Kroger 2013 Annual Report Download - page 28

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The฀ 2013฀ targets฀ established฀ by฀ the฀ Committee฀ for฀ annual฀ bonus฀ amounts฀ based฀ on฀ identical฀ sales฀
without฀fuel฀and฀EBITDA฀without฀fuel฀results,฀the฀actual฀2013฀results,฀and฀the฀bonus฀percentage฀earned฀in฀
each฀of฀the฀components฀of฀named฀executive฀officer฀bonus,฀were฀as฀follows:
Targets
Component Minimum 100% Result Amount Earned
Identical฀Sales฀without฀fuel ......... 1.6% 3.6% 3.5% 31.679%
EBITDA฀without฀fuel .............. $3.583฀Billion $4.216฀Billion* $4.245฀Billion 34.474%
Strategic฀Plan฀.................... ** ** ** 33.796฀%
Fuel฀Bonus ...................... [as฀described฀in฀the฀text฀above] 5.000%
Total Earned ..................... 104.949%
*฀ Payout฀is฀at฀125%฀if฀identical฀sales฀goal฀is฀achieved.฀
**฀ The฀ Strategic฀ Plan฀ component฀ also฀ was฀ established฀ by฀ the฀ Committee,฀ but฀ is฀ not฀ disclosed฀ as฀ it฀ is฀
competitively sensitive.
In฀2013,฀as฀in฀all฀years,฀the฀Committee฀retained฀discretion฀to฀reduce฀the฀bonus฀payout฀for฀all฀executive฀
officers,฀including฀the฀named฀executive฀officers,฀if฀the฀Committee฀determined฀for฀any฀reason฀that฀the฀bonus฀
payouts฀were฀not฀appropriate.฀The฀independent฀directors฀retained฀that฀discretion฀for฀the฀CEO’s฀bonus.฀Those฀
bodies฀also฀retained฀discretion฀to฀adjust฀the฀targets฀under฀the฀plan฀should฀unanticipated฀developments฀arise฀
during฀ the฀ year.฀ No฀ adjustments฀ were฀ made฀ to฀ the฀ targets฀ in฀ 2013.฀ The฀ Committee,฀ and฀ the฀ independent฀
directors฀in฀the฀case฀of฀the฀CEO,฀determined฀that฀the฀bonus฀payouts฀for฀the฀named฀executive฀officers฀should฀
remain the same as other participants.
The฀ percentage฀ paid฀ for฀ 2013฀ represented฀ excellent฀ performance฀ that฀ exceeded฀ our฀ business฀ plan฀
objectives.฀A฀comparison฀of฀bonus฀percentages฀for฀the฀named฀executive฀officers฀in฀prior฀years฀demonstrates฀
the฀variability฀of฀annual฀cash฀bonus฀incentive฀compensation:
Fiscal Year
Annual Cash Bonus
Percentage
2013 104.949%
2012 85.881%
2011 138.666%
2010 53.868%
2009 38.450%
2008 104.948%
2007 128.104%
2006 141.118%
2005 132.094%
2004 55.174%
The฀actual฀amounts฀of฀annual฀performance-based฀cash฀bonuses฀paid฀to฀the฀named฀executive฀officers฀
for฀2013฀are฀reported฀in฀the฀ Summary฀ Compensation฀Table฀under฀the฀heading฀ “Non-Equity฀Incentive฀Plan฀
Compensation”฀ and฀ footnote฀ 4.฀ These฀ amounts฀ represent฀ the฀ bonus฀ potentials฀ for฀ each฀ named฀ executive฀
officer฀multiplied฀by฀the฀104.949%฀payout฀percentage฀earned฀in฀2013.฀In฀no฀event฀can฀any฀participant฀receive฀
a฀performance-based฀annual฀cash฀bonus฀in฀excess฀of฀$5,000,000.฀The฀maximum฀amount฀that฀a฀participant,฀
including฀ each฀ named฀ executive฀ officer,฀ can฀ earn฀ is฀ further฀ limited฀ to฀ 200%฀ of฀ the฀ participant’s฀ bonus฀
potential amount.
The฀performance-based฀annual฀cash฀bonus฀for฀2014฀will฀be฀determined฀based฀on฀Kroger’s฀performance฀
against฀the฀identical฀sales฀without฀fuel,฀EBITDA฀without฀fuel,฀strategic฀plan,฀and฀operating฀costs฀as฀a฀percentage฀
of฀sales฀objectives฀established฀by฀the฀Committee.฀The฀first฀three฀metrics฀will฀be฀weighted฀at฀30%฀each฀and฀
the฀final฀metric฀will฀be฀weighted฀at฀10%.฀The฀underlying฀strategy฀metrics฀have฀been฀revised฀from฀prior฀years฀
to฀focus฀on฀shorter-term฀measures,฀as฀the฀long-term฀bonus฀emphasizes฀long-term฀performance.฀The฀2014฀plan฀
also฀provides฀for฀an฀additional฀5%฀payout฀if฀our฀goals฀for฀supermarket฀fuel฀EBITDA,฀supermarket฀fuel฀gallons฀
sold,฀and฀targeted฀number฀of฀fuel฀centers฀in฀operation฀at฀the฀fiscal฀year฀end฀are฀achieved.