Exhibit 10(iii).32

DEFERRED COMPENSATION PLAN FOR SAFEWAY

NON-EMPLOYEE DIRECTORS II

(Amended and Restated Effective January 1, 2011)

ARTICLE I

1.1 Introduction.

 

  (a) The name of this plan is the “Deferred Compensation Plan for Safeway
Non-Employee Directors II” (the “Plan”). Its purpose is to provide non-employee
Directors of the Company with increased flexibility in timing the receipt of
board service fees and to assist the Company in attracting and retaining
qualified individuals to serve as Directors. The Plan is effective as of
January 1, 2005, and was amended and restated as of January 1, 2009, to comply
with Code Section 409A, and amended and restated again effective January 1,
2011. Between January 1, 2005 and December 31, 2008, the Plan operated in good
faith compliance with the guidance issued under Code Section 409A.

 

  (b) The Plan is the successor plan to the Deferred Compensation Plan for
Safeway Non-Employee Directors (the “Prior Plan”). Effective December 31, 2004,
the Prior Plan was frozen and no new deferrals will be made under it; provided,
however, that any deferrals made under the Prior Plan before January 1, 2005
will continue to be governed by the terms and conditions of the Prior Plan as in
effect on December 31, 2004 or on the date of any later amendment, provided that
such amendment is not a material modification of the Prior Plan under
Section 409A of the Code and regulations promulgated thereunder.

 

  (c) Any deferrals made under the Prior Plan after December 31, 2004 are deemed
to have been made under the Plan and all such deferrals are governed by the
terms and conditions of the Plan as it may be amended from time to time.

 

  (d) The Plan is intended to comply with the requirements of Section 409A of
the Code.

1.2 Definitions. Whenever used in this Plan, the following terms shall have the
meaning set forth below:

 

  (a) “Annual Fee” means the base annual fee payable to a Director for the
Director’s service as a member of the Board, as determined by the Board from
time to time, exclusive of any other fees, including, but not limited to, annual
fees for committee membership.

 

  (b) “Automatic Deferral” means the automatic deferral as described in
Section 3.1 below.

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

  (c) “Board” means the Board of Directors of the Company.

 

  (d) “Closing Price” means the closing price of the Company’s Common Stock as
reported in The Wall Street Journal.

 

  (e) “Code” means the Internal Revenue Code of 1986, as amended.

 

  (f) “Common Stock” means the Common Stock, par value $.01 per share, of
Safeway Inc.

 

  (g) “Company” means Safeway Inc.

 

  (h) “Compensation” means all remuneration paid to a Director for services as a
Director other than reimbursement for expenses and shall include, but not be
limited to, Annual Fees and fees for committee membership.

 

  (i) “Director” means any individual serving on the Board who is not an
employee of the Company or any of its direct or indirect subsidiaries.

 

  (j) “Elective Deferral” means a Participant’s elective deferral as described
in Section 3.2 below.

 

  (k) “Participant” means a Director who receives Compensation from the Company
in any Plan Year.

 

  (l) “Plan Administrator” means a committee consisting of one or more senior
executives of the Company designated by the Chief Executive Officer of the
Company.

 

  (m) “Plan” means the Deferred Compensation Plan for Safeway Non-Employee
Directors II, effective as of January 1, 2005, and as amended thereafter.

 

  (n) “Plan Year” means the calendar year.

 

  (o) “Prior Plan” means Deferred Compensation Plan for Safeway Non-Employee
Directors.

 

  (p) “Separation from Service” or “Separates from Service” means termination of
a Director’s service as a non-employee member of the Board consistent with Code
Section 409A and the regulations promulgated thereunder.

ARTICLE II

2.1 Participation in the Plan. Any individual who is a Director as defined in
Section 1.2(h) shall participate in the Plan.

 

2

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

ARTICLE III

3.1 Automatic Deferrals.

 

  (a) Prior to the fourth calendar quarter of the 2007 Plan Year, payment of 50%
of a Director’s Compensation for each Plan Year shall automatically be deferred
under the Plan.

 

  (b) Beginning with the fourth calendar quarter of the 2007 Plan Year and for
each calendar quarter of a Plan Year thereafter, $5,000 of a Director’s
Compensation, and 50% of the balance of the Director’s Compensation for such
calendar quarter shall automatically be deferred under the Plan; provided,
however, that effective January 1, 2011, any increase in a Director’s then
current Annual Fee, plus the increase in the Directors’ Annual Fee for 2010,
shall be automatically deferred under the Plan, quarterly, in substantially
equal amounts. Such increase shall continue to be automatically deferred and
shall not be eligible for elective deferral under Section 3.2.

3.2 Election to Defer. Each Director may elect annually to have payment of all
or any portion of his or her Compensation, in excess of the amount subject to
the Automatic Deferral, for that Plan Year deferred. No election to defer
Compensation under this Plan may be made after December 31 of the year preceding
the Plan Year during which Compensation is earned. An election to defer any
Compensation shall be in writing and shall be delivered to the Plan
Administrator. An election to defer shall be irrevocable after the beginning of
the Plan Year for which the election is applicable and shall be effective for
the Plan Year or Plan Years immediately following the date on which it was filed
as set forth in the written election to defer. In the absence of a written
election to defer filed by a Director with the Plan Administrator, his or her
Compensation remaining after the Automatic Deferral will be paid directly to the
Director. Notwithstanding the foregoing, a Director who is first appointed or
elected to the Board in a Plan Year may elect to defer under the Plan all or a
portion of his or her Compensation, in excess of the amount subject to the
Automatic Deferral, with respect to such Compensation earned on and after the
first day of the month next following the date such Director completes and
returns the written election to defer to the Company, provided that such
election is made within 30 days after the date the Director is first elected or
appointed to the Board; such election, if made, shall be irrevocable on the 31st
day after such election or appointment or at such earlier date as provided in
the form.

3.3 Special Distribution Election.

 

  (a)

At the time the Participant elects to defer Compensation in accordance with
Section 3.2, the Participant may elect that Compensation deferred pursuant to an
Elective Deferral will be paid in January of a specified year in the future that
is at least twelve months from the last day of the Plan Year in which the
deferred Compensation is earned; provided, however, that if the Participant
Separates from Service prior to such specified year,

 

3

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

 

the Participant’s account will be paid within 90 days following the
Participant’s Separation from Service.

 

  (b) Compensation deferred pursuant to an Automatic Deferral is payable only
upon the Participant’s Separation from Service.

 

  (c) A Participant who makes a special distribution election pursuant to
Section 3.3(a) above may elect to amend such an election to further defer the
payment, provided that such election is made in writing and delivered to the
Plan Administrator at least twelve months in advance of the originally scheduled
special distribution date and the new distribution date elected by the
Participant is at least five years from the originally scheduled special
distribution date.

3.4 Transition Distribution Election. Notwithstanding any other provision of the
Plan to the contrary, a Participant may elect an in-service account distribution
or change the time of an in-service account distribution as elected in
accordance with Section 3.3 above, provided that the election is made at least
twelve months prior to the originally scheduled distribution date and the
election is made not later than December 31, 2006. An election made pursuant to
this Section 3.4 shall be treated as an initial special distribution election
and shall be subject to any administrative rules imposed by the Plan
Administrator including rules intended to comply with Section 409A of the Code
and Notice 2005-1, A-19. No election under this Section 3.4 shall (i) change the
payment date of any distribution otherwise scheduled to be paid in 2006 or cause
a payment to be paid in 2006, or (ii) be permitted after December 31, 2006.

3.5 Mode of Deferral. Payment of a Participant’s Compensation deferred pursuant
to an Automatic Deferral shall be deferred by means of a stock credit. Payment
of a Participant’s Compensation deferred pursuant to an Elective Deferral may be
deferred by means of a cash credit, a stock credit or a combination of the two
as the Participant shall elect in writing at the same time as the election
provided for in Section 3.2. If a Participant fails to make an election as to
the mode of deferral of his or her Elective Deferral, he or she shall be deemed
to have elected deferral by means of a cash credit. Cash credits and stock
credits shall be recorded in accounts established in Participants’ names on the
books of the Company.

 

  (a)

Cash Credits. If the Elective Deferral is deferred wholly or partly by means of
a cash credit, the Participant’s cash credit account shall be credited, as of
the last day of the calendar quarter, with the dollar amount of Compensation
deferred during the quarter by means of a cash credit. As of the last day of
each calendar quarter, the Participant’s cash credit account shall also be
credited with an interest equivalent in an amount determined by applying to the
balance in the account as of the first day of the quarter (less any
distributions during the quarter) an interest rate for such quarter which, when
annualized, shall be the prime rate of Bankers Trust Company or such other
equivalent financial institution, as of the first

 

4

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

 

business day of the quarter. Interest shall be calculated on the actual number
of days in the quarter based upon a 360-day year.

 

  (b) Stock Credits. The Participant’s stock credit account shall be credited,
as of the last day of the calendar quarter with a Common Stock equivalent equal
to the number of shares of Common Stock (including fractions of a share) that
could have been purchased at the average of the Closing Price of Common Stock on
each business day during the last month of the calendar quarter with the amount
of the Compensation deferred during the quarter by means of a stock credit. As
of the date any dividend is paid to holders of Common Stock, the Participant’s
stock credit account shall also be credited with additional Common Stock
equivalents equal to the number of shares of Common Stock (including fractions
of a share) that could have been purchased at the Closing Price of Common Stock
on such date with the dividend paid on the number of shares of Common Stock to
which the Participant’s stock credit account is then equivalent. In case of
dividends paid in property, the dividend shall be deemed to be the fair market
value of the property at the time of distribution of the dividend, as determined
by the Plan Administrator.

3.6 Distribution of Credits.

 

  (a) If a Participant has elected payment in a specified year under
Section 3.3, distribution of his or her accounts will only be made in a single
lump sum payment. Otherwise, unless a Participant has elected to receive
installment payments as provided below or if the Participant fails to make any
election with respect to distribution of his or her accounts, payment of a
Participant’s accounts shall be made in a single lump sum within 90 days
following the Participant’s Separation from Service.

 

  (b) At the election of the Participant made in writing and delivered to the
Plan Administrator at the same time the Participant elects to defer Compensation
in accordance with Section 3.2, distribution of his or her accounts, commencing
within 90 days following the Participant’s Separation from Service, shall be
made in the number of annual installments elected by the Director not exceeding
ten. Any such election is irrevocable; provided, however, that with respect to
amount deferred in 2005 and 2006, a Participant may make a transition election
in accordance with Section 3.4.

 

  (c) Distribution of a Participant’s cash credit and stock credit accounts
shall be made in cash. The amount of the distribution for stock credit accounts
shall be determined by multiplying the number of shares of Common Stock
attributable to the distribution by the average of the Closing Price of Common
Stock on each business day in the month of December immediately prior to the
Plan Year in which the installment is to be paid.

 

5

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

3.7 Adjustment. If at any time the number of outstanding shares of Common Stock
shall be increased as the result of any stock dividend, subdivision or
reclassification of shares, the number of shares of Common Stock to which each
Participant’s stock credit account is equivalent shall be increased in the same
proportion as the outstanding number of shares of Common Stock is increased, or
if the number of outstanding shares of Common Stock shall at any time be
decreased as the result of any combination or reclassification of shares, the
number of shares of Common Stock to which each Participant’s stock credit
account is equivalent shall be decreased in the same proportion as the
outstanding number of shares of Common Stock is decreased. In the event the
Company shall at any time be consolidated with or merged into any other
corporation and holders of the Company’s Common Stock receive common shares of
the resulting or surviving corporation, there shall be credited to each
Participant’s stock credit account, in place of the shares then credited
thereto, a stock equivalent determined by multiplying the number of common
shares of stock given in exchange for a share of Common Stock upon such
consolidation or merger, by the number of shares of Common Stock to which the
Participant’s account is then equivalent. If in such a consolidation or merger,
holders of the Company’s Common Stock shall receive any consideration other than
common shares of the resulting or surviving corporation, the Participants’ stock
credit accounts shall be adjusted in accordance with the terms set forth in the
applicable consolidation or merger agreement, as interpreted by the Plan
Administrator.

3.8 Installment Amount. In the event a Participant has elected to receive
distribution of his or her accounts in more than one installment, the amount of
each installment shall be determined by multiplying the current balance
(denominated in cash units for the portion elected to be deferred as cash
credits and denominated in stock units for the portion deferred or elected to be
deferred in stock credits) in the accounts as determined under Section 3.5, by a
fraction, the numerator of which is one, and the denominator of which is the
number of installments yet to be paid. With respect to cash credits, interest
shall continue to be credited in accordance with Section 3.5 during the payment
period. For purposes of the Plan, installment payments shall be treated as a
single distribution under Section 409A of the Code.

3.9 Distribution upon Death. In the event of the death of a Participant, whether
before or after ceasing to serve as a Director, any cash credit account and
stock credit account to which he or she was entitled, shall be converted to cash
and distributed in a single lump sum to such person or persons or the survivors
thereof, including corporations, unincorporated associations or trusts, as the
Participant may have designated. All such designations shall be made in writing
signed by the Participant and delivered to the Plan Administrator. A Participant
may from time to time revoke or change any such designation by written notice to
the Plan Administrator. If there is no unrevoked designation on file with the
Plan Administrator at the time of the Participant’s death, or if the person or
persons designated therein shall have all predeceased the Participant or
otherwise ceased to exist, such distributions shall be made in accordance with
the Participant’s will or in the absence of a will, to the administrator of the
Participant’s estate. Any distribution under this Section 3.9 shall be made
within 90 days following the date of the Participant’s death. In this case, a
Participant’s stock credit account shall be converted to cash by multiplying the
number of whole and fractional

 

6

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

shares of Common Stock to which the Participant’s stock credit account is
equivalent by the average of the Closing Price of Common Stock on each business
day during the last month of the calendar quarter prior to the date of death.

3.10 Prohibition on Acceleration. Notwithstanding any other provision of the
Plan to the contrary, no distribution shall be made from the Plan that would
constitute an impermissible acceleration of payment as defined in
Section 409A(a)(3) of the Code and the regulations promulgated thereunder.

ARTICLE IV

4.1 Plan Administrator. The Plan Administrator shall have full power and
authority to administer the Plan including the power to promulgate forms to be
used with regard to the Plan, the power to promulgate rules of Plan
administration, the power to settle any disputes as to rights or benefits
arising from the Plan, and the power to make such decisions or take such actions
as the Plan Administrator, in its sole discretion, deems necessary or advisable
to aid in the proper maintenance of the Plan.

ARTICLE V

5.1 Funding. No promise hereunder shall be secured by any specific assets of the
Company, nor shall any assets of the Company be designated as attributable or
allocated to the satisfaction of such promises. In addition, amounts deferred
pursuant to the terms of the Plan and income attributable to such amounts shall
remain (until distributed in accordance with the terms of the Plan) solely the
property of the Company, subject to the claims of the Company’s general
creditors.

ARTICLE VI

6.1 Non-alienation of Benefits. No benefit under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt thereof by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements, or torts of the
Participant.

6.2 Domestic Relations Orders. If a court of competent jurisdiction determines
pursuant to a judgment, order or approval of a marital property settlement
agreement that all or any portion of the benefits payable under the Plan to a
Participant constitute community property of the Participant and his or her
spouse or former spouse (hereafter, the “Alternate Payee”) or property which is
otherwise subject to division by the Participant and the Alternate Payee, a
division of such property shall not constitute a violation of Section 6.1, and
any portion of such property may be paid or set aside for payment to the
Alternate Payee. The preceding sentence of this Section 6.2, however, shall not
create any additional rights and privileges for the Alternate Payee (or the
Participant) not already provided under the Plan; in this regard, the
Administrator shall have the right to refuse to recognize any judgment, order or
approval of a marital property settlement agreement that the Administrator in
its sole discretion determines

 

7

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

provides for any additional rights and privileges not provided under the Plan,
including without limitation provisions relating to form and time of payment.

ARTICLE VII

7.1 Delegation of Administrative Duties. Administrative duties imposed by this
Plan may be delegated by the Plan Administrator or the individual charged with
such duties.

7.2 Governing Law. This Plan shall be governed by the laws of the State of
Delaware. The Plan is intended to comply with Code Section 409A and shall be
interpreted as necessary to comply with Code Section 409A. Any provision that
does not comply with Code Section 409A shall be void or deemed to be amended to
comply with Code Section 409A.

7.3 Amendment, Modification and Termination of the Plan.

 

  (a) The Plan Administrator may amend or modify the Plan at any time and in any
respect.

 

  (b) The Board may terminate and liquidate the Plan on a completely voluntary
basis if: (1) the termination does not occur proximate to a downturn in the
financial health of the Company, (2) all nonqualified plans that are aggregated
as a single plan with the Plan (pursuant to Code Section 409A) are terminated,
(3) no payments are made within the first 12 months following termination, other
than payments that would have been payable under the terms of the Plan if the
Plan had not been terminated, (4) all payments are made within 24 months of the
termination and (5) a new plan that would be aggregated with the Plan (pursuant
to Code Section 409A) is not established for a period of three years following
the date of termination of the Plan.

 

  (c) The Board may terminate the Plan upon a dissolution of the Company that is
taxed under Code section 331 or with the approval of a bankruptcy court pursuant
to 11 U.S.C. section 503(b)(1)(A), provided that the deferred amounts are
distributed and included in the gross income of the Participants by the latest
of (i) the calendar year in which the Plan terminates or (ii) the first calendar
year in which payment of the deferred amounts is administratively practicable.

[Signature Page Follows]

 

8

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

IN WITNESS WHEREOF, the Board has caused this amended and restated Plan to be
executed by a duly authorized officer of the Company this 20th day of October
2010.

 

SAFEWAY INC. By:   /s/ Laura A. Donald Its:   Assistant Vice President

 

9