Kroger 2010 Annual Report Download - page 37

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Assuming that the highest level of performance conditions are achieved, the value of the performance-
based awards at the grant date is as follows: Mr. Dillon: $1,229,925; Mr. Schlotman: $133,688; Mr. McMullen:
$374,325; Mr. Becker: $160,425; and Mr. Heldman: $160,425. These amounts are not reflected in the table.
(2) These amounts represent the aggregate grant date fair value of awards computed in accordance with
FASB ASC Topic 718.
(3) Non-equity incentive plan compensation for 2010 consists of payments under an annual cash bonus
program. In accordance with the terms of the 2010 performance-based annual cash bonus program, Kroger
paid 53.868% of bonus potentials for the executive officers including the named executive officers.
(4) Amounts are attributable to change in pension value and preferential earnings on nonqualified
deferred compensation. During 2010, pension values increased primarily due to: (i) a decrease in the
discount rate for the plans, as determined by the plan actuary; (ii) increases in final average earnings
used in determining pension benefits; (iii) an additional year of credited service; and (iv) an increase
in present value due to participant aging. Since the benefits are based on final average earnings and
service, the effect of the final average earnings increase is larger for those with longer service. Please
refer to the 2010 Pension Benefits Table for further information regarding credited service.
Under the Company’s deferred compensation plan, deferred compensation earns interest at the rate
representing Kroger’s cost of ten-year debt as determined by Kroger’s CEO prior to the beginning of
each deferral year. For each participant, a separate deferral account is created each year, and the interest
rate established under the plan for that year is applied to that deferral account until the deferred
compensation is paid out. If the interest rate established by the Company for a particular year exceeds
120% of the applicable federal long-term interest rate that corresponds most closely to the Company
rate, the amount by which the Company rate exceeds 120% of the corresponding federal rate is deemed
to be above-market or preferential. In ten of the seventeen years in which at least one named executive
officer deferred compensation, the Company rate set under the plan for that year exceeds 120% of the
corresponding federal rate. For each of the deferral accounts in which the Company rate is deemed
to be above-market, the Company calculates the amount by which the actual annual earnings on the
account exceed what the annual earnings would have been if the account earned interest at 120% of
the corresponding federal rate, and discloses those amounts as preferential earnings.
The amount listed for Mr. Dillon includes change in pension value in the amount of $2,146,081 and
preferential earnings on nonqualified deferred compensation in the amount of $10,544. The amount
listed for Mr. McMullen includes change in pension value in the amount of $909,667 and preferential
earnings on nonqualified deferred compensation in the amount of $43,492. The amount listed for
Mr. Heldman includes change in pension value in the amount of $867,905 and preferential earnings
on nonqualified deferred compensation in the amount of $7,741. The amounts listed for the remaining
named executive officers represent only change in pension value.
(5) The following table provides the items and amounts included in All Other Compensation for 2010:
Life
Insurance
Premium
Accidental
Death and
Dismemberment
Insurance
Premium
Long-Term
Disability
Insurance
Premium
Mr. Dillon $57,894 $133 —
Mr. Schlotman $13,682 $133 —
Mr. McMullen $17,964 $133 $2,778
Mr. Becker $37,750 $133 $3,007
Mr. Heldman $30,866 $133 $2,778