Kroger 2012 Annual Report Download - page 41

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39
(11)฀ This฀ amount฀ reflects฀ preferential฀ earnings฀ on฀ nonqualified฀ deferred฀ compensation฀ in฀ the฀ amount฀ of฀
$415.฀ Mr.฀ LaMacchia฀ also฀ participates฀ in฀ the฀ outside฀ director฀ retirement฀ plan,฀ and฀ his฀ pension฀ value฀
decreased by $1,200.
(12)฀ This฀amount฀reflects฀the฀value฀of฀gift฀cards฀in฀the฀amount฀of฀$75,฀a฀gift฀valued฀at฀$199฀(accepted฀by฀each฀
director฀other฀than฀Messrs.฀Lewis฀and฀Shackouls)฀and฀the฀cost฀to฀the฀Company฀per฀director฀for฀providing฀
accidental death and dismemberment insurance coverage for non-employee directors in the amount of
$191. These premiums are paid on an annual basis in February.
Each non-employee director receives an annual retainer of $75,000. The chair of each committee receives
an additional annual retainer of $12,000. Each member of the Audit Committee receives an additional annual
retainer of $10,000. The director designated as the “Lead Director” receives an additional annual retainer of
$20,000.฀On฀July฀12,฀2012,฀each฀non-employee฀director฀received฀5,500฀shares฀of฀restricted฀stock฀and฀an฀award฀
of฀6,500฀nonqualified฀stock฀options.
Non-employee directors first elected prior to July 17, 1997 receive a major medical plan benefit as well
as an unfunded retirement benefit. The retirement benefit equals the average cash compensation for the five
calendar years preceding retirement. Participants who retire from the Board prior to age 70 will be credited
with 50% vesting after five years of service, and 10% for each additional year up to a maximum of 100%.
Benefits for participants who retire prior to age 70 begin at the later of actual retirement or age 65.
We also maintain a deferred compensation plan, in which all non-employee members of the Board are
eligible to participate. Participants may defer up to 100% of their cash compensation. They may elect from
either฀or฀both฀of฀the฀following฀two฀alternative฀methods฀of฀determining฀benefits:
•฀ interest฀accrues฀until฀paid฀out฀at฀the฀rate฀of฀interest฀determined฀prior฀to฀the฀beginning฀of฀the฀deferral฀
year to represent Kroger’s cost of ten-year debt; and
•฀ amounts฀are฀credited฀in฀“phantom”฀stock฀accounts฀and฀the฀amounts฀in฀those฀accounts฀fluctuate฀with฀the฀
price of Kroger common shares.
In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the
participants at the time the deferral elections are made. Participants can elect to have distributions made in a
lump฀sum฀or฀in฀quarterly฀installments,฀and฀may฀make฀comparable฀elections฀for฀designated฀beneficiaries฀who฀
receive benefits in the event that deferred compensation is not completely paid out upon the death of the
participant.
The Board has determined that compensation of non-employee directors must be competitive on an
on-going basis to attract and retain directors who meet the qualifications for service on Kroger’s Board. Non-
employee฀director฀compensation฀will฀be฀reviewed฀from฀time฀to฀time฀as฀the฀Corporate฀Governance฀Committee฀
deems appropriate.
PO T E N T I A L P A Y M E N T S U P O N T E R M I N A T I O N O R C H A N G E I N C O N T R O L
Kroger has no contracts, agreements, plans or arrangements that provide for payments to the named
executive officers in connection with resignation, severance, retirement, termination, or change in control,
except for those available generally to salaried employees. The Kroger Co. Employee Protection Plan, or
KEPP, applies to all management employees and administrative support personnel who are not covered by
a collective bargaining agreement, with at least one year of service, and provides severance benefits when
a participant’s employment is terminated actually or constructively within two years following a change in
control฀of฀Kroger.฀For฀purposes฀of฀KEPP,฀a฀change฀in฀control฀occurs฀if:
•฀ any฀person฀or฀entity฀(excluding฀Kroger’s฀employee฀benefit฀plans)฀acquires฀20%฀or฀more฀of฀the฀voting฀
power of Kroger;
•฀ a฀merger,฀consolidation,฀share฀exchange,฀division,฀or฀other฀reorganization฀or฀transaction฀with฀Kroger฀
results in Kroger’s voting securities existing prior to that event representing less than 60% of the
combined voting power immediately after the event;