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                                                                     EXHIBIT 4.2



                             CANADA SAFEWAY LIMITED
                      EXECUTIVE DEFERRED COMPENSATION PLAN

1.      PURPOSE OF THE PLAN

        The purpose of the Plan is to provide a tax deferred capital
accumulation opportunity to a select group of management or other key employees
through deferral of compensation and to provide the Company with a method of
rewarding and retaining such selected employees.

2.      DEFINITIONS

        For the purposes of the Plan, the terms contained in this Section shall
have the following meanings.

(a)     "ADMINISTRATION COMMITTEE" shall mean the committee appointed by the
        Board from time to time to administer the Plan, or where the Board has
        not appointed a committee, the Board.

(b)     "BONUS" shall mean any annual bonus payable under the Company's annual
        bonus program that will become payable to an Executive.

(c)     "BOARD" shall mean the Board of Directors of the Company.

(d)     "BUSINESS DAY" shall mean a day, other than Saturday or Sunday, on which
        banking institutions in Calgary are not authorized or obligated by law
        to close.

(e)     "COMPANY" shall mean Canada Safeway Limited, an Alberta corporation, or
        its successors and assigns.

(f)     "DIVIDEND EQUIVALENTS" means a bookkeeping entry, whereby each Deferred
        Share Unit is credited with the equivalent amount of the dividend paid
        on a Share in accordance with Section 5(d).

(g)     "DEFERRED SHARE UNIT" or "DSU" shall mean a share unit credited to a
        Participant's account in accordance with the terms and conditions of the
        Plan.

(h)     "EXECUTIVE" shall mean an employee of Canada Safeway Limited who is
        selected to participate in the Plan by the Administration Committee.

(i)     "FAIR MARKET VALUE" of a Share as of a given date shall be (a) the
        closing price of a Share on the principal exchange on which Shares are
        then trading, if any (or as reported on any composite index which
        includes such principal exchange), on such date, or if Shares were not
        traded on such date, then on the next preceding date on which a trade
        occurred, or (b) if Shares are not traded on an exchange but are quoted
        on NASDAQ or a successor quotation system, the mean between the closing
        representative bid and asked prices for a Share on such date as reported
        by NASDAQ or such successor quotation system, or (c) if Shares are not
        publicly traded on an exchange and not quoted on NASDAQ or a successor
        quotation system,

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        the Fair Market Value of a Share as established by the Administration
        Committee acting in good faith. In determining the Fair Market Value of
        a Share under subsection (a) of this Section 1(i), the Administration
        Committee may rely on the closing price as reported in the New York
        Stock Exchange composite transactions published in the Western Edition
        of the Wall Street Journal.

(j)     "PARTICIPANT" shall mean an Executive who has been granted DSUs under
        the Plan.

(k)     "PERMANENT DISABILITY" shall have the meaning ascribed to such term in
        the long-term disability plan or policy of the Company applicable to a
        Participant.

(l)     "PLAN" shall mean the Canada Safeway Limited Executive Deferred
        Compensation Plan as set forth herein and as it may be amended from time
        to time.

(m)     "PLAN YEAR" shall have the meaning set forth in Section 16.

(n)     "RESIGNATION DATE" shall mean, in respect of a Participant, the date on
        which

        (i)    the Participant has ceased to be employed by the Company for any
               reason whatsoever, including termination of employment, voluntary
               resignation, retirement from active employment, Permanent
               Disability or death of the Participant, or, if later,

        (ii)   the Participant has ceased to be a member of the Board of the
               Company if the Participant had ceased employment with the
               Company, but had continued (without any interruption between the
               date he or she ceased to be so employed) to be a member of the
               Board of the Company after the cessation of such employment.

(o)     "SETTLEMENT DATE" with respect to a Participant to whom a Resignation
        Date has occurred shall be, subject to Section 11, the last Business Day
        of the calendar year following the calendar year during which the
        Resignation Date occurs. Provided that a Participant may, on or before
        the Resignation Date, elect in writing a date which is after the
        Resignation Date but before the date which would otherwise be the
        Settlement Date (the "ELECTED Date"). Subject to the approval of the
        Administration Committee and compliance with all applicable laws,
        regulations or rules, the Settlement Date shall be the Elected Date.

(p)     "SHARE" shall mean a common share of Safeway Inc., par value $0.01 per
        share, and any equity security of Safeway Inc. issued or authorized to
        be issued in the future, but excluding any preferred stock and any
        warrants, options or other rights to purchase shares.

3.      ADMINISTRATION OF THE PLAN

        The Plan shall be administered by the Administration Committee. The
Administration Committee shall have full and complete authority to interpret the
Plan, to prescribe such rules and regulations (including those with respect to
the holding of meetings by telephone) and to make such other determinations as
it deems necessary or desirable for the administration of the



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Plan. All actions taken and decisions made by the Administration Committee shall
be final, conclusive and binding on all parties concerned.

        No member of the Administration Committee shall be liable for any action
or determination made in good faith pursuant to the Plan. To the full extent
permitted by law, the Company shall indemnify and save harmless each person
made, or threatened to be made, a party to any action or proceeding by reason of
the fact that such person is or was a member of the Administration Committee
and, as such, is or was required or entitled to take action pursuant to the
terms of the Plan.

4.      ELIGIBILITY

        The Plan shall apply to Executives of the Company as selected and
designated by the Administration Committee in its sole and unfettered
discretion. Notwithstanding the foregoing, an Executive shall not be eligible to
be a Participant unless the Executive (i) has a minimum potential compensation
for the year in excess of $CDN100,000 and (ii) has achieved at least the level
of a director or is eligible to participate in the director level bonus plan.

5.      DEFERRAL ELECTION

        Each Participant may elect, in the manner prescribed herein, to be
allocated DSUs in lieu of receiving a cash payment in respect of a Bonus, up to
100% thereof.

        a.     Method of Electing. A Participant must complete and deliver to
               the Administration Committee, or to such person as the
               Administration Committee may direct, a written election, which
               shall designate the amount of the Bonus in respect of a Plan Year
               that the Participant elects to convert to DSUs. Once made, an
               election is irrevocable. An election must be completed and
               delivered to the Administration Committee on or before December
               31 of the calendar year in respect of which the Bonus is earned,
               to be effective for any future payment to be made in respect of
               that Bonus. If an election is not made in respect of a Plan Year,
               or not validly made before the applicable deadline, an election
               in respect of a previous Plan Year shall not be effective for a
               succeeding Plan Year and a Participant shall not be permitted to
               convert any portion of his or her Bonus in respect of such Plan
               Year to DSUs.

        b.     Minimum Election. Notwithstanding the above, no election shall
               reduce a Participant's compensation below the amount necessary to
               satisfy applicable withholding requirements or taxes. The minimum
               aggregate election in respect of any Plan Year shall be
               $CDN7,500.

        c.     Deferred Share Units. If a Participant elects to convert all or a
               specified amount of his or her Bonus in respect of a Plan Year to
               DSUs, such Participant shall have DSUs allocated to an account
               maintained for the Participant on the books of the Company. DSUs
               (including fractional DSUs) shall be allocated to a Participant's
               account effective



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               as of the day the Bonus would have otherwise been payable to the
               Participant. The amount of the Bonus that the Participant elected
               to convert into DSUs shall be converted into United States
               dollars by using the mid-market foreign exchange rate (as
               prepared by the Bank of Montreal Treasury Group and published in
               the Globe & Mail) on the day the Bonus would, but for the
               Participant's election hereunder, have otherwise been payable to
               the Participant. The number of DSUs to be credited to a
               Participant's account shall be determined by dividing the amount
               of the Bonus that the Participant elected to convert into DSUs
               (after conversion into United States dollars) by the Fair Market
               Value of a Share on the date DSUs are to be allocated. A
               Participant shall not be entitled to any certificate or other
               document evidencing the DSUs and under no circumstances shall
               DSUs be considered as Shares, nor shall they entitle any
               Participant to exercise voting rights or any other rights
               attaching to the ownership or control of Shares. A Participant
               shall at all times be vested in his or her elected deferrals.

        d.     Dividend Equivalents. DSUs shall be credited with Dividend
               Equivalents when dividends are paid on Shares and such Dividend
               Equivalents shall be converted to additional DSUs based on the
               Fair Market Value of a Share on the date credited.

6.      SETTLEMENT OF DEFERRED SHARE UNITS

On the Settlement Date, the Company shall cause the Participant to receive a
number of Shares equal to the number of DSUs recorded in the Participant's
account on the Settlement Date; provided that, however, the Company may reduce
the number of Shares otherwise deliverable to the Participant to reflect the
minimum amount of withholding taxes and other source deductions required by law
to be withheld by the Company in connection with the satisfaction of the
Participant's entitlement.

In order to satisfy its obligation under this Section 6, the Company may obtain
Shares in respect of a Participant's entitlement from the open market or such
Shares may be issued from Safeway Inc.'s treasury. If the Company chooses to
satisfy its obligation under this Section 6 by purchasing Shares in respect of a
Participant's entitlement on the open market, the Company shall, on the
Settlement Date, notify an investment dealer that is independent from the
Company and Safeway Inc. (the "BROKER") of the number of Shares to be purchased
on behalf of the Participant on the New York Stock Exchange or other applicable
stock exchange approved by the Administration Committee. As soon as practicable
thereafter, the Broker shall purchase the number of Shares which the Company has
requested and shall notify the Participant and the Company of:

(a)     the aggregate purchase price ("Aggregate Purchase Price") of the Shares;

(b)     the purchase price per Share, or if the Shares were purchased at
        different prices, the average purchase price (computed on a weighted
        average basis) per Share ("Price per Common Share");



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(c)     the amount of any reasonable brokerage commission related to such
        purchase of Shares; and

(d)     the date of payment for such purchase of Shares;

On the date of payment, upon payment of the Aggregate Purchase Price and related
reasonable brokerage commission by the Company, the Broker shall deliver to the
Participant, or his designate, as the case may be, the certificate attesting the
Shares purchased on behalf of the Participant or shall cause such Shares to be
transferred electronically to an account designated by the Participant.

Any entitlement to fractional Shares (Shares shall be rounded down to the
nearest whole number) shall be paid in cash based on the Fair Market Value of a
Share on the Settlement Date. The Participant shall have no further entitlement
under the Plan upon receipt of Shares (and where applicable, cash in lieu of
fractional Shares) as provided for in this Section 6.

7.      ADJUSTMENTS TO THE NUMBER OF DEFERRED SHARE UNITS

        In the event of any stock dividend, stock split, combination or exchange
of shares, merger, consolidation, spin-off or other distribution (other than
normal cash dividends) of Safeway Inc. assets to shareholders, or any other
change affecting shares, such proportionate adjustments, if any, as the
Administration Committee in its discretion may deem appropriate to reflect such
change, shall be made with respect to the number of DSUs outstanding under the
Plan. In the event Safeway Inc. or the Company is not the surviving company of a
merger, consolidation or amalgamation with another company or in the event of a
liquidation, reorganization and in the absence of any surviving corporation's
assumption of outstanding awards made under the Plan, the Administration
Committee may provide for appropriate settlements of DSUs.

8.      PARTICIPANT ACCOUNTS

        The Company shall maintain or cause to be maintained in its books an
account for each Participant recording at all times the number of DSUs credited
to the Participant. Upon payment in satisfaction of DSUs pursuant to Section 6,
such DSUs shall be cancelled. A written notification of the balance in the
account maintained for each Participant shall be mailed by the Company or by an
administrator on behalf of the Company to each Participant at least annually. A
Participant shall not be entitled to any certificate or other document
evidencing the grant of DSUs to him or her.

9.      RIGHTS OF PARTICIPANTS

        Except as specifically herein provided, no Participant shall have any
claim or right to any Shares that may be delivered in settlement of DSUs
credited pursuant to the Plan.

        Under no circumstances shall DSUs be considered to be Shares nor shall
they entitle any Participant to exercise voting rights or any other rights
attaching to the ownership or control of Shares.



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        Neither participation in the Plan nor any action taken under the Plan
shall give or be deemed to give any Participant a right to continued employment
with the Company and shall not interfere with any right of the Company to
terminate the employment of any Participant. The payment of any sum of money in
cash in lieu of notice of termination of employment shall not be considered as
extending the period of employment for the purposes of the Plan.

10.     REORGANIZATION

        The existence of DSUs shall not affect in any way the right or power of
Safeway Inc. or the Company or their shareholders to make or authorize any
adjustment, recapitalization, reorganization or other change in capital
structure or business, any amalgamation, combination, merger or consolidation,
or to create or issue any bonds, debentures, shares or other securities or to
change the rights and conditions attaching thereto, or to effect a dissolution,
liquidation, sale or transfer of all or any part of its assets or business, or
any other corporate act or proceeding, whether of a similar nature or otherwise.

11.     DEATH OF PARTICIPANT

        Upon the death of a Participant prior to the settlement of the DSUs
credited to the account of such Participant, the Administration Committee shall,
on the Settlement Date, cause to be delivered to the estate or the designated
beneficiary of the deceased Participant the number of Shares such Participant
would have been entitled to in accordance with Section 6 if the Participant had
previously ceased to be employed by the Company on the day prior to his or her
death. For purposes of the definition of Settlement Date, in case of death of a
Participant, unless the Participant had previously elected otherwise in
accordance with Section 2(o), the Settlement Date shall be the day which is
sixty (60) days after the date of death.

12.     DESIGNATION OF A BENEFICIARY

        To the extent permissible by law, a Participant may, by written notice
to the Secretary of the Company (or to such other person as the Administration
Committee or the Secretary may designate), designate a person to receive the
benefits payable under the Plan on the Participant's death, and may also by
written notice to the Secretary of the Company (or to such other person as the
Administration Committee or the Secretary may designate) alter or revoke such
designation from time to time, subject always to the provisions of any
applicable law. Such written notice shall be in such form and shall be executed
in such manner as the Administration Committee in its discretion may from time
to time determine.

13.     WITHHOLDING TAXES

        The Company may reduce the number of Shares that the Company would
otherwise cause to be delivered to a Participant to reflect the minimum amount
of withholding taxes and other source deductions required by law to be withheld
by the Company in connection with the satisfaction of the Participant's
entitlement. The Company may adopt and apply such rules and regulations that in
its opinion will ensure that the Company will be able to so comply.



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14.     TRANSFERABILITY

        The rights or interests of a Participant under the Plan shall not be
assignable or transferable, otherwise than by testamentary disposition or in
accordance with the laws governing the devolution of property in the event of
death and such rights or interests shall not be encumbered.

15.     EFFECTIVE DATE OF THE PLAN

        The effective date of the Plan shall be November 1, 1999.

16.     PLAN YEAR

        A Plan Year shall coincide with a calendar year. The first Plan Year in
respect of which an election may be made under section 5 is the 1999 calendar
year.

17.     AMENDMENTS, SUSPENSION OR TERMINATION OF, THE PLAN

        The Board may from time to time amend, suspend or terminate the Plan in
whole or in part or amend the terms of DSUs credited to a Participant in
accordance with the Plan. If any such amendment, suspension or termination will
both materially and adversely affect the rights of a Participant with respect to
DSUs credited to such Participant, the written consent of such Participant to
such amendment, suspension or termination shall be obtained. Notwithstanding the
foregoing, the obtaining of any required consent of any Participant to an
amendment, suspension or termination with respect to any credited DSUs shall not
be required if such amendment, suspension or termination is required to comply
with applicable laws, regulations, rules, orders of government or regulatory
authorities or the requirements of any stock exchange on which shares of the
Company are listed.

        If the Administration Committee terminates the Plan, DSUs previously
credited to Participants shall remain outstanding and in effect and be settled
in due course in accordance with the terms of the Plan (which shall continue to
have effect, but only for such purposes) on the Settlement Date.

        Notwithstanding the foregoing, the Administration Committee shall, on
the date which is five (5) years from the effective date of the Plan,
re-evaluate the Plan in light of the above-stated purposes.

18.     GOVERNING LAW

        The Plan shall be governed and interpreted in accordance with the laws
in force in the Province of Alberta.



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