Kroger 2012 Annual Report Download - page 19

17
in executive sessions of independent directors led by an independent Lead Director, to exercise effective
oversight฀of฀the฀actions฀ of฀management,฀led฀ by฀ Mr.฀ Dillon฀as฀ Chairman฀ and฀CEO,฀in฀identifying฀ risks฀and฀
implementing฀effective฀risk฀management฀policies฀and฀controls.
BO A R D L E A D E R S H I P S T R U C T U R E
Our฀Board฀is฀composed฀of฀twelve฀independent฀directors฀and฀two฀management฀directors,฀Mr.฀Dillon,฀the฀
Chairman฀of฀the฀Board฀and฀Chief฀Executive฀Officer,฀and฀Mr.฀McMullen,฀President฀and฀Chief฀Operating฀Officer.฀
In addition, as provided in our Guidelines on Issues of Corporate Governance, the Board has designated
one of the independent directors as Lead Director. The Board has established five standing committees —
audit, compensation, corporate governance, financial policy, and public responsibilities. Each of the Board
committees is composed solely of independent directors, each with a different independent director serving
as฀committee฀chair.฀We฀believe฀that฀the฀mix฀of฀experienced฀independent฀and฀management฀directors฀that฀make฀
up our Board, along with the independent role of our Lead Director and our independent Board committees,
benefits Kroger and its shareholders.
The Board believes that it is beneficial to Kroger and its shareholders to designate one of the directors
as a Lead Director. The Lead Director serves a variety of roles, including reviewing and approving Board
agendas, meeting materials and schedules to confirm the appropriate topics are reviewed and sufficient
time is allocated to each; serving as liaison between the Chairman of the Board, management, and the non-
management directors; presiding at the executive sessions of independent directors and at all other meetings
of the Board of Directors at which the Chairman of the Board is not present; calling an executive session of
independent directors at any time and serving as the Board’s representative for any consultation and direct
communication,฀ following฀ a฀ request,฀ with฀ major฀ shareholders.฀ Bobby฀ Shackouls,฀ an฀ independent฀ director฀
and฀the฀chair฀of฀the฀Corporate฀Governance฀Committee,฀is฀currently฀our฀Lead฀Director.฀Mr.฀Shackouls฀is฀an฀
effective Lead Director for Kroger due to, among other things, his independence, his deep strategic and
operational understanding of Kroger obtained while serving as a Kroger director, his corporate governance
knowledge฀acquired฀during฀his฀tenure฀as฀a฀member฀of฀our฀Corporate฀Governance฀Committee,฀his฀previous฀
experience on other boards, and his prior experience as a CEO of a Fortune 500 company.
With respect to the roles of Chairman and CEO, the Guidelines provide that the Board believes that it is
in the best interests of Kroger and its shareholders for one person to serve as Chairman and CEO. The Board
recognizes that there may be circumstances in which it is in the best interests of Kroger and its shareholders
for the roles to be separated, and the Board exercises its discretion as it deems appropriate in light of prevailing
circumstances. The Board believes that the combination or separation of these positions should continue
to be considered as part of the succession planning process, as was the case in 2003 when the roles were
separated. Since 2004, the roles have been combined.
Our Board and each of its committees conduct an annual evaluation to determine whether they are
functioning effectively. As part of this annual self-evaluation, the Board assesses whether the current leadership
structure continues to be appropriate for Kroger and its shareholders. Our Guidelines provide the flexibility
for฀our฀Board฀to฀modify฀our฀leadership฀structure฀in฀the฀future฀as฀appropriate.฀We฀believe฀that฀Kroger,฀like฀
many U.S. companies, has been well-served by this flexible leadership structure.