Kroger 2010 Annual Report Download - page 29

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27
The amounts shown below reflect the salaries of the named executive officers in effect following the
annual review of their compensation in June of each year.
Salaries
2008 2009 2010
David B. Dillon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,220,000 $1,260,000 $1,260,000
J. Michael Schlotman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 545,000 $ 567,000 $ 610,000
W. Rodney McMullen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 860,000 $ 890,000 $ 890,000
Donald E. Becker ...................................... $ 620,000 $ 645,000 $ 660,000
Paul W. Heldman ...................................... $ 685,000 $ 710,000 $ 724,000
PE R F O R M A N C E -BA S E D AN N U A L CA S H BO N U S
A large percentage of our employees at all levels, including the named executive officers, are eligible
to receive a performance-based annual cash bonus based on Kroger or unit performance. The Committee
establishes bonus potentials for each executive officer, other than the CEO whose bonus potential is
established by the independent directors. Actual payouts, which can exceed 100% of the potential
amounts, represent the extent to which performance meets or exceeds the thresholds established by
the Committee.
The Committee considers several factors in making its determination or recommendation as to bonus
potentials. First, the individual’s level within the organization is a factor in that the Committee believes
that more senior executives should have a substantial part of their compensation dependent upon Kroger’s
performance. Second, the individual’s salary is a factor so that a substantial portion of a named executive
officer’s total cash compensation is dependent upon Kroger’s performance. Finally, the Committee considers
the reports of its compensation consultants to assess the bonus potential of the named executive officers in
light of total compensation paid to comparable executive positions in the industry.
The annual cash bonus potential in effect at the end of the year for each named executive officer
is shown below. Actual bonus payouts are prorated to reflect changes, if any, to bonus potentials during
the year.
Annual Bonus Potential
2008 2009 2010
David B. Dillon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500,000 $1,500,000 $1,500,000
J. Michael Schlotman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 $ 500,000 $ 525,000
W. Rodney McMullen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000 $1,000,000 $1,000,000
Donald E. Becker ...................................... $ 550,000 $ 550,000 $ 550,000
Paul W. Heldman ...................................... $ 550,000 $ 550,000 $ 550,000
The amount of bonus that the named executive officers earn each year is determined by Kroger’s
performance compared to targets established by the Committee based on the business plan adopted by
the Board of Directors. In 2010, thirty percent of bonus was earned based on an identical sales target for
Kroger’s supermarkets and other business operations; thirty percent was based on a target for EBITDA,
excluding supermarket fuel; and forty percent was based on implementation and results of a set of measures
under our strategic plan. An additional 5% would be earned if Kroger achieved three goals with respect
to its supermarket fuel operations; achievement of at least 85% of the targeted fuel EBITDA as set forth in
the business plan, increase of at least 3% in gallons sold at identical fuel centers, and achievement of the
planned number of fuel centers placed in service.