Kroger 2010 Annual Report Download - page 48

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Each non-employee director receives an annual retainer of $75,000. The chair of each committee receives
an additional annual retainer of $12,000. Each member of the Audit Committee receives an additional annual
retainer of $10,000. The director designated as the “Lead Director” receives an additional annual retainer of
$20,000. Each non-employee director also has received annually, at the regularly scheduled Board meeting
held in December, restricted stock and nonqualified stock option awards. On December 9, 2010, each non-
employee director received 3,250 shares of restricted stock and an award of 6,500 nonqualified stock options.
Beginning in 2011, these awards will be made at the regularly scheduled Board meeting held in June, as this
is the date for general awards to be made to Kroger employees.
Non-employee directors first elected prior to July 17, 1997 receive a major medical plan benefit as well
as an unfunded retirement benefit. The retirement benefit equals the average cash compensation for the
five calendar years preceding retirement. Participants who retire from the Board prior to age 70 will be
credited with 50% vesting after five years of service, and 10% for each additional year up to a maximum of
100%. Benefits for participants who retire prior to age 70 begin at the later of actual retirement or age 65.
We also maintain a deferred compensation plan, in which all non-employee members of the Board are
eligible to participate. Participants may defer up to 100% of their cash compensation. They may elect from
either or both of the following two alternative methods of determining benefits:
•฀ interest฀accrues฀until฀paid฀out฀at฀the฀rate฀of฀interest฀determined฀prior฀to฀the฀beginning฀of฀the฀deferral฀
year to represent Kroger’s cost of ten-year debt; and
•฀ amounts฀are฀credited฀in฀“phantom”฀stock฀accounts฀and฀the฀amounts฀in฀those฀accounts฀fluctuate฀with฀
the price of Kroger common shares.
In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the
participants at the time the deferral elections are made. Participants can elect to have distributions made in
a lump sum or in quarterly installments, and may make comparable elections for designated beneficiaries
who receive benefits in the event that deferred compensation is not completely paid out upon the death of
the participant.
The Board has determined that compensation of non-employee directors must be competitive on an
on-going basis to attract and retain directors who meet the qualifications for service on Kroger’s Board.
Non-employee director compensation will be reviewed from time to time as the Corporate Governance
Committee deems appropriate.
PO T E N T I A L PA Y M E N T S U P O N TE R M I N A T I O N O R CH A N G E I N CO N T R O L
Kroger has no contracts, agreements, plans or arrangements that provide for payments to the named
executive officers in connection with resignation, severance, retirement, termination, or change in control,
except for those available generally to salaried employees. The Kroger Co. Employee Protection Plan, or
KEPP, applies to all management employees and administrative support personnel who are not covered by
a collective bargaining agreement, with at least one year of service, and provides severance benefits when
a participant’s employment is terminated actually or constructively within two years following a change in
control of Kroger. For purposes of KEPP, a change in control occurs if:
•฀ any฀person฀or฀entity฀(excluding฀Kroger’s฀employee฀benefit฀plans)฀acquires฀20%฀or฀more฀of฀the฀voting฀
power of Kroger;