Kroger 2010 Annual Report Download - page 56

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AP P R O V A L O F T H E 2011 LO N G -TE R M IN C E N T I V E A N D CA S H BO N U S PL A N
(IT E M NO. 2)
The Board of Directors has adopted, subject to shareholder approval, The Kroger Co. 2011 Long-Term
Incentive and Cash Bonus Plan (“Plan”) for which a maximum of 25,000,000 shares were reserved. The
purpose of the Plan is to assist in attracting and retaining employees and directors of outstanding ability
and to align their interests with those of the shareholders of Kroger. If approved, the Plan will be effective
as of June 23, 2011.
DE S C R I P T I O N O F T H E PL A N
General. The Plan consists of two separate equity-based programs; the Insider Program and the Non-
Insider Program. Officers and directors of Kroger subject to Section 16(a) of the Securities Exchange Act
of 1934 (the “Exchange Act”) are eligible for grants or awards under the Insider Program while all other
employees of Kroger are eligible for grants or awards under the Non-Insider Program. As of the date of
this proxy statement, 27 employees and directors are eligible to participate in the Insider Program and
the remaining approximately 338,000 employees of Kroger are eligible to participate in the Non-Insider
Program. In addition, the Plan provides for a performance-based Cash Bonus Program in which all 338,000
employees are eligible to participate.
Administration. The Insider Program will be administered by a committee of the Board of Directors
that meets the standards of Rule 16b-3(d)(1) under the Exchange Act and initially will be the Compensation
Committee of the Board of Directors, made up exclusively of independent directors. The Non-Insider
Program will be administered by a committee of three officers appointed by the Chief Executive Officer,
the members of which are ineligible to receive grants or awards under the Non-Insider Program. The
administering committee in each case is referred to as the “Committee.” The Cash Bonus Program will be
administered by the Committee under the Insider Program. The Plan is drafted to maintain the maximum
amount of flexibility with the Committee determining the ultimate provisions of each grant or award.
The Committee is authorized to award or grant nonstatutory stock options, stock appreciation rights,
performance units, restricted stock and incentive shares to participants under the Insider Program and the
Non-Insider Program, and to award performance-based cash bonuses under the Cash Bonus Program. The
Committee will determine the types and amounts of awards or grants, the recipients of awards or grants,
vesting schedules, restrictions, performance criteria, and other provisions of the grants or awards. All of
these provisions will be set forth in a written instrument.
In addition to other rights of indemnification they may have as directors or employees of Kroger,
members of the Committee will be indemnified by Kroger for reasonable expenses incurred in connection
with defense of any action brought against them by reason of action taken or failure to act under or in
connection with the Plan or any grant or award thereunder, if the members acted in good faith and in a
manner that they believed to be in the best interest of Kroger.
The Board of Directors may terminate or amend the Plan at any time without shareholder approval,
except that it may not amend the Plan without shareholder approval if required by applicable law, regulations,
or rules of the principal exchange or interdealer quotation system on which Kroger’s common shares are
listed or quoted. Unless earlier terminated by the Board of Directors, the Plan will terminate on March 10,
2021. Termination of the Plan will have no effect on the validity of any options, stock appreciation rights,
performance units, restricted stock or incentive shares outstanding on the date of termination.
Unless otherwise provided in the agreement, awards and grants will not be transferable other than by
will or the laws of descent and distribution.