Harris Teeter shareholders voted Thursday to approve the supermarket chain’s sale to The Kroger Co., a deal that Harris Teeter’s CEO said would make the stores better able to compete against retailers such as Wal-Mart.
The overwhelming vote – about 83 percent of Harris Teeter shareholders cast ballots in favor – moves the $2.4 billion deal one crucial step closer to completion.
A smaller majority, 72 percent, approved “golden parachute” compensation packages for Harris Teeter’s top executives once the deal is complete.
CEO Thomas Dickson would be eligible for a $262,500 bonus for getting the deal done. He would also be paid another roughly $16 million in cash, stock and perks.
Federal regulators, who so far haven’t objected to the deal, would still have to sign off on the acquisition. University of Richmond professor Carl Tobias, who studies antitrust activity, called that very unlikely.
The companies also face several shareholder suits that sought to block the vote or to award monetary damages to shareholders. The suits generally contend that Harris Teeter failed to get a high enough premium to its closing share price.
While the grocers may still settle, the lawsuits are not likely to stop the merger from going forward.
Harris Teeter said Thursday it still plans to close the sale in the fourth quarter of this year. That would end local control for a company whose roots in Charlotte date back to its founding in the 1930s.
Cincinnati-based Kroger has said Harris Teeter will be able to keep its name, growth plan, distribution centers and corporate offices.
Kroger spokesman Keith Dailey said the company was pleased Harris Teeter shareholders voted in favor of the deal. He said both Kroger and Harris Teeter have been working with the Federal Trade Commission as the agency reviews their plans.
Harris Teeter’s future has been in flux since February, when the company confirmed it was exploring a sale. Little was said publicly until July, when Kroger announced it would acquire Harris Teeter to gain a larger foothold in the Southeast.
Thursday’s meeting at the company’s Matthews headquarters lasted less than 20 minutes. In opening remarks, Dickson said Harris Teeter pursued a sale because of tightening competition in the grocery industry – particularly from Wal-Mart.
“The competitive landscape in the retail food industry has changed dramatically in the last 30 years,” he said.
The big-box giant has used its scale to continually drive down prices on its food, pressuring margins at other stores, Dickson said. Price is the top reason people decide to switch grocery stores, he said.
Harris Teeter and Wal-Mart have twice swapped places as the top Charlotte-area grocer by market share in the last three years. In 2012, Wal-Mart took the reins as having the most sales in the region, according to data from Chain Store Guide. This year, Harris Teeter regained the top spot.
Competition is beginning to grow even fiercer as Publix enters the market. The Florida-based chain broke ground on its first Charlotte location in Ballantyne this spring. Since then, Publix has announced plans for stores in South End, Mint Hill and Cornelius and bought seven locations from Bi-Lo.
Kroger, as a much larger company with nearly $100 billion in sales, is better able to keep pace with Wal-Mart, Dickson said. Harris Teeter had about $4.5 billion in sales last year.
Harris Teeter did not make executives available for questions from the media Thursday. Several directors approached by the Observer declined to comment.
“It’s a big day. It is,” said John Belk, CEO of Belk Inc. and a member of Harris Teeter’s board of directors.
Dunn: 704-358-5235; Twitter: @andrew_dunn