Kroger 2012 Annual Report Download - page 29

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27
Amounts of equity awards issued and outstanding for the named executive officers are set forth in the
tables that follow this discussion and analysis.
RE T I R E M E N T A N D O T H E R B E N E F I T S
Kroger maintains a defined benefit and several defined contribution retirement plans for its employees.
The named executive officers participate in one or more of these plans, as well as one or more excess plans
designed฀to฀make฀up฀the฀shortfall฀in฀retirement฀benefits฀created฀by฀limitations฀under฀the฀Internal฀Revenue฀
Code on benefits to highly compensated individuals under qualified plans. Additional details regarding
retirement benefits available to the named executive officers can be found in the 2012 Pension Benefits table
and the accompanying narrative description that follows this discussion and analysis.
Kroger also maintains an executive deferred compensation plan in which some of the named executive
officers participate. This plan is a nonqualified plan under which participants can elect to defer up to 100%
of their cash compensation each year. Compensation deferred bears interest, until paid out, at the rate
representing Kroger’s cost of ten-year debt in the year the rate is set, as determined by Kroger’s CEO, and
reviewed with the Committee, prior to the beginning of each deferral year. In 2012, that rate was 4.23%.
Deferred amounts are paid out only in cash, in accordance with a deferral option selected by the participant
at the time the deferral election is made.
We adopted The Kroger Co. Employee Protection Plan, or KEPP, during fiscal year 1988. That plan was
amended and restated in 2007. All of our management employees and administrative support personnel whose
employment is not covered by a collective bargaining agreement, with at least one year of service, are covered.
KEPP provides for severance benefits and extended Kroger-paid health care, as well as the continuation of
other benefits as described in the plan, when an employee is actually or constructively terminated without
cause฀ within฀ two฀ years฀ following฀ a฀ change฀ in฀ control฀ of฀ Kroger฀ (as฀ defined฀ in฀ the฀ plan).฀ Participants฀ are฀
entitled to severance pay of up to 24 months’ salary and bonus. The actual amount is dependent upon pay
level and years of service. KEPP can be amended or terminated by the Board at any time prior to a change in
control.
Stock฀option,฀restricted฀stock฀and฀performance฀unit฀agreements฀with฀participants฀in฀Kroger’s฀long-term฀
incentive plans provide that those awards “vest,” with options becoming immediately exercisable, restrictions
on฀restricted฀stock฀lapsing,฀and฀common฀shares฀equal฀to฀50%฀of฀the฀performance฀units฀being฀awarded,฀upon฀
a change in control as described in the agreements.
None of the named executive officers is party to an employment agreement.
PE R Q U I S I T E S
The Committee does not believe that it is necessary for the attraction or retention of management talent
to provide the named executive officers a substantial amount of compensation in the form of perquisites. In
2012,฀the฀only฀perquisites฀available฀to฀our฀named฀executive฀officers฀were:
•฀ premiums฀paid฀on฀life฀insurance฀policies,
•฀ premiums฀paid฀on฀accidental฀death฀and฀dismemberment฀insurance;
•฀ premiums฀paid฀on฀long-term฀disability฀insurance฀policies;฀and
•฀ a฀nominal฀gift.
The life insurance benefit was offered beginning several years ago to replace a split-dollar life insurance
benefit that was substantially more costly to Kroger. Currently, 136 active executives, including the named
executive officers, and 73 retired executives, receive this benefit.
In addition, the named executive officers are entitled to the following benefit that does not constitute a
perquisite฀as฀defined฀by฀SEC฀rules:฀personal฀use฀of฀Kroger฀aircraft,฀which฀officers฀may฀lease฀from฀Kroger฀and฀
pay฀the฀average฀variable฀cost฀of฀operating฀the฀aircraft,฀making฀officers฀more฀available฀and฀allowing฀for฀a฀more฀
efficient use of their time.
The total amount of perquisites furnished to the named executive officers is shown in the Summary
Compensation Table and described in more detail in footnote 6 to that table.