2001 Operating Performance Bonus Plan for Executive Officers - Safeway Inc.


                     THE 2001 AMENDED AND RESTATED OPERATING
                             PERFORMANCE BONUS PLAN
                     FOR EXECUTIVE OFFICERS OF SAFEWAY INC.


Safeway Inc., a Delaware corporation (the "Company"), previously 
adopted The Operating Performance Bonus Plan for Executive Officers of 
Safeway Inc. (the "Plan"). The objectives of the Plan are to motivate 
and reward executives to produce results that increase stockholder 
value and to encourage individual and team behavior that helps the 
Company achieve both short and long-term corporate objectives.

Under the terms of the Plan, the Board of Directors of the Company 
(the "Board") reserved the right to amend the Plan. The Board of 
Directors of the Company has adopted this amendment and restatement of 
the Plan, effective with respect to bonuses for fiscal years beginning 
on or after December 31, 2000, subject to approval of this amendment 
and restatement of the Plan by the
stockholders of the Company.

ARTICLE I.

                                   DEFINITIONS

Section 1.1 - Base Compensation. "Base Compensation" shall mean the
Participant's regular weekly base salary rate, excluding moving 
expenses, bonus pay and other payments which are not considered part 
of regular weekly salary rate, multiplied by the number of weeks the 
Participant is eligible, including up to six weeks of Paid Leave of 
Absence. Any changes in the Participant's regular weekly base salary 
rate effected during the fiscal year of the Company shall be taken 
into account, on a proportionate basis, in computing any bonus award 
for the fiscal year.

Section 1.2 - Paid Leave of Absence. "Paid Leave of Absence" shall 
mean a period of time during which a Participant performs no duties 
due to an illness, incapacity (including disability), layoff, jury 
duty, military duty or a leave of absence for which the Participant is 
so paid or so entitled to payment by the Company, whether direct or 
indirect, but excluding vacation time.

Section 1.3 - Participant. "Participant" shall mean the Company's Chief
Executive Officer ("CEO") and any other Executive Officer (including 
the Senior Vice President - Supply). "Executive Officer" shall mean 
any officer of the Company subject to Section 16(a) of the Securities 
Exchange Act of 1934, as amended..

                                  ARTICLE II.

                                  BONUS AWARDS

Section 2.1 - CEO. The CEO is eligible for a bonus award under this 
Section 2.1. For each fiscal year of the Company, the Section 162(m) 
Committee of the Board (the "Committee") shall establish an objectively 
determinable performance target under this Section 2.1, which shall 
include one or more of the following components of overall Company 
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performance: (i) identical store sales, (ii) operating profit, and (iii)
working capital, in each case as determined in accordance with the Company's
accounting practices, as in effect on the first day of such fiscal year, and
which may also provide for adjustments in accordance with Section 2.4.
Achievement of specified levels above the performance target will result in a
bonus award to the CEO not to exceed a percentage of Base Compensation
determined by the Committee, up to a maximum bonus award of $3.0 million, paid
in accordance with Article III. The Committee shall establish such specified
levels above the performance target and the bonus award to be paid at each such
specified level. Prior to the payment of a bonus award, the Committee shall
certify in writing the level of performance attained by the Company for the
fiscal year to which such bonus award relates.

     Section 2.2 - Executive Officers. Each Executive Officer (including the
Senior Vice President - Supply, but excluding the CEO) is eligible for a bonus
award under this Section 2.2. Achievement of specified levels above the
performance target described under Section 2.1 will result in a bonus award to
an Executive Officer not to exceed a percentage of such Executive Officer's Base
Compensation determined by the Committee, up to a maximum bonus award of $1.5
million, paid in accordance with Article III. For each Executive Officer, the
Committee shall establish such specified levels above the performance target and
the bonus award to be paid at each such specified level. At the discretion of
the Committee, however, the Committee may reduce the bonus amount payable to any
Executive Officer. Prior to the payment of a bonus award, the Committee shall
certify in writing the level of performance attained by the Company for the
fiscal year to which such bonus award relates.

     Section 2.3 - Senior Vice President - Supply. The Senior Vice President -
Supply is eligible for a bonus award under this Section 2.3. For each fiscal
year of the Company, the Committee shall establish an objectively determinable
performance target under this Section 2.3, which shall include one or more of
the following components of performance for the Supply Division: (i) Supply
Division operating income, (ii) plant performance, (iii) third party sales
income contribution, (iv) working capital, and (v) identical store sales, in
each case as determined in accordance with the Company's accounting practices,
as in effect on the first day of such fiscal year, and which may also provide
for adjustments in accordance with Section 2.4. Achievement of specified levels
above the performance target will result in a bonus award not to exceed a
percentage of Base Compensation determined by the Committee, up to a maximum
bonus award of $550,000, paid in accordance with Article III. The Committee
shall establish such specified levels above the performance target and the bonus
award to be paid at each such specified level. Prior to the payment of a bonus
award, the Committee shall certify in writing the level of performance attained
by the Supply Division for the fiscal year to which such bonus award relates.

     Section 2.4 - Adjustments to Performance Components. For each fiscal year
of the Company, the Committee may provide for objectively determinable
adjustments, as determined in accordance with generally accepted accounting
principles ("GAAP"), to any of the performance components under Section 2.1, 2.3
or 5.3 for one or more of the items of gain, loss, profit or expense: (i)
determined to be extraordinary or unusual in nature or infrequent in occurrence,
(ii) related to the disposal of a segment of a business, (iii) related to a
change in accounting principle under GAAP, (iv) related to discontinued
operations that do not qualify as a segment of a business under GAAP, and (v)
attributable to the business operations of any entity acquired by the Company
during the fiscal year.

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                                  ARTICLE III.

                             PAYMENT OF BONUS AWARD

     Section 3.1 - Form of Payment. Each Participant's bonus award may be paid,
at the option of the Participant, in cash or in stock, or in any combination of
cash and stock. Stock bonuses shall be paid in accordance with the provisions of
the 1999 Amended and Restated Equity Participation Plan of Safeway Inc.

     Section 3.2 - Timing of Payment. Unless otherwise directed by the
Committee, each bonus award shall be paid as soon as practicable after the end
of the fiscal year to which such bonus award relates.

                                  ARTICLE IV.

                                 SECTION 162(m)

     Section 4.1 - Qualified Performance Based Compensation. The Committee, in
its discretion, may determine whether a bonus award should qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and may take such actions
which it may deem necessary to ensure that such bonus award will so qualify.

     Section 4.2 - Performance Goals. With respect to any bonus award which the
Committee determines should qualify as performance-based compensation, any of
the performance targets described in Sections 2.1 and 2.3, if applicable to such
bonus award, shall be established in writing before the first day of the fiscal
year to which such bonus award relates; provided, however, that, to the extent
permitted under Section 162(m)(4)(C) of the Code and the Treasury Regulations
thereunder, such performance targets may be established in writing by the
Committee not later than 90 days after the commencement of the period of service
to which the performance targets relate, provided that the outcome is
substantially uncertain at the time the Committee actually establishes the
performance targets; and, provided, further, that in no event shall the
performance targets be established after 25% of the period of service (as
scheduled in good faith at the time the performance targets are established) has
elapsed.

                                   ARTICLE V.

               TRANSFERS, TERMINATIONS AND NEW EXECUTIVE OFFICERS

     Section 5.1 - Transfers. For a Participant who is transferred from one
Executive Officer position to another during a fiscal year, the bonus award for
the fiscal year will be the sum of the pro-rata bonus awards calculated for each
position.

     Section 5.2 - Terminations. Except as provided in Section 5.1 or as
otherwise provided by the Committee, a Participant who, whether voluntarily or
involuntarily, is terminated, demoted, transferred or otherwise ceases to be an
Executive Officer at any time during a fiscal year shall not be eligible to
receive a partial fiscal year bonus award, except when the reason for leaving
the position is for reason of health or retirement; provided, however, that 

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with respect to a Participant who leaves for reason of health or retirement, the
Committee may determine that such Participant shall not receive a partial fiscal
year bonus award.

     Section 5.3 - New Executive Officers. A Participant who is transferred from
a non-Executive Officer position to an Executive Officer position during a
fiscal year, or who commences employment with the Company in an Executive
Officer position during a fiscal year, shall be eligible for a bonus award for
such fiscal year in accordance with Article II, unless the Committee determines,
on the basis that the performance targets established under Article II are no
longer substantially uncertain or otherwise, that such Participant shall be
eligible for a bonus award for such fiscal year under this Section 5.3. In the
event a Participant is eligible for a bonus award under this Section 5.3, for
such fiscal year, the Committee shall establish an objectively determinable
performance target under this Section 5.3, which shall relate to such
Participant's period of service as an Executive Officer during such fiscal year,
and which shall include one or more of the performance components specified in
Section 2.1 (and, if such a Participant is the Senior Vice President - Supply,
one or more of the performance components under Section 2.3) and may also
provide for adjustments in accordance with Section 2.4. Achievement of specified
levels above the performance target will result in a bonus award to such
Participant not to exceed a percentage of Base Compensation determined by the
Committee, up to a maximum bonus award of $3.0 million (in the case of the CEO)
or $1.5 million (in the case of any Executive Officer other than the CEO), paid
in accordance with Article III. The Committee shall establish such specified
levels above the performance target and the bonus award to be paid at each such
specified level. At the discretion of the Committee, however, the Committee may
reduce the bonus payable to any such Participant (other than the CEO). Prior to
the payment of a bonus award, the Committee shall certify in writing the level
of performance attained by the Company for the fiscal year to which such bonus
award relates. With respect to any bonus award under this Section 5.3 which the
Committee determines should qualify as performance-based compensation, any of
the performance targets described in this Section 5.3, if applicable to such
bonus award, shall be established in writing before the first day of such
Participant's employment in an Executive Officer position during the fiscal year
to which such bonus relates; provided, however, that, to the extent permitted
under Section 162(m)(4)(C) of the Code and the Treasury Regulations thereunder,
such performance targets may be established in writing by the Committee after
the commencement of the period of service to which the performance targets
relate, provided that the outcome is substantially uncertain at the time the
Committee actually establishes the performance targets; and, provided, further,
that in no event shall the performance targets be established after 25% of the
period of service (as scheduled in good faith at the time the performance
targets are established) has been established.

                                  ARTICLE VI.

                                 ADMINISTRATION

     Section 6.1 - Committee

     (a) The Committee shall consist of at least two persons appointed by and
holding office at the pleasure of the Board.

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     (b) Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee shall be filled by the Board.

     Section 6.2 - Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan, and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Section 162(m) of the Code are
required to be determined in the sole and absolute discretion of the Committee.

     Section 6.3 - Majority Rule. The Committee shall act by a majority of its
members in office. The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the Committee.

                                  ARTICLE VII.

                                OTHER PROVISIONS

     Section 7.1 - Amendment, Suspension or Termination of the Plan. This Plan
does not constitute a promise to pay and may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Board. However, to the extent required by Section 162(m) with respect to
bonus awards which the Committee determines should qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, no action of the
Board may modify the performance targets described in Sections 2.1 and 2.3 if
applicable to such bonus awards, after the commencement of the year with respect
to which such bonus awards relate.

     Section 7.2 - Approval of Plan by Stockholders. This amendment and
restatement of the Plan shall be submitted for the approval of the Company's
stockholders at the annual meeting of stockholders to be held in 2001. In the
event that this amendment and restatement of the Plan is not so approved, this
amendment and restatement of the Plan shall cease to be effective, and the Plan,
as in effect prior to this amendment and restatement of the Plan, shall continue
in accordance with the terms thereof.

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