Kroger 2010 Annual Report Download - page 77

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16. Cash Bonuses
Two types of bonuses can be awarded under the Cash Bonus Program; an annual bonus award for
each fiscal year, and a long-term bonus award for measurement periods in excess of one year. Bonus
payments are based on the Company’s performance measured against Performance Goals established
by the Committee. The Committee establishes a bonus “potential” for each bonus payable under the
Cash Bonus Program for each participant, based on the participant’s level within the Company, and
actual payouts can exceed that amount when the Company’s performance exceeds the pre-established
thresholds. Initially the Performance Goals for annual bonuses will include the following components:
(i) EBITDA; (ii) identical sales; (iii) achievement of strategic initiatives; and (iv) achievement of
supermarket fuel center goals for EBITDA, gallons sold, and number of fuel centers. Initially the
Performance Goals for long-term bonuses will include the following components: (i) performance in
four key categories in the Company’s strategic plan, (ii) reduction in operating costs as a percentage
of sales, and (iii) performance in categories designed to measure associate engagement.
17. Effectiveness of the Plan
The Plan and any amendments requiring shareholder approval pursuant to Article 14 are subject
to approval by vote of the shareholders of the Company within 12 months after their adoption by
the Board. Subject to that approval, the Plan is effective upon approval by the shareholders and any
amendments are effective on the date on which they are adopted by the Board. Options, Rights,
Performance Units, Restricted Stock and Incentive Shares may be granted or awarded prior to
shareholder approval of the Plan or amendments, but each such Option, Right, Performance Unit,
Restricted Stock or Incentive Share grant or award will be subject to the approval of the Plan or
amendments by the shareholders. The date on which any Option, Right, Performance Unit, Restricted
Stock or Incentive Shares granted or awarded prior to shareholder approval of the Plan or amendment
is granted or awarded will be the Date of Grant for all purposes as if the Option, Right, Performance
Unit, Restricted Stock or Incentive Shares had not been subject to approval. No Option, Right or
Performance Unit may be exercised prior to such shareholder approval, and any Restricted Stock or
Incentive Shares awarded will be forfeited if such shareholder approval is not obtained.
18. Term of the Plan
Unless sooner terminated by the Board pursuant to Article 14, the Plan will terminate on the date
ten years after its adoption by the Board, and no Options, Rights, Performance Units, Restricted Stock
or Incentive Shares may be granted or awarded after termination. The termination will not affect the
validity of any Option, Right, Performance Unit, Restricted Stock or Incentive Shares outstanding on
the date of termination.
19. Indemnification of Committee
In addition to such other rights of indemnification as they may have as Directors or as members
of the Committee, the members of the Committee will be indemnified by the Company against the
reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they
or any of them may be a party by reason of any action taken or failure to act under or in connection
with the Plan or any grant or award hereunder, and against all amounts reasonably paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such action, suit or proceeding,
if such members acted in good faith and in a manner that they believed to be in, and not opposed to,
the best interests of the Company.