Kroger 2013 Annual Report Download - page 20
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BO A R D O V E R S I G H T O F E N T E R P R I S E R I S K
While risk management is primarily the responsibility of Kroger’s management team, the Board of
Directorsisresponsiblefortheoverallsupervisionofourriskmanagementactivities.TheBoard’soversightof
thematerialrisksfacedbyKrogeroccursatboththefullBoardlevelandatthecommitteelevel.
TheBoard’sAuditCommitteehasoversightresponsibilitynotonlyforfinancialreportingofKroger’s
major financial exposures and the steps management has taken to monitor and control those exposures,
butalsofortheeffectivenessofmanagement’sprocessesthatmonitorandmanagekeybusinessrisksfacing
Kroger, aswellasthemajorareas ofriskexposure andmanagement’seffortstomonitorand control that
exposure.TheAuditCommitteealsodiscusseswithmanagementitspolicieswithrespecttoriskassessment
andriskmanagement.
Management, including Kroger’s Chief Ethics and Compliance Officer, provides regular updates
throughouttheyeartotherespectivecommitteesregardingthemanagementoftheriskstheyoversee,and
eachofthesecommitteesreportsonrisktothefullBoardateachregularmeetingoftheBoard.
Inadditiontothereportsfromthecommittees,theBoardreceivespresentationsthroughouttheyearfrom
variousdepartmentandbusinessunitleadersthatincludediscussionofsignificantrisksasnecessary.Ateach
Boardmeeting,theChairmanandtheCEOaddressmattersofparticularimportanceorconcern,includingany
significantareasofriskthatrequireBoardattention.Additionally,throughdedicatedsessionsfocusingentirely
on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term strategies, including
consideration of significant risks facing Kroger and their potential impact. The independent directors, in
executivesessionsledbytheLeadDirector,addressmattersofparticularconcern,includingsignificantareas
ofrisk,thatwarrantfurtherdiscussionorconsiderationoutsidethepresenceofKrogeremployees.
We believe that our approach to risk oversight, as described above, optimizes our ability to assess
inter-relationships amongthevarious risks,makeinformedcost-benefit decisions,and approach emerging
risks in a proactive manner for Kroger. We also believe that our risk structure complements our current
Boardleadershipstructure,asitallowsourindependentdirectors,throughthefivefullyindependentBoard
committees, and in executive sessions of independent directors led by an independent Lead Director, to
exerciseeffectiveoversightoftheactionsofmanagement,ledbyMr.McMullenasCEO,inidentifyingrisks
andimplementingeffectiveriskmanagementpoliciesandcontrols.
BO A R D L E A D E R S H I P S T R U C T U R E A N D L E A D D I R E C T O R
OurBoardiscomposedofelevenindependentnon-employeedirectors,andtwomanagementdirectors,
Mr.Dillon,theChairmanoftheBoardandourformerChiefExecutiveOfficer,andMr.McMullen,ourChief
Executive Officer. In addition, as provided in our Guidelines on Issues of Corporate Governance,theBoard
hasdesignatedoneoftheindependentdirectorsasLeadDirector.TheBoardhasestablishedfivestanding
committees—audit,compensation,corporategovernance,financialpolicy,andpublicresponsibilities.Each
Boardcommitteeiscomposedsolelyofindependentdirectors,eachwithadifferentindependentdirector
servingascommitteechair.Themixofexperiencedindependentandmanagementdirectorsthatmakeup
ourBoard,alongwiththeindependentroleofourLeadDirectorandourindependentBoardcommittees,
benefitsKrogeranditsshareholders.
The Board designatesoneoftheindependentdirectorsasaLeadDirector. TheLeadDirectorserves
a variety of roles, including reviewing and approving Board agendas, meeting materials and schedules to
confirmtheappropriatetopicsarereviewedandsufficienttimeisallocatedtoeach;servingasliaisonbetween
the Chairman of the Board, management, and the non-management directors; presiding at the executive
sessionsofindependentdirectorsandatallothermeetingsoftheBoardofDirectorsatwhichtheChairman
oftheBoardisnotpresent;callinganexecutivesessionofindependentdirectorsatanytimeandservingas
theBoard’srepresentativeforanyconsultationanddirectcommunication,followingarequest,withmajor
shareholders.UnlessotherwisedeterminedbytheBoard,thechairoftheCorporateGovernanceCommittee
is designatedas theLeadDirector. Robert Beyer, anindependentdirector andthe chairofthe Corporate
GovernanceCommittee,iscurrentlyourLeadDirector.Mr. BeyerisaneffectiveLeadDirectorforKroger
due to, among other things, his independence, his deep strategic and operational understanding of Kroger
obtained while servingasa Kroger director,hisinsightintocorporategovernanceandhisexperienceon
otherboards.