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24
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.
Salaries
2011 2012 2013
David฀B.฀Dillon........................................ $1,290,000 $1,330,000 $1,370,000
W.฀Rodney฀McMullen* .................................. $ 910,000 $ 939,600 $968,600
J.฀Michael฀Schlotman ................................... $650,000 $671,100 $704,655
Kathleen฀S.฀Barclay** ................................... — $ 677,300 $700,000
Paul฀W.฀Heldman ...................................... $739,000 $763,000 $786,000
Michael฀L.฀Ellis*** ...................................... — — $ 527,360
*฀ Mr.฀McMullen’s฀salary฀increased฀to฀$1,100,000฀effective฀with฀his฀promotion฀to฀CEO฀on฀January฀1,฀2014.
**฀฀ Ms.฀Barclay฀became฀a฀named฀executive฀officer฀in฀2012.฀
***฀฀ Mr.฀Ellis฀became฀a฀named฀executive฀officer฀in฀2013.฀His฀salary฀increased฀to฀$775,000฀effective฀with฀his฀
promotion฀to฀President฀and฀COO฀on฀January฀1,฀2014.
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฀the฀performance฀of฀Kroger฀(in฀the฀case฀of฀the฀named฀
executive฀officers)฀or฀business฀unit฀(in฀the฀case฀of฀employees฀in฀our฀business฀units).฀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฀but฀may฀not฀exceed฀
200%฀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฀
officer’s total cash compensation is dependent upon Kroger’s performance. Finally, the Committee considers
the฀reports฀of฀its฀compensation฀consultants฀to฀assess฀the฀bonus฀potential฀of฀the฀named฀executive฀officers฀in฀
light฀of฀total฀compensation฀paid฀to฀comparable฀executive฀positions฀in฀the฀industry.