Kroger 2010 Annual Report Download - page 34

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We adopted The Kroger Co. Employee Protection Plan, or KEPP, during fiscal year 1988. That plan was
amended and restated in 2007. All of our management employees and administrative support personnel
whose employment is not covered by a collective bargaining agreement, with at least one year of service,
are covered. KEPP provides for severance benefits and extended Kroger-paid health care, as well as the
continuation of other benefits as described in the plan, when an employee is actually or constructively
terminated without cause within two years following a change in control of Kroger (as defined in the
plan). Participants are entitled to severance pay of up to 24 months’ salary and bonus. The actual amount
is dependent upon pay level and years of service. KEPP can be amended or terminated by the Board at any
time prior to a change in control.
Stock option and restricted stock agreements with participants in Kroger’s long-term incentive plans
provide that those awards “vest,” with options becoming immediately exercisable and restrictions on
restricted stock lapsing, upon a change in control as described in the agreements.
None of the named executive officers is party to an employment agreement.
PE R Q U I S I T E S
The Committee does not believe that it is necessary for the attraction or retention of management talent
to provide the named executive officers a substantial amount of compensation in the form of perquisites.
In 2010, the only perquisites provided were payments of premiums of:
•฀ life฀insurance,
•฀ accidental฀death฀and฀dismemberment฀insurance;฀and
•฀ long-term฀disability฀insurance฀policies.
The life insurance benefit was offered beginning several years ago to replace a split-dollar life insurance
benefit that was substantially more costly to Kroger. Currently, 147 active executives, including the named
executive officers, and 69 retired executives, receive this benefit.
In addition, the named executive officers are entitled to the following benefit that does not constitute
a perk as defined by SEC rules:
•฀ personal฀use฀of฀Kroger฀aircraft,฀which฀officers฀may฀lease฀from฀Kroger฀and฀pay฀the฀average฀variable฀
cost of operating the aircraft, making officers more available and allowing for a more efficient use of
their time.
The total amount of perquisites furnished to the named executive officers is shown in the Summary
Compensation Table and described in more detail in footnote 4 to that table.
EX E C U T I V E CO M P E N S A T I O N RE C O U P M E N T PO L I C Y
If a material error of facts results in the payment to an executive officer at the level of Group Vice
President or higher of an annual bonus or a long-term bonus in an amount higher than otherwise would
have been paid, as determined by the Committee, then the officer, upon demand from the Committee,
will reimburse Kroger for the amounts that would not have been paid if the error had not occurred. This
recoupment policy applies to those amounts paid by Kroger within 36 months prior to the detection and
public disclosure of the error. In enforcing the policy, the Committee will take into consideration all factors
that it deems appropriate, including:
•฀ The฀materiality฀of฀the฀amount฀of฀payment฀involved;