Kroger 2013 Annual Report Download - page 27

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25
The฀annual฀cash฀bonus฀potential฀in฀effect฀following฀the฀annual฀review฀of฀compensation฀in฀June฀for฀each฀
named฀executive฀officer฀is฀shown฀below.฀Actual฀bonus฀payouts฀are฀prorated฀to฀reflect฀changes,฀if฀any,฀to฀bonus฀
potentials during the year.
Annual Bonus Potential
2011 2012 2013
David฀B.฀Dillon........................................ $1,500,000 $1,500,000 $1,500,000
W.฀Rodney฀McMullen* .................................. $1,000,000 $1,000,000 $1,000,000
J.฀Michael฀Schlotman ................................... $525,000 $550,000 $550,000
Kathleen฀S.฀Barclay** ................................... — $ 550,000 $550,000
Paul฀W.฀Heldman ...................................... $550,000 $550,000 $550,000
Michael฀L.฀Ellis*** ...................................... — $ — $ 375,000
*฀฀ Mr.฀McMullen’s฀annual฀bonus฀potential฀increased฀to฀$1,500,000฀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฀annual฀bonus฀potential฀increased฀to฀$750,000฀
effective฀with฀his฀promotion฀to฀President฀and฀COO฀on฀January฀1,฀2014.
Over time the Committee and our independent directors have placed an increased emphasis on our
strategic฀ plan฀ by฀ making฀ the฀ target฀ more฀ difficult฀ to฀ achieve.฀ The฀ bonus฀ plan฀ allows฀ for฀ minimal฀ bonus฀
to฀be฀ earned฀at฀relatively฀ low฀levels฀ of฀ performance฀ to฀ provide฀ incentive฀ for฀ achieving฀even฀ higher฀ levels฀
of performance.
The฀ amount฀ of฀ bonus฀ that฀ the฀ named฀ executive฀ officers฀ earn฀ each฀ year฀ is฀ determined฀ by฀ Kroger’s฀
performance฀ compared฀ to฀ targets฀ established฀ by฀ the฀ Committee฀ and฀ our฀ independent฀ directors฀ based฀ on฀
the฀business฀plan฀adopted฀by฀the฀Board฀of฀Directors.฀In฀2013,฀one-third฀of฀the฀bonus฀was฀based฀on฀a฀target฀
for฀identical฀sales฀without฀fuel;฀one-third฀was฀based฀on฀a฀target฀for฀EBITDA฀without฀fuel;฀and฀one-third฀was฀
based฀on฀implementation฀and฀results฀of฀a฀set฀of฀measures฀under฀our฀strategic฀plan.฀An฀additional฀5%฀would฀
be฀earned฀if฀Kroger฀achieved฀three฀goals฀with฀respect฀to฀its฀supermarket฀fuel฀operations:฀achievement฀of฀the฀
targeted฀fuel฀EBITDA,฀increase฀of฀at฀least฀3%฀in฀total฀gallons฀sold, and฀achievement฀of฀the฀planned฀number฀of฀
fuel centers placed in service.
Following the close of the year, the Committee reviewed Kroger’s performance against the identical sales
without฀fuel,฀EBITDA฀without฀fuel,฀and฀strategic฀plan฀objectives฀and฀determined฀the฀extent฀to฀which฀Kroger฀
achieved฀those฀objectives. Kroger’s฀EBITDA฀without฀fuel฀for฀2013฀was฀$4.245฀billion฀and฀Kroger’s฀identical฀
sales฀ without฀ fuel฀ for฀ 2013฀ were฀ 3.5%.฀ In฀ 2013,฀ Kroger’s฀ supermarket฀ fuel฀ EBITDA฀ was฀ $232.990฀ million,฀
which฀exceeded฀the฀goal฀of฀$184.875฀million฀necessary฀to฀earn฀a฀bonus฀for฀the฀fuel฀component.฀Kroger’s฀fuel฀
gallon฀sales฀in฀supermarket฀fuel฀centers฀were฀4.431฀billion฀gallons,฀or฀6.6%฀over฀the฀prior฀year.฀We฀operated฀
1,240฀supermarket฀fuel฀centers฀as฀of฀the฀end฀of฀2013,฀exceeding฀our฀goal฀of฀1,235฀centers.฀As฀a฀result,฀the฀
payout฀percentage฀included฀the฀additional฀5%฀fuel฀bonus.฀Due฀to฀our฀performance฀when฀compared฀to฀the฀
targets฀ established฀by฀the฀Committee,฀ and฀based฀on฀the฀ business฀ plan฀adopted฀by฀the฀Board฀of฀ Directors,฀
the฀named฀executive฀officers฀earned฀104.949%฀of฀their฀bonus฀potentials.฀This฀is฀the฀same฀bonus฀percentage฀
payout฀received฀by฀all฀other฀participants฀in฀the฀annual฀corporate฀bonus฀plan.฀