Kroger 2012 Annual Report Download - page 24

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22
SA L A R Y
We provide our named executive officers and other employees a fixed amount of cash compensation –
salary฀–฀for฀their฀work.฀Salaries฀for฀named฀executive฀officers฀(with฀the฀exception฀of฀the฀CEO)฀are฀established฀
each year by the Committee. The CEO’s salary is established by the independent directors. Salaries for the
named executive officers were reviewed in June.
The฀amount฀of฀each฀executive’s฀salary฀is฀influenced฀by฀numerous฀factors฀including:
•฀ An฀assessment฀of฀individual฀contribution฀in฀the฀judgment฀of฀the฀CEO฀and฀the฀Committee฀(or,฀in฀the฀case฀
of฀the฀CEO,฀of฀the฀Committee฀and฀the฀rest฀of฀the฀independent฀directors);
•฀ Benchmarking฀with฀comparable฀positions฀at฀peer฀group฀companies;
•฀ Tenure;฀and
•฀ Relationship฀with฀the฀salaries฀of฀other฀executives฀at฀Kroger.
The assessment of individual contribution is based on a subjective determination, without the use of
performance฀targets,฀in฀the฀following฀areas:
•฀ Leadership;
•฀ Contribution฀to฀the฀officer฀group;
•฀ Achievement฀of฀established฀objectives,฀to฀the฀extent฀applicable;
•฀ Decision-making฀abilities;
•฀ Performance฀of฀the฀areas฀or฀groups฀directly฀reporting฀to฀the฀officer;
•฀ Increased฀responsibilities;
•฀ Strategic฀thinking;฀and
•฀ Furtherance฀of฀Kroger’s฀core฀values.
The amounts shown below reflect the salaries of the named executive officers in effect following the
annual review of their compensation in June of each year.
Salaries
2010 2011 2012
David B. Dillon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,260,000 $1,290,000 $1,330,000
J.฀Michael฀Schlotman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 610,000 $ 650,000 $ 671,100
W.฀Rodney฀McMullen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 890,000 $ 910,000 $ 939,600
Paul W. Heldman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 724,000 $ 739,000 $ 763,000
Kathleen S. Barclay* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — $ 677,300
*฀ Ms.฀Barclay฀became฀a฀named฀executive฀officer฀in฀2012.
PE R F O R M A N C E - B A S E D A N N U A L C A S H B O N U S
A large percentage of our employees at all levels, including the named executive officers, are eligible
to receive a performance-based annual cash bonus based on Kroger or business unit performance. The
Committee establishes bonus potentials for each executive officer, other than the CEO whose bonus potential
is established by the independent directors. Actual payouts, which can exceed 100% of the potential amounts,
represent the extent to which performance meets or exceeds the thresholds established by the Committee.
The฀Committee฀considers฀several฀factors฀in฀making฀its฀determination฀or฀recommendation฀as฀to฀bonus฀
potentials. First, the individual’s level within the organization is a factor in that the Committee believes
that more senior executives should have a substantial part of their compensation dependent upon Kroger’s
performance. Second, the individual’s salary is a factor so that a substantial portion of a named executive