Kroger 2010 Annual Report Download - page 26

Download and view the complete annual report

Please find page 26 of the 2010 Kroger annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

24
•฀ Conducted฀ an฀ annual฀ review฀ of฀ all฀ components฀ of฀ compensation,฀ quantifying฀ total฀ compensation฀
for the named executive officers on tally sheets. The review includes an assessment for each named
executive officer, including the CEO, of salary; performance-based cash compensation, or bonus (both
annual and long-term); equity; accumulated realized and unrealized stock option gains and restricted
stock and performance unit values; the value of any perquisites; retirement benefits; severance
benefits available under The Kroger Co. Employee Protection Plan; and earnings and payouts available
under Kroger’s nonqualified deferred compensation program.
•฀ Considered฀ internal฀ pay฀ equity฀ at฀ Kroger.฀ The฀ Committee฀ is฀ aware฀ of฀ reported฀ concerns฀ at฀ other฀
companies regarding disproportionate compensation awards to chief executive officers. The
Committee has assured itself that the compensation of Kroger’s CEO and that of the other named
executive officers bears a reasonable relationship to the compensation levels of other executive
positions at Kroger taking into consideration performance and differences in responsibilities.
•฀ Recommended฀ share฀ ownership฀ guidelines,฀ adopted฀ by฀ the฀ Board฀ of฀ Directors.฀ These฀ guidelines฀
require directors, officers and some other key executives to acquire and hold a minimum dollar value
of Kroger stock. The guidelines require the CEO to acquire and maintain ownership of Kroger shares
equal to 5 times his base salary; the Chief Operating Officer at 4 times his base salary; Executive Vice
Presidents, Senior Vice Presidents and non-employee directors at 3 times their base salaries or annual
base cash retainers; and other officers and key executives at 2 times their base salaries.
ES T A B L I S H I N G EX E C U T I V E CO M P E N S A T I O N
The independent members of the Board have the exclusive authority to determine the amount of the
CEO’s salary; the bonus potential for the CEO; the nature and amount of any equity awards made to the
CEO; and any other compensation questions related to the CEO. In setting the annual bonus potential for
the CEO, the independent directors determine the dollar amount that will be multiplied by the percentage
payout under the annual bonus plan generally applicable to all corporate management, including the
named executive officers. The independent directors retain discretion to reduce the percentage payout the
CEO would otherwise receive. The independent directors thus make a separate determination annually
concerning both the CEO’s bonus potential and the percentage of bonus paid.
The Committee performs the same function and exercises the same authority as to the other named
executive officers. The Committee’s annual review of compensation for the named executive officers
includes the following:
•฀ A฀detailed฀report,฀by฀officer,฀that฀describes฀current฀compensation,฀the฀value฀of฀equity฀compensation฀
previously awarded, the value of retirement benefits earned, and any severance or other benefits
payable upon a change of control.
•฀ An฀internal฀equity฀comparison฀of฀compensation฀at฀various฀senior฀levels.฀This฀current฀and฀historical฀
analysis is undertaken to ensure that the relationship of CEO compensation to other senior officer
compensation, and senior officer compensation to other levels in the organization, is equitable.
•฀ A฀ report฀ from฀ the฀ Committee’s฀ compensation฀ consultants฀ (described฀ below)฀ comparing฀ named฀
executive officer and other senior executive compensation with that of other companies, primarily
our competitors, to ensure that the Committee’s objectives of competitiveness are met.
•฀ A฀recommendation฀from฀the฀CEO฀ (except฀in฀ the฀ case฀ of฀his฀ own฀compensation)฀for฀ salary,฀ bonus฀
potential, and equity awards for each of the senior officers including the other named executive
officers. The CEO’s recommendation takes into consideration the objectives established by and the
reports received by the Committee as well as his assessment of individual job performance and
contribution to our management team.