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25
PE R F O R M A N C E B A S E D L O N G - T E R M C O M P E N S A T I O N
The long-term incentive plan adopted in 2010 provides the model for the new combined plan structure.
Subsequent฀plans฀have฀been฀adopted฀in฀2011,฀2012฀and฀2013.฀Each฀of฀these฀plans฀has฀the฀following฀characteristics:
•฀ Performance฀is฀measured฀over฀a฀three฀year฀period.
•฀ Between฀130฀and฀140฀executives,฀including฀the฀named฀executive฀officers,฀participate฀in฀each฀plan.
•฀ Awards฀include฀both฀cash฀and฀performance฀units.
Ø The cash bonus base equals the executive’s salary at the end of the fiscal year preceding the plan
adoption date.
Ø A fixed number of performance units is awarded to each participant. The awards are paid out
in Kroger common shares, along with a cash amount equal to the dividends paid during the
performance period on the number of issued common shares.
•฀ Compensation฀under฀the฀plans฀is฀earned฀based฀on฀our฀performance฀against฀metrics฀established฀by฀the฀
Committee at the beginning of the performance period.
•฀ The฀payout฀percentage,฀based฀on฀the฀extent฀to฀which฀the฀performance฀metrics฀are฀achieved,฀is฀applied฀
to both the bonus base and the number of performance units awarded.
•฀ Actual฀ payouts฀ cannot฀ exceed฀ 100%฀ of฀ the฀ cash฀ bonus฀ base฀ or฀ 100%฀ of฀ the฀ number฀ of฀ performance฀
units awarded.
•฀ In฀no฀event฀can฀a฀cash฀bonus฀award฀exceed฀$5,000,000.
The฀following฀table฀summarizes฀each฀of฀the฀long-term฀performance฀based฀plans฀for฀the฀years฀shown:
2010 Plan 2011 Plan 2012 Plan 2013 Plan
Performance Period 2010 to 2012 2011 to 2013 2012 to 2014 2013 to 2015
Payout Date March฀2013 March฀2014 March฀2015 March฀2016
Cash Bonus Base Salary at end of
fiscal year 2009
Salary at end of
fiscal year 2010
Salary at end of
fiscal year 2011
Salary at end of
fiscal year 2012
Performance Metrics
Strategic Plan: 1% payout per unit
improvement
2% payout per unit
improvement
2% payout per unit
improvement
2% payout per unit
improvement
Reduction in
Operating Cost as
a Percentage of
Sales, Excluding
Fuel:
0.25% payout per
0.01% reduction in
operating costs
Baseline:฀27.59%
0.50% payout per
0.01% reduction in
operating costs
Baseline:฀27.60%
0.50% payout per
0.01% reduction in
operating costs
Baseline:฀27.09%
0.50% payout per
0.01% reduction in
operating costs
Baseline:฀26.69%
Improvement
in Associate
Engagement:
2% payout per unit
improvement
2% payout per unit
improvement
4% payout per unit
improvement
4% payout per unit
improvement
Return on
Invested Capital:
N/A N/A N/A 1% payout per 0.01%
improvement in ROIC
Baseline:฀13.41%