual increments
after it has been held for five years.

(5) Carl W. Pennington and Ronald D. Walk were each granted 25,000 shares of the
Common  Stock of the Company at the closing  market price of the Common Stock on
December  1,  1997,  the date the  option  was  granted.  These  options  become
exercisable in 50% annual increments after being held for one year.


- --------------------------------------------------------------------------------

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUES

- --------------------------------------------------------------------------------
<TABLE>
<S>                                          <C>           <C>           <C>            <C>               <C>          <C>
                                                                             Number of Securities            Value+ of Unexercised
                                                                            Underlying Unexercised               In-the-Money
                                                                               Options at Fiscal               Options at Fiscal
                                              Acquired on     Value+               Year-End                        Year-End
                                               Exercise      Realized      Exercisable   Unexercisable     Exercisable Unexercisable
                  Name                            (#)           ($)            (#)            (#)              ($)          ($)
- ----------------------------------------     ------------  -----------   -------------  -------------     ------------ ------------
Gary G. Michael                                   64,000   $1,395,000            0           230,000       $       0     $3,518,500
  Chairman of the Board and Chief
  Executive Officer and a director

Richard L. King                                   14,400      435,200            0           178,600               0      2,254,300
  President and Chief Operating Officer

Carl W. Pennington                                     0            0       20,000            70,000         612,500      1,048,438
  Executive Vice President, Corporate
  Merchandising

Ronald D. Walk                                    10,000      161,250       10,000            80,000         306,250      1,354,688
  Executive Vice President, Retail Operations

- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>


+ The dollar values are  calculated by determining  the  difference  between the
closing price on the New York Stock  Exchange  Composite  Tape for the Company's
Common  Stock  at  exercise  or  at  fiscal  year-end  (January  29,  1998)  for
exercisable and unexercisable options and the exercise price of the options.

                                       16
<PAGE>
                                       


RETIREMENT BENEFITS

The Company has adopted two defined  benefit  pension  plans that cover  certain
salaried and hourly-paid employees of the Company, both of which are governed by
the Employee  Retirement Income Security Act of 1974 ("ERISA").  One plan covers
eligible  salaried  employees of the Company and the other plan covers  eligible
hourly-paid  employees.  "Eligible"  employees  are those who  complete at least
1,000 hours of service during the twelve-month period commencing with their date
of hire or with any  anniversary  thereof,  are age 21 or over and (with certain
exceptions) are not covered by a collective bargaining agreement.  The amount of
benefit paid under the plans depends upon the credited  years of service and the
compensation level of the participant.  The compensation used in determining the
retirement  benefit for the individuals named in the Summary  Compensation Table
on page __ consists of the employee's salary and deferred  compensation and does
not include bonus and noncash compensation.

The following  table gives the estimated  annual benefit payable upon retirement
for participants in the salaried pension plan,  including benefits payable under
the Makeup Plan (as defined below).  The estimates  assume normal  retirement at
age 62 for employees at specified compensation levels (based on average earnings
for the  highest  five  consecutive  years of service out of the last ten years)
with various years of service with the Company.


- --------------------------------------------------------------------------------

                               PENSION PLAN TABLE

- --------------------------------------------------------------------------------

<TABLE>
<S>                               <C>            <C>            <C>           <C>            <C>           <C>      

- --------------------------------- ----------------------------------------------------------------------------------------
    Compensation                                                         Years of Service
                                  ----------------------------------------------------------------------------------------
        Level                             20             25             30            35             40             45
- --------------------------------- -------------- -------------- ------------- -------------- ------------- ---------------
      $ 100,000                      $  27,000      $  33,750      $  40,500     $   47,250     $   54,000    $  60,750
        200,000                         54,000         67,500         81,000         94,500        108,000      121,500
        300,000                         81,000        101,250        121,500        141,750        162,000      182,250
        400,000                        108,000        135,000        162,000        189,000        216,000      243,000
        500,000                        135,000        168,750        202,500        236,250        270,000      303,750
        600,000                        162,000        202,500        243,000        283,500        324,000      364,500
        700,000                        189,000        236,250        283,500        330,750        378,000      425,250
        800,000                        216,000        270,000        324,000        378,000        432,000      486,000
</TABLE>

As of January 29, 1998, the years of service credited to the executive  officers
listed in the Summary  Compensation Table on page __ were: Mr. Michael,  32; Mr.
Carley, 44; Mr. King, 32; Mr. Pennington,  34; and Mr. Walk, 36. Also as of such
date,  the covered  compensation  for the last  fiscal  year of these  executive
officers  under the Company's  pension  plans was: Mr.  Michael,  $772,000;  Mr.
Carley,  $522,000; Mr. King, $450,000;  Mr. Pennington,  $335,000; and Mr. Walk,
$335,000.

The  amounts   presented  in  the  pension  table  are  single  life   annuities
notwithstanding the availability of joint and survivor annuity  provisions.  The
pension  benefit is not subject to any  deduction  for social  security or other
offset amounts.

Retirement  benefits  otherwise  available to key executives under the Company's
qualified defined benefit plans have been limited by the effects of the Internal
Revenue Code of 1986, as amended (the "Code").  For example,  the maximum annual
benefit  under a  qualified  pension  plan under the Code is limited to $130,000
(subject to certain  exceptions).  The Company has complied with this limitation
to  assure  continuing  qualification  of its  plans.  To  offset  the  loss  of
retirement benefits  associated with tax law limitations,  the Company adopted a
nonqualified  "makeup"  benefit plan  ("Makeup  Plan")  effective  June 1, 1988.
Benefits  are  provided  under this plan for key  employees  equal to those that
would otherwise be lost by such plan qualification limitations.  The Makeup Plan
was  amended in 1990 to extend  certain  benefits  to  participants  in the 1990
Deferred  Compensation  Plan.  All amounts for any  benefits  accrued  under the
Makeup Plan are  included in the  figures in the Summary  Compensation  Table on
page __.


                                       17
<PAGE>
                                       


In order to protect the benefits  payable under the Makeup Plan, the Company has
established  the Executive  Pension  Makeup Trust ("Makeup  Trust"),  which is a
grantor trust that is substantially  similar to the Deferred Compensation Trusts
described in footnote 1 to the Summary Compensation Table on page __. The Makeup
Trust is  administered  by the Grantor Trust Committee of the Board of Directors
as are the Deferred Compensation Trusts.



                                       18

<PAGE>
                                       


- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE/EXECUTIVE
COMMITTEE REPORT

- --------------------------------------------------------------------------------

Overview

For the fiscal year ended January 29, 1998, the  Compensation  Committee and the
Executive  Committee in a joint meeting  established  the annual salaries of the
Chairman  and  Chief  Executive  Officer  ("CEO")  and the  President  and Chief
Operating  Officer  ("President") and determined that the annual salaries of the
Executive Vice Presidents  recommended by the CEO were reasonable based upon its
analysis of the factors discussed below and approved those annual salaries.  The
annual salaries of the other  executive  officers were determined by the CEO and
were reviewed by the Compensation  Committee and Executive  Committee in a joint
meeting.  The  Compensation  Committee  approved the  Albertson's,  Inc.  Senior
Operations  Executive  Officer  Bonus  Plan  (the  "Bonus  Plan"),   subject  to
stockholder   approval  which  was  obtained  at  the  1997  Annual  Meeting  of
Stockholders. The performance goals for the senior operations executive officers
as defined in the Bonus Plan (the "Senior  Operations  Executive  Officers") and
which  included four of the five  executives  named in the Summary  Compensation
Table were  approved by the  Compensation  Committee as well as the  performance
goals for the other  officers of the Company.  The  Compensation  Committee then
determined that the performance  goals had been met which  determined the amount
of the annual  bonuses  paid for the fiscal  year.  The  Compensation  Committee
approved all grants of stock options  during the fiscal year, as  recommended by
the CEO  (except  in the  case  of the  option  granted  to the  CEO  which  was
recommended  by the members of the  Compensation  Committee);  and options  were
granted to four of the five executives named in the Summary  Compensation Table.
All decisions of the  Compensation  Committee and the Executive  Committee  were
reported to the Board of Directors.

Executive Officer Compensation Policy

The  compensation  policy of the Company,  which is applied by the  Compensation
Committee and the Executive  Committee to the compensation of the CEO, President
and Executive Vice  Presidents and by the CEO to the  compensation  of the other
executive  officers,  is to set  compensation  so as to  attract  and retain the
highest  quality  people who will  contribute to the long-term  performance  and
long-term growth of the Company.  To this end, annual compensation for executive
officers  (except for the Chairman of the  Executive  Committee)  consists of an
annual salary which is not directly dependent upon the Company's  performance in
that fiscal  year and an annual  bonus which is paid after the end of the fiscal
year and which is computed as a  percentage  of annual  salary.  As discussed in
more detail  below,  the annual bonus is directly  dependent  upon the Company's
performance  in the completed  fiscal year.  It is the  Company's  long-standing
policy that the annual bonus make up a substantial  portion of executive officer
compensation.

In accordance with this overall policy, the Company provides retirement benefits
to  encourage  executive  officers to stay with the  Company.  To this end,  the
executive  officers  participate in the defined benefit pension plan that covers
eligible  salaried  employees  of the  Company  as well  as in the  nonqualified
"makeup"  benefit plan which provides  benefits for key employees equal to those
that would otherwise be lost by certain plan qualification  limitations  imposed
by the Internal  Revenue Code of 1986,  as amended (the  "Code").  Both of these
plans are described under the heading "Retirement Benefits." For each of the CEO
and Chairman of the  Executive  Committee,  the Company has agreed to contribute
$22,000 for the fiscal year,  in lieu of salary,  to the  deferred  compensation
plans  established  by the  Company  which are  described  in  footnote 1 to the
Summary  Compensation  Table.  The  executive  officers  are  also  eligible  to
contribute  amounts from their  annual  salary to the  Company-wide  401(k) plan
and/or the deferred  compensation  plans  described in footnote 1 to the Summary
Compensation Table.

At the 1997 Annual Stockholders Meeting, the Company's stockholders approved the
Bonus Plan which is designed to meet the  requirements  of Section 162(m) of the
Code so that all  remuneration  paid by the  Company  for  fiscal  year 1997 was
deductible under Section 162(m) of the Code.

                                       19

<PAGE>
                                       


   Executive Officer Compensation

Executive officer  compensation (except the compensation for the Chairman of the
Executive  Committee)  consists of two annual  components:  (i) an annual salary
which is determined upon the basis of a number of factors,  only one of which is
the Company's overall performance in prior fiscal years and (ii) an annual bonus
which is determined solely on the basis of the Company's  performance during the
fiscal year (an additional bonus may be granted for exceptional  services to the
Company as approved by the Compensation Committee); and one long-term component:
stock  options,  the value of which is  directly  dependent  upon the  Company's
long-term performance.

   Annual Salaries  --  Compensation Committee and Executive Committee

In  determining  the annual  salaries  (including  increases)  for the CEO,  the
President  and the  Executive  Vice  Presidents  for the last fiscal  year,  the
Compensation  Committee and Executive  Committee in a joint meeting considered a
number of factors. These factors included the experience and responsibilities of
the executive officers,  the Company's overall performance in prior fiscal years
and the role of the  executive  officers  in  achieving  such  performance.  The
consideration  of overall  performance  was not based on  specific  measures  of
performance.  The  Compensation  Committee  did not give any specific  weight to
these factors in determining the annual salary  component of  compensation.  For
background  purposes only,  and not to establish  specific  target  compensation
levels,  the  Compensation  Committee  also reviewed  three  wholesaler/retailer
compensation   comparison  surveys  prepared  by  third  parties.   One  of  the
third-party  comparison  surveys  included  four  of the  six  companies  in the
Standard & Poor's Retail  Store-Food  Chains Index used in the Performance Graph
on page __ and two of the surveys included three of those companies.  The annual
salary of the Chairman of the Executive Committee was established pursuant to an
employment   agreement   which  is  described  in  footnote  5  to  the  Summary
Compensation  Table.  The Chairman of the Executive  Committee did not receive a
bonus and was not eligible to be granted stock options.

In reviewing the annual salary  structure for the other  executive  officers for
the last fiscal year,  the  Compensation  Committee and the Executive  Committee
considered the  recommendations  of the CEO as well as factors  similar to those
set forth above. The Compensation  Committee and the Executive Committee did not
give any  specific  weight to any of these  factors  in  determining  the annual
salary component of compensation.

   Annual Bonus  --  Compensation Committee

The performance  goals approved by the Compensation  Committee  (pursuant to the
stockholder  approved Bonus Plan with respect to the Senior Operations Executive
Officers  which  included four of the five  executives  set forth in the Summary
Compensation Table) set forth a scale of percentages of annual salary to be paid
if certain  Company-wide  sales volume increases over the prior fiscal year were
achieved by the Company and a scale of  percentages  of annual salary to be paid
if certain  Company-wide net earnings  increases over the prior fiscal year were
achieved by the Company.  The  percentage  of annual salary to be paid as annual
bonus  increased for the more senior  officers in  recognition of the leadership
roles of the senior officers.

The Compensation  Committee  established the annual bonuses based upon the sales
volume increases and the net earnings  increases that were achieved.  The annual
bonuses that were paid to the Senior  Operations  Executive  Officers  were less
than the maximum  bonuses  that could have been paid under the terms of the Plan
and the performance goals  established  pursuant to the Plan.  Accordingly,  the
annual  bonus of the CEO was set at 39% of his current  annual  salary,  and the
annual bonus of the President was set at 39% of his current annual  salary.  The
Chairman of the Executive  Committee did not receive an annual bonus. The annual
bonus  of  the  Executive  Vice   President,   Corporate   Merchandising   whose
compensation  is disclosed in the Summary  Compensation  Table was set at 26% of
his current  annual salary.  The annual bonus of the Executive  Vice  President,
Retail  Operations whose  compensation is disclosed in the Summary  Compensation
Table was set at 26% of his current annual salary.


                                       20



<PAGE>
                                       


  Stock Options  --  Compensation Committee

Stock  options are granted  from time to time by the  Compensation  Committee to
certain employees of the Company,  including executive  officers.  Stock options
are  granted  by the  Compensation  Committee  to  attract  and  retain the best
available  personnel  for  positions  of  substantial  responsibility,   provide
additional  incentive to employees  and thus promote the success of the business
of the  Company.  Criteria  used by the  Compensation  Committee in making stock
option grants include the potential for a person in the  employee's  position to
make a significant  contribution  to the Company's  performance;  the employee's
past  performance;  the  employee's  length  of  service  with the  Company;  an
evaluation of the employee's  potential for advancement;  and factors bearing on
the  desirability of encouraging  continuance of the employee's  employment with
the  Company.  The  Committee  also  considers  the amount and terms of previous
option grants when determining the grant of options. Based on these factors, the
Compensation Committee determined that the recommendations received from the CEO
of those  employees to whom it would be  appropriate to grant stock options were
reasonable  and granted those stock  options.  Stock options were granted during
the last fiscal year to four of the five executive officers named in the Summary
Compensation  Table as set forth in that table. These options were granted based
on the factors outlined above and are described under the heading "Option Grants
in Last Fiscal Year."

  Compensation of the CEO  --  Compensation Committee

The  compensation of Gary G. Michael,  Chairman of the Board and Chief Executive
Officer,  consists of the same elements as for other executive  officers,  which
are annual salary, annual bonus based upon the performance of the Company during
the fiscal year and stock options,  as well as the $22,000  payment,  in lieu of
salary,  to the  deferred  compensation  plans  described  in  footnote 1 to the
Summary  Compensation  Table.  Mr. Michael also  participates  in the retirement
programs and in the optional deferrals of annual salary into the 401(k) plan and
the deferred compensation plans discussed herein.

Mr.  Michael's  annual  salary  was not  based  upon  specific  measures  of the
Company's  performance  during the fiscal year. His annual salary  determination
was based on the Compensation  Committee's  evaluation of his performance during
the prior fiscal year which  included  the  financial  results  reflected in the
Performance  Graph set forth on page __ of this Proxy Statement and nonfinancial
factors including  strategic planning for the future of the Company,  as well as
the  factors  discussed   previously  under  the  heading  "Annual  Salaries  --
Compensation  Committee." His annual bonus was based upon the achievement of the
specific   Company-wide  sales  volume  increases  and  net  earnings  increases
discussed  previously under the heading "Annual Bonus -- Compensation  Committee
and Executive Committee." His annual bonus was 39% of his current annual salary.
Mr.  Michael  was  granted a stock  option  during  fiscal  year  1997  which is
described under the heading "Option Grants in Last Fiscal Year."

Compensation Committee of the Board of Directors

John B. Fery,                       Clark A. Johnson
    Chairman                        Will M. Storey
A. Gary Ames


Executive Committee of the Board of Directors

John B. Carley,                     Charles D. Lein
    Chairman                        Warren E. McCain
Cecil D. Andrus                     Gary G. Michael*
John B. Fery

*Mr.  Michael did not participate as a member of the Executive  Committee in any
of the  decisions  that are  described in the  Compensation  Committee/Executive
Committee Report.

                                       21

<PAGE>
                                       


Compensation   Committee  and  Executive   Committee   Interlocks   and  Insider
Participation

The members of the Compensation  Committee are John B. Fery,  Chairman,  A. Gary
Ames,  Clark A.  Johnson  and  Will M.  Storey.  The  members  of the  Executive
Committee are John B. Carley,  Chairman,  Cecil D. Andrus, John B. Fery, Charles
D. Lein, Warren E. McCain and Gary G. Michael.

Gary G. Michael,  Chairman of the Board and Chief Executive Officer,  has served
on the Executive  Committee  since 1993.  Mr.  Michael did not  participate as a
member of the Executive  Committee in any of the decisions that are described in
the Compensation Committee/Executive Committee Report.


                                       22

<PAGE>
                                       


PERFORMANCE GRAPH

The following  graph  provides a comparison of the  five-year  cumulative  total
return*  for the  Standard  & Poor's  500 Index,  the  Standard & Poor's  Retail
Store-Food Chains Index and the Company.
<TABLE>
       <S>                             <C>                             <C>                <C>

         Measurement Period                                                               S & P RETAIL
       (Fiscal Year Covered)           ALBERTSON'S, INC.               S & P 500          (FOOD CHAINS)
                1/93                        100                          100                    100
                1/94                        111                          113                     97
                1/95                        126                          113                    105
                1/96                        146                          157                    133
                1/97                        153                          199                    156
                1/98                        212                          252                    213

</TABLE>

*  $100 invested on January 31, 1993 in stock or index,  including  reinvestment
   of dividends. Fiscal year ending January 31.


                                       23


<PAGE>
                                       


- --------------------------------------------------------------------------------
Amendment of the Restated  Certificate of Incorporation  to Increase  Authorized
Shares of Common Stock (Proposal 2)

- --------------------------------------------------------------------------------

On March 2, 1998,  the Board of Directors  (the  "Board")  unanimously  adopted,
subject to approval by the  stockholders at the Annual  Meeting,  an increase in
the number of shares of authorized Common Stock,  $1.00 par value per share (the
"Common  Stock"),  from 600 million shares to 1.2 billion shares.  This increase
would be accomplished by adopting an amendment (Proposal 2) to Article Fourth of
the Company's Restated Certificate of Incorporation (the "Certificate"). Exhibit
A to this Proxy  Statement sets forth the text of the  amendment,  which changes
the first sentence of Article Fourth. As of April 7, 1998, 000,000,000 shares of
Common Stock were issued and outstanding.  Of the remaining  shares,  00,000,000
are reserved for issuance  under the Company's  stock option  plans.  Proposal 2
would  increase  the number of  authorized,  unissued and  unreserved  shares of
Common Stock to  approximately  000 million  shares.  No change is proposed with
respect  to  the  10  million  shares  of  Preferred  Stock  authorized  by  the
Certificate,  of which 3,000,000  shares have been designated as Series A Junior
Participating  Preferred Stock in connection  with the  Stockholder  Rights Plan
Agreement discussed below.

The Board believes that Proposal 2 is desirable, among other reasons, to provide
flexibility to declare stock splits or dividends payable in Common Stock without
further authorization by stockholders.  Authorization for such additional shares
will also enable the Company to take prompt  advantage of market  conditions and
the  availability  of  favorable  opportunities  for the  acquisition  of  other
companies  using the  Company's  Common Stock.  Authorization  at this time will
permit such action  without the delay and expense  incident to holding a special
meeting of  stockholders  should the need for the issuance of additional  shares
arise.  The  Company  has  no  immediate  plans,  arrangements,  commitments  or
understandings  with respect to the issuance of any of the additional  shares of
Common Stock which would be authorized by Proposal 2.

The issuance of additional shares of Common Stock by the Company may,  depending
on the circumstances  under which such shares are issued,  reduce  stockholders'
equity per share and reduce  the  percentage  of  ownership  of Common  Stock of
existing  stockholders.  The  issuance of  additional  shares of Common Stock in
payment  of a stock  dividend  or to effect a stock  split,  however,  would not
reduce any  stockholders'  interest in the earnings of the Company or reduce the
percentage  of ownership of the Common  Stock of existing  stockholders.  As set
forth in the Company's Certificate, no holder of Common Stock has any preemptive
rights with  respect to such  Common  Stock.  In  addition,  unless  required by
applicable laws or stock exchange regulations,  no further authorization by vote
of  stockholders  will be solicited for such  issuance.  Under existing New York
Stock  Exchange  regulations,  approval  of a majority  of the holders of Common
Stock would be required  prior to the  issuance of  additional  shares of Common
Stock or securities convertible into or exercisable for Common Stock, other than
in a public  offering  for cash,  as a  prerequisite  to listing on the New York
Stock  Exchange if (i) the Common  Stock has or will have upon  issuance  voting
power equal to or in excess of 20% of the voting  power  outstanding  before the
issuance of such stock or securities  convertible into or exercisable for Common
Stock,  or (ii) the number of shares of Common  Stock to be issued is or will be
equal to or in excess of 20% of the number of shares of Common Stock outstanding
before the issuance of the stock.

The  proposed  increase  in  authorized  shares of Common  Stock could also make
attempts to acquire control of the Company more difficult. For example, issuance
of shares of Common Stock could dilute the  ownership  interest and voting power
of stockholders of the Company who are seeking  control.  Although the Board has
no present  intent to do so, shares of Common Stock could be issued in a private
placement to one or more persons or  organizations  sympathetic to management in
opposing  a  takeover  bid that  that the Board  has  deemed  not be in the best
interest of the Company and its  stockholders,  or in other  circumstances  that
could make more difficult,  and thereby discourage,  attempts to acquire control
of the Company. To the extent that it impedes any such attempts,  Proposal 2 may
serve to perpetuate the tenure of management.  It should be noted, however, that
although  Proposal  2 would  increase  the  number of  shares  of  Common  Stock
available for issuance,  the Board  currently has authority to take such actions
and such authority  itself would not be increased by Proposal 2. The Company has
no knowledge that anyone is considering a takeover of the Company.


                                       24
<PAGE>
                                       


The  stockholders  of the Company  have  previously  approved  certain  measures
designed to lessen the likelihood of a successful  hostile takeover or change in
control of the Company and to encourage  fair treatment of all  stockholders  in
the event of a  takeover.  These  provisions  include (i) the  authorization  of
7,000,000  shares  of  Preferred  Stock,  the terms of which may be fixed by the
Board of Directors  without  further action by  stockholders,  (ii) a classified
Board of Directors with three classes of directors serving staggered  three-year
terms,  which  prevents the entire Board of Directors  from being  replaced at a
single Annual Meeting of Stockholders,  (iii) a provision stating that Directors
may be removed only for cause and only upon the affirmative  vote of the holders
of 75%  of the  outstanding  voting  stock  of  the  Company,  (iv) a  provision
requiring the affirmative  vote of the holders of 80% of the outstanding  voting
stock of the Company to approve certain business  transactions  (such as mergers
or sales of assets)  involving an entity which  beneficially owns 10% or more of
the  outstanding  voting stock of the  Company,  (v) a provision  requiring  the
affirmative  vote of the holders of 75% of the  outstanding  voting stock of the
Company to amend the  Certificate  to change the number or classes of Directors,
(vi) a provision  stating that special  meetings of  stockholders  may be called
only by the  Chairman,  Vice  Chairman,  President or a majority of the Board of
Directors  and  (vii)  provisions   requiring   advance  notice  of  stockholder
nominations  of  candidates  for election to the Board of Directors and of other
stockholder proposals.

In addition,  on December 2, 1996, the Company adopted a Stockholder Rights Plan
Agreement  (the  "Rights  Plan").  Under  the  terms  of the  Rights  Plan,  all
stockholders of record on the close of business on March 21, 1997, received, for
each  share  owned,  a  preferred  stock  purchase  right  (each a "Right"  and,
collectively,  the  "Rights")  entitling  the  holder  thereof to  purchase  one
one-hundredth of a share of Series A Junior Participating  Preferred Stock at an
exercise  price of $160 per  share.  The Rights  are not  exercisable  until the
earlier of (i) the tenth business day following the public announcement that any
person has  acquired,  or has obtained the right to acquire,  15% or more of the
outstanding voting stock of the Company or (ii) the tenth business day following
commencement  of a tender offer or exchange  offer by any person for 15% or more
of the  outstanding  voting stock of the  Company,  or on such later date as the
Board of Directors may designate.

The Rights Plan  provides  that if any person or group  becomes  the  beneficial
owner of more than 15% of the  outstanding  Common  Stock of the  Company,  each
holder of a Right will generally be entitled to purchase at the exercise price a
number of shares of the  Company's  Common  Stock having a market value of twice
the exercise price.  The Rights Plan further provides that if, at any time after
the Rights become exercisable, the Company is acquired in a business combination
transaction  by a person  or group  which is the  holder of more than 15% of the
outstanding  Common  Stock of the  Company  prior to such  transaction,  and the
Company  is not the  surviving  corporation,  or more than 50% of the  Company's
assets or earning  power is  transferred  or sold,  each  holder of a Right will
generally be entitled to purchase shares of the acquiring Company's common stock
having a market value of twice the exercise price.

Generally,  at any time  until  ten days  following  the date  that any group or
person becomes the holder of 15% or more of the outstanding  Common Stock of the
Company,  the Rights may be  redeemed in whole,  but not in part,  at a price of
$.001 per  share.  The  Rights  Plan is  designed  to  protect  the value of the
stockholders'  investment in the Company,  while not preventing the consummation
of a transaction in which all stockholders  receive a fair price for their stock
and which is otherwise in the best interests of the Company.

In order to secure plan benefits under each of the deferred  compensation  plans
adopted for  management  and highly  compensated  employees as well as under the
Makeup Plan (collectively,  the "Plans"), three trust have been established into
which the Company has  contributed a combination of cash,  real estate and other
property to provide for the payment of benefits  under the Plans in the event of
a change  in  control  of the  Company.  These  trusts  may have the  effect  of
deterring persons seeking to acquire control of the Company.

Each of the Company's stock option plans (except the option plan for the outside
directors)  provide that the options granted  pursuant to such plans will become
immediately exercisable upon the occurrence of certain events involving a change
of control of the Company, as enumerated in the plans. These provisions may also
have the effect of deterring an attempt to acquire control of the Company.


                                       25
<PAGE>
                                       


The Board of Directors  is not  presently  considering  other  measures  that it
believes would have an anti-takeover effect.

The  affirmative  vote of  holders  of a majority  of the  Company's  issued and
outstanding  shares  entitled  to vote at the  meeting  is  required  to approve
Proposal 2.

In view of all of the above  considerations,  the Board of Directors unanimously
recommends a vote FOR Proposal 2.

- --------------------------------------------------------------------------------
Ratification of Appointment of Independent Auditors
(Proposal 3)

- --------------------------------------------------------------------------------

Upon the  recommendation  of its Audit  Committee,  the Board of  Directors  has
reappointed  Deloitte & Touche LLP as  independent  auditors for the fiscal year
ending January 28, 1999, and is requesting  ratification by the stockholders for
such reappointment.  Deloitte & Touche LLP has audited the financial  statements
of the Company for each fiscal year since 1967.

In the event this proposal is defeated, the adverse vote will be considered as a
direction to the Board of Directors to select other auditors for the next fiscal
year. However,  because of the difficulty and expense of making any substitution
of auditors  after the beginning of a fiscal year, it is  contemplated  that the
appointment for the 1998 fiscal year will be permitted to stand unless the Board
of Directors finds other reasons for making a change.

Services to be  performed by Deloitte & Touche LLP for the 1998 fiscal year will
include,  among other  things,  audit of annual  financial  statements,  limited
review of quarterly  financial  information and consultations in connection with
various financial reporting, accounting and income tax matters.  Representatives
of  Deloitte  & Touche  LLP will  attend  the  Annual  Meeting  and will have an
opportunity  to make a  statement,  if they  desire to do so,  and to respond to
appropriate questions.

The  affirmative  vote of  holders  of a majority  of the  Company's  issued and
outstanding  shares  entitled  to vote at the  meeting  is  required  to approve
Proposal 3.

The Board of Directors unanimously recommends a vote FOR Proposal 3.


- --------------------------------------------------------------------------------
Stockholder Proposal
(Proposal 4)

- --------------------------------------------------------------------------------

Gerald R. Armstrong,  the holder of 1,914 shares of the Company's  Common Stock,
whose address is 910 Fifteenth Street, No. 754, Denver, Colorado 80202-2924, has
notified the Company that he intends to present the following  resolution at the
Annual Meeting.  In accordance with applicable proxy  regulations,  the proposed
resolution  and supporting  statement,  for which the Board of Directors and the
Company accept no responsibility, are set forth below.

Stockholder Resolution:

Resolved: That the shareholders of ALBERTSON'S, INC., assembled in person and by
proxy in an annual meeting, request that the Board of Directors take those steps
necessary  to cause annual  elections  for all  directors  by providing  that at
future elections in annual meeting, all directors be elected annually and not by
classes as is now provided and that on the expiration of the present terms their
subsequent elections shall also be on an annual basis.


                                       26
<PAGE>
                                       


Stockholder Supporting Statement:

For many of Albertson's  most profitable  years, one year terms were in place in
the election of Directors when  performance  warranted  re-election  without the
fears expressed by current management.

It is noteworthy that  shareholders  of Chase Manhattan  received one year terms
for their directors upon merging with Chemical Bank.

Recently,  Ameritech,  Time-Warner,  Lockheed Martin,  Campbell Soups,  Atlantic
Richfield,  Pacific  Enterprises,  Westinghouse,  and  other  corporations  have
replaced three year terms with the annual election of all directors.

Occidental  Petroleum  Corporation stated in its 1997 proxy statement in support
of replacing three year terms with one year terms for its directors:

"the current Board of  Directors....does  recognize  that under current views of
corporate  governance  a classified  board is believed to offer less  protection
against  unfriendly  takeover attempts than previously assumed while frustrating
stockholders in their exercise of oversight of the board. The Board of Directors
believes that the best interests of the stockholders are not currently served by
maintaining a classified board...."

These actions have increased shareholder voting rights by 300%--and,  at no cost
to the shareholders.

The proponent  believes the current system  produces only a facade of continuity
which should be displaced;  and accountability and performance be substituted as
the basis for re-election to our board of directors.

At  ALBERTSON'S,  this  procedure  will allow  shareholders  an  opportunity  to
register annually their reviews of the performance of the board collectively and
of each director,  individually.  Concern that annual elections of all directors
would leave ALBERTSON'S without experienced directors is unfounded.

If you agree,  please vote FOR this proposal.  If your proxy card is unmarked on
this issue, your shares will be automatically voted "against" this proposal.


- --------------------------------------------------------------------------------
Board of Directors' Statement in Opposition

- --------------------------------------------------------------------------------

Your Board of Directors  recommends a vote AGAINST  Proposal 4 for the following
reasons:

Your Board of Directors  believes that a classified board continues to serve the
Company, you, the stockholders, and those with whom the Company does business by
permitting all to rely on the consistency and continuity of corporate policy. At
the same time, annual elections in which approximately one-third of the board is
elected  each  year  offer  stockholders  a  regular  opportunity  to renew  and
reinvigorate corporate  decision-making while maintaining the basic integrity of
corporate policy from year-to-year for the benefit of all who rely on it.

A system of classified directors also benefits  stockholders by making corporate
takeovers by proxy contest more difficult. Since only approximately one-third of
the Company's directorships are filled at any annual meeting of stockholders, it
is  impossible to elect an entire new board or even a majority of the board at a
single meeting. Incumbent directors always represent a majority of the Board and
are in a position to protect the interests of all stockholders.

The  stockholders  of the  Company  adopted  the  present  system of  classified
directors at the 1980 Annual Meeting of  Stockholders  by a margin of 77% of the
outstanding shares.

                                       27
<PAGE>
                                       


Our stockholders have consistently rejected a similar proposal for the past four
years. While a stockholder has the right to submit this proposal again this year
(and year after year,  provided the proposal receives at least 10% of the vote),
your Board of Directors  believes  that the reasons  relied on by the Company in
prior  years  remain  persuasive  and that the  proposal  should  continue to be
defeated by the stockholders.

For the foregoing  reasons,  your Board of Directors believes that this proposal
is not in the best interests of the Company and unanimously  recommends that you
vote AGAINST Proposal 4.


- --------------------------------------------------------------------------------
Other Matters

- --------------------------------------------------------------------------------

The  Company  is not aware of any other  matters to be  submitted  at the Annual
Meeting of Stockholders.  If any other matters properly come before the meeting,
it is the  intention of the proxy  holders to vote the shares they  represent as
the Board of Directors may recommend.


- --------------------------------------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance

- --------------------------------------------------------------------------------

As required by Securities and Exchange  Commission rules under Section 16 of the
Securities  Exchange Act of 1934,  as amended,  the Company  notes that,  due to
clerical error,  the option exercise of 1,600 shares by Dennis C. Lucas,  Senior
Vice  President and Regional  Manager,  on October 6, 1997 was not reported in a
timely manner.


- --------------------------------------------------------------------------------
Deadline for Receipt of Stockholders' Proposals

- --------------------------------------------------------------------------------

Proposals  by  stockholders  of the Company that are intended to be presented to
the  stockholders  at the Company's  1999 Annual Meeting must be received by the
Company no later than  December  18,  1998 in order that they may be included in
the Proxy Statement and proxy card for that meeting.


                                       28

<PAGE>
                                       

                                       
                                      
Proposed   Amendment  to  Article   Fourth  of  the  Restated   Certificate   of
Incorporation of Albertson's, Inc.
(Exhibit A)

(Underscored to show changes that would be made by proposed amendment)

FOURTH:  The  aggregate  number  of shares of stock of all  classes  which  this
Corporation  has  authority  to issue is one billion two hundred and ten million
(1,210,000,000) of which one billion two hundred million  (1,200,000,000) shares
shall be Common Stock with a par value of one dollar ($1.00) per share,  and ten
million  (10,000,000)  shares shall be  Preferred  Stock with a par value of one
dollar ($1.00) per share.


                                       A-1
<PAGE>
                                       



         THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

                                ALBERTSON'S INC.

The undersigned  hereby appoints Gary G. Michael,  John B. Carley and Richard L.
King, and each of them, as Proxies for the undersigned,  each with full power of
substitution,  to  represent  the  undersigned  and to vote all shares of Common
Stock of  Albertson's,  Inc. (the "Company") that the undersigned is entitled to
vote in the manner indicated on the reverse side hereof,  and with discretionary
authority as to any other  matters that may properly  come before the meeting as
set forth under the heading "Other Matters" in the accompanying Proxy Statement.
If no other indication is made, the proxyholders  will vote FOR (i) the election
of  director  nominees;  (ii) the  proposal  to  amend  the  Company's  Restated
Certificate of Incorporation to increase the Company's  authorized Common Stock;
and (iii) the  ratification of the  appointment of the independent  auditors and
will vote  AGAINST  proposal 4 at the  Annual  Meeting  of  Stockholders  of the
Company  to be held on Friday,  May 22,  1998,  and at any and all  adjournments
thereof.

                     (PLEASE DATE AND SIGN ON REVERSE SIDE)


                              FOLD AND DETACH HERE





                         ANNUAL MEETING OF STOCKHOLDERS
                              FRIDAY, MAY 22, 1998

                                   10:00 a.m.


                            BOISE CENTRE ON THE GROVE
                                850 FRONT STREET
                                  BOISE, IDAHO



<PAGE>
                                      



                        PLEASE MARK YOUR VOTE LIKE THIS X
                                       ---


        THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS  AND WILL BE
VOTED AS DIRECTED  THEREIN.  IF NO DIRECTION IS GIVEN,  THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4.


        COMMON

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.

1.     ELECTION OF FIVE DIRECTORS TO CLASS III.
       NOMINEES:  Cecil D. Andrus;  John B. Fery;  Richard L. King; J.B. Scott;
                  Will M.Storey

       FOR all nominees                     WITHHOLD AUTHORITY to vote
                                            for all nominees

       -----                                -----

To withhold  authority for any individual  nominee,  check the "FOR" all nominee
box above and write that nominee's name on line below:

- -----------------------------------------

2.   APPROVAL OF  PROPOSAL TO AMEND  ARTICLE  FOURTH OF THE  COMPANY'S  RESTATED
     CERTIFICATE OF  INCORPORATION TO INCREASE THE COMPANY'S  AUTHORIZED  COMMON
     STOCK FROM 600 MILLION TO 1.2 BILLION SHARES.

       FOR____                   AGAINST____                  ABSTAIN____


3.    RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.

       FOR____                   AGAINST____                  ABSTAIN____


THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.

4. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.

       FOR___                    AGAINST____                  ABSTAIN____




<PAGE>
                                       


THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON.
Executors,  administrators,  trustees  and so forth,  should  give full title as
such. If the signatory is a  corporation,  please sign full  corporate name by a
duly authorized officer. If a partnership, please sign in partnership name by an
authorized  party.  If shares are held in multiple names, at least one must sign
as an authorized party.


Dated: __________________, 1998



- -----------------------------
Signature



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Signature




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