Kroger 2010 Annual Report Download - page 40

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of fiscal year 2009. Bonuses are determined upon completion of the performance period as of fiscal
year ending 2012. The “Target” amount is also the “Maximum” amount payable under this program, as
participants can earn no more than 100% of their bonus potentials.
(3) This amount represents the number of restricted shares awarded under one of the Company’s long-
term incentive plans.
(4) This amount represents the number of stock options granted under one of the Company’s long-term
incentive plans. Options are granted at fair market value of Kroger common shares on the date of the
grant. Fair market value is defined as the closing price of Kroger shares on the date of the grant.
(5) Performance units were granted under one of the Company’s long-term incentive plans. The “Maximum”
amount represents the maximum number of common shares that can be earned by the named executive
officer under the grant. Because the target amount of common shares is not determinable, the amount
listed under “Target” reflects a representative amount based on the previous year’s performance. This
performance unit award is subject to performance conditions; accordingly the dollar amount listed
in the grant date fair value column is the value at the grant date based on the probable outcome of
these conditions. This amount is consistent with the estimate of aggregate compensation cost to be
recognized by the Company over the three-year service period determined as of the grant date under
FASB ASC Topic 718, excluding the effect of estimated forfeitures.
The Compensation Committee of the Board of Directors, and the independent members of the Board in
the case of the CEO, established bonus potentials, shown in this table as “target” amounts, for the performance-
based annual and long-term cash bonus awards for the named executive officers. Amounts were payable
to the extent that performance met specific objectives established at the beginning of the performance period.
As described in the Compensation Discussion and Analysis, actual earnings under the annual cash bonus can
exceed the target amounts if performance exceeds the thresholds. The Compensation Committee of the Board
of Directors, and the independent members of the Board in the case of the CEO, also determined the number
of performance units to be awarded to each named executive officer, under which common shares are
earned to the extent performance meets objectives established at the beginning of the performance period.
The performance units are more particularly described in the Compensation Discussion and Analysis.
Restrictions on restricted stock awards made to the named executive officers normally lapse, as long as
the officer is then in our employ, in equal amounts on each of the five anniversaries of the date the award is
made, except that: restrictions on 30,000 shares awarded to Mr. Becker in 2008 would have lapsed in 2011,
and 50,000 shares awarded to Mr. Becker in 2010 would have lapsed as follows: 16,667 on 6/24/2011 and
33,333 on 6/24/2012. By the express terms of the restricted stock agreements, all of Mr. Becker’s restrictions
lapsed on his death on February 16, 2011. 70,000 shares awarded to Mr. McMullen in 2009 vest as follows:
15,000 shares on 6/25/2012, 20,000 shares on 6/25/2013, and 35,000 shares on 6/25/2014; 8,000 shares
awarded to Mr. Heldman in 2006 vest on 5/4/2011; and 30,000 shares awarded to Mr. Heldman in 2008 vest
as follows: 6,000 shares on 6/26/2011, 12,000 shares on 6/26/2012, and 12,000 shares on 6/26/2013. Any
dividends declared on Kroger common shares are payable on restricted stock. Nonqualified stock options
granted to the named executive officers normally vest in equal amounts on each of the five anniversaries
of the date of grant. Those options were granted at the fair market value of Kroger common shares on the
date of the grant. By the express terms of the stock option agreement, all of Mr. Becker’s options vested on
his death on February 16, 2011. Options are granted only on one of the four dates of regularly scheduled
Compensation Committee meetings conducted shortly following Kroger’s public release of its quarterly
earnings results.