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SHAREHOLDER ASKS NASDAQ TO ENFORCE RULES, REQUIRE FOOD LION TO ELECT INDEPENDENT DIRECTORS

 WASHINGTON, May 4 /PRNewswire/ -- A Food Lion shareholder said today that the National Association of Securities Dealers, Inc., should investigate the failure of Food Lion, Inc. (NASDAQ-NMS: FDLN) to comply with NASD corporate governance rules requiring at least two independent directors. The findings of an investigation could lead to termination of the chain's listing on the NASDAQ National Market System.
 The Food and Allied Service Trades Department, AFL-CIO (FAST), made the request in a letter to the chairman of the NASD's board of governors.
 Food Lion also is apparently violating NASD's rule that independent directors constitute a majority of the audit committee of listed companies, the letter added. The audit committee oversees the independent accounting firm and reviews potential conflicts of interest.
 Ten current directors were elected under a 1988 agreement between Delhaize led Lion, the Belgian company that owns 50.3 percent of Food Lion's voting shares, and Food Lion's principal officers, President, Chairman and CEO Tom Smith and Chairman Emeritus and co-founder Ralph Ketner. The agreement commits both parties to vote for two five-member slates designated by Delhaize and Smith.
 Delhaize's five directors are officials of the Belgian company or a subsidiary. Smith's designees include himself, Ketner, two corporate officers and the firm's general counsel. "None of these directors could be considered `independent,'" FAST contended.
 The directors' terms expire at Food Lion's annual meeting Thursday in Salisbury, N.C. Food Lion has announced shareholders will be asked to elect as a director the "first person not directly involved with Food Lion," according to a company spokesman quoted in the Salisbury Post. The new director will replace Ketner, who resigned recently, citing disagreement with management decisions.
 "But," FAST insisted, "the election of the first independent director will neither bring Food Lion into compliance with the NASD rule, nor result in `any meaningful stewardship function being provided by the board,' since Smith's removal requires approval of more than 80 percent of the directors, under the agreement."
 "Food Lion has deliberately ignored the NASD independent director requirement," the letter complained, citing provisions in the 1988 agreement spelling out a mechanism for electing independent directors to comply with NASD rules. "Food Lion should have complied with the requirement, rather than ignoring it until such time as it is forced to comply," FAST stated.
 Shares in Food Lion, once considered a darling of Wall Street, have lost an estimated $5 billion in market value since late 1991, and the firm's credit rating was recently downgraded as, "experts ... focused on the steady deterioration in the company's financial condition and management's inability to steer the company on a corrective course," the letter asserted.
 "Analysts ... have attributed Food Lion's poor performance to a series of management decisions concerning its `Effective Scheduling' system, food safety issues, expansion into new markets, and management's ineffectiveness in handling negative publicity," FAST wrote.
 A nationwide Department of Labor (DOL) investigation concluded Food Lion worked employees off the clock in violation of federal wage-and- hour laws, the letter added, and uncovered "what has been described as the largest number of child labor law violations in history." A Congressional panel also was "highly critical of management's handling of the DOL investigation," the letter noted.
 A "scathing expose" on ABC's "PrimeTime Live" showed Food Lion employees "repackaging outdated or spoiled meat for sale to unsuspecting customers," FAST continued. "According to Food Lion's latest SEC filing, its expansion into Texas is failing, and management is exploring `alternative strategies.'"
 "Management's reaction ... has been a barrage of denials and public relations attacks on the critics, which leave unaddressed the substance of the critics' case against the company," FAST added. "For example, Food Lion publicly accused ABC News of `concocting' the program, while its suit against ABC does not question the accuracy of the broadcast."
 "The presence of independent directors, as required by NASD's bylaws, could have fostered a more critical examination of the merits of the issues raised and an atmosphere more conducive to constructive change," FAST said. "Questioning from independent directors might have prevented at least some of the economic harm caused tens of thousands of shareholders, who suffered the largest part of the $5 billion decline in share value."
 -0- 5/4/93
 /NOTE: For more information or copies of FAST's letter, call the contact below./
 /CONTACT: Keith Mestrich of FAST, 202-737-7200/
 (FDLN)


CO: Food Lion, Inc.; Food and Allied Service Trades Department, AFL-CIO ST: District of Columbia; North Carolina IN: RET SU:

TW-KD -- DC008 -- 4269 05/04/93 11:19 EDT
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Date:May 4, 1993
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