Kroger 2012 Annual Report Download - page 18

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16
AT T E N D A N C E
The Board of Directors held seven meetings in 2012. During 2012, all incumbent directors attended at
least 75% of the aggregate number of meetings of the Board and committees on which that director served.
Members฀of฀the฀Board฀are฀expected฀to฀use฀their฀best฀efforts฀to฀attend฀all฀annual฀meetings฀of฀shareholders.฀All฀
fourteen members of the Board attended last year’s annual meeting.
CO M P E N S A T I O N C O N S U L T A N T S
The฀Compensation฀Committee฀directly฀engages฀a฀compensation฀consultant฀from฀Mercer฀Human฀Resource฀
Consulting to advise the Committee in the design of compensation for executive officers. In 2012, Kroger paid
that฀consultant฀$135,573฀for฀work฀performed฀for฀the฀Committee.฀Kroger,฀on฀management’s฀recommendation,฀
retained฀the฀parent฀and฀affiliated฀companies฀of฀Mercer฀Human฀Resource฀Consulting฀to฀provide฀other฀services฀
for Kroger in 2012, for which Kroger paid $2,541,660. These other services primarily related to insurance
claims฀(for฀which฀Kroger฀was฀reimbursed฀by฀insurance฀carriers฀as฀claims฀were฀adjusted),฀insurance฀brokerage฀
and bonding commissions, and pension consulting. Kroger also made payments to affiliated companies for
insurance premiums that were collected by the affiliated companies on behalf of insurance carriers, but these
amounts are not included in the totals referenced above, as the amounts were paid over to insurance carriers
for services provided by those carriers. Although neither the Committee nor the Board expressly approved the
other฀services,฀after฀taking฀into฀consideration฀the฀NYSE’s฀independence฀standards,฀the฀Committee฀determined฀
that฀the฀ consultant฀is฀ independent฀ because฀(a)฀he฀was฀first฀ engaged฀ by฀ the฀ Committee฀before฀ he฀ became฀
associated฀ with฀ Mercer;฀ (b)฀ he฀ works฀ exclusively฀ for฀ the฀ Committee฀ and฀ not฀ for฀ our฀ management;฀ (c)฀ he฀
does฀not฀benefit฀from฀the฀other฀work฀that฀Mercer’s฀parent฀and฀affiliated฀companies฀perform฀for฀Kroger;฀and฀
(d)฀neither฀the฀consultant฀nor฀the฀consultant’s฀team฀perform฀any฀other฀services฀on฀behalf฀of฀Kroger.
BO A R D O V E R S I G H T O F E N T E R P R I S E R I S K
While฀ risk฀ management฀ is฀ primarily฀ the฀ responsibility฀ of฀ Kroger’s฀ management฀ team,฀ the฀ Board฀ of฀
Directors฀is฀responsible฀for฀the฀overall฀supervision฀of฀our฀risk฀management฀activities.฀The฀Board’s฀oversight฀of฀
the฀material฀risks฀faced฀by฀Kroger฀occurs฀at฀both฀the฀full฀Board฀level฀and฀at฀the฀committee฀level.
The Board’s Audit Committee has oversight responsibility not only for financial reporting of Kroger’s
major฀ financial฀ exposures฀ and฀ the฀ steps฀ management฀ has฀ taken฀ to฀ monitor฀ and฀ control฀ those฀ exposures,฀
but฀also฀for฀the฀effectiveness฀of฀management’s฀processes฀that฀monitor฀and฀manage฀key฀business฀risks฀facing฀
Kroger,฀as฀well฀as฀ the฀ major฀ areas฀of฀risk฀ exposure฀ and฀ management’s฀efforts฀to฀monitor฀and฀control฀that฀
exposure.฀The฀Audit฀Committee฀also฀discusses฀with฀management฀its฀policies฀with฀respect฀to฀risk฀assessment฀
and฀risk฀management.
Management,฀ including฀ Kroger’s฀ Chief฀ Ethics฀ and฀ Compliance฀ Officer,฀ provides฀ regular฀ updates฀
throughout฀the฀year฀to฀the฀respective฀committees฀regarding฀the฀management฀of฀the฀risks฀they฀oversee,฀and฀
each฀of฀these฀committees฀reports฀on฀risk฀to฀the฀full฀Board฀at฀each฀regular฀meeting฀of฀the฀Board.
In addition to the reports from the committees, the Board receives presentations throughout the year
from฀various฀department฀and฀business฀unit฀leaders฀that฀include฀discussion฀of฀significant฀risks฀as฀necessary.฀At฀
each Board meeting, the Chairman and CEO addresses matters of particular importance or concern, including
any฀significant฀areas฀of฀risk฀that฀require฀Board฀attention.฀Additionally,฀through฀dedicated฀sessions฀focusing฀
entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term strategies, including
consideration฀ of฀ significant฀ risks฀ facing฀ Kroger฀ and฀ their฀ potential฀ impact.฀ The฀ independent฀ directors,฀ in฀
executive sessions led by the Lead Director, address matters of particular concern, including significant areas
of฀risk,฀that฀warrant฀further฀discussion฀or฀consideration฀outside฀the฀presence฀of฀Kroger฀employees.
We฀believe฀that฀our฀approach฀to฀risk฀oversight,฀as฀described฀above,฀optimizes฀our฀ability฀to฀assess฀inter-
relationships฀among฀the฀various฀risks,฀make฀informed฀cost-benefit฀decisions,฀and฀approach฀emerging฀risks฀in฀a฀
proactive฀manner฀for฀Kroger.฀We฀also฀believe฀that฀our฀risk฀structure฀complements฀our฀current฀Board฀leadership฀
structure, as it allows our independent directors, through the five fully independent Board committees, and