Kroger 2013 Annual Report Download - page 35

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Assuming that the highest level of performance conditions is achieved, the value of the performance unit
awards฀at฀the฀grant฀date฀is฀as฀follows:฀Mr.฀Dillon฀$2,963,033;฀Mr.฀McMullen:฀$966,970;฀Mr.฀Schlotman:฀
$542,234;฀Ms.฀Barclay:฀ $327,881;฀Mr.฀Heldman:฀$490,233;฀and฀Mr.฀ Ellis:฀$251,666.฀These฀amounts฀are฀
required฀to฀be฀reported฀in฀a฀footnote฀and฀are฀not฀reflected฀in฀the฀table.
The assumptions used in calculating the valuation are set forth in Note 12 to the consolidated financial
statements฀in฀Kroger’s฀10-K฀for฀fiscal฀year฀2013฀ended฀February฀1,฀2014.
(3)฀ These฀amounts฀represent฀the฀aggregate฀grant฀date฀fair฀value฀of฀awards฀computed฀in฀accordance฀with฀
FASB฀ASC฀Topic฀718.฀The฀assumptions฀used฀in฀calculating฀the฀valuation฀are฀set฀forth฀in฀Note฀12฀to฀the฀
consolidated฀financial฀statements฀in฀Kroger’s฀10-K฀for฀fiscal฀year฀2013฀ended฀February฀1,฀2014.
(4)฀ Non-equity฀incentive฀plan฀compensation฀earned฀for฀2013฀consists฀of฀the฀following฀two฀amounts฀for฀each฀
named executive officer:
฀ In฀accordance฀with฀the฀terms฀of฀the฀2013฀performance-based฀annual฀cash฀bonus฀program,฀Kroger฀paid฀
104.959%฀of฀bonus฀potentials฀for฀the฀executive฀officers฀including฀the฀named฀executive฀officers.฀Payments฀
were฀made฀in฀the฀following฀amounts:฀Mr.฀Dillon:฀$1,574,235;฀Mr.฀McMullen:฀$1,099,946;฀Mr.฀Schlotman:฀
$577,220;฀Ms.฀Barclay:฀$577,220;฀Mr.฀Heldman:฀$577,220;฀and฀Mr.฀Ellis:฀$431,401.฀These฀amounts฀were฀
earned฀with฀respect฀to฀performance฀in฀2013,฀and฀paid฀in฀March฀2014.
฀ The฀ 2011฀ Long-Term฀ Bonus฀ Plan฀ is฀ a฀ performance-based฀ bonus฀ plan฀ designed฀ to฀ reward฀ participants฀
for฀improving฀the฀long-term฀performance฀of฀the฀Company.฀The฀plan฀covered฀performance฀during฀fiscal฀
years฀2011,฀2012฀and฀2013,฀and฀amounts฀earned฀under฀the฀plan฀were฀paid฀in฀March฀2014.฀The฀cash฀bonus฀
potential฀amount฀equaled฀the฀executive’s฀salary฀in฀effect฀on฀the฀last฀day฀of฀fiscal฀year฀2010.฀The฀following฀
amounts฀ represent฀ payouts฀ at฀ 70%฀ of฀ bonus฀ potentials฀ that฀ were฀ earned฀ under฀ the฀ plan:฀ Mr.฀ Dillon:฀
$882,000;฀ Mr.฀ McMullen:฀ $623,000;฀ Mr.฀ Schlotman:฀ $427,000;฀ Ms.฀ Barclay:฀ $449,400;฀ Mr.฀ Heldman:฀
$506,800;฀and฀Mr.฀Ellis:฀$324,170.
(5)฀ Amounts฀ in฀ the฀ table฀ for฀ 2011฀ and฀ 2012฀ are฀ changes฀ in฀ pension฀ value฀ and฀ preferential฀ earnings฀ on฀
nonqualified฀ deferred฀ compensation.฀ For฀ 2013,฀ the฀ amounts฀ only฀ include฀ preferential฀ earnings฀ on฀
nonqualified฀ deferred฀ compensation.฀ Under฀ the฀ Company’s฀ deferred฀ compensation฀ plan,฀ deferred฀
compensation฀earns฀interest฀ at฀the฀ rate฀representing฀Kroger’s฀cost฀of฀ten-year฀debt฀as฀ determined฀ by฀
Kroger’s฀CEO,฀and฀reviewed฀by฀the฀Compensation฀Committee,฀prior฀to฀the฀beginning฀of฀each฀deferral฀
year.฀For฀each฀participant,฀a฀separate฀deferral฀account฀is฀created฀each฀year,฀and฀the฀interest฀rate฀established฀
under the plan for that year is applied to that deferral account until the deferred compensation is paid
out.฀If฀the฀interest฀rate฀established฀by฀the฀Company฀for฀a฀particular฀year฀exceeds฀120%฀of฀the฀applicable฀
federal฀long-term฀interest฀rate฀that฀corresponds฀most฀closely฀to฀the฀Company฀rate,฀the฀amount฀by฀which฀
the฀ Company฀ rate฀ exceeds฀ 120%฀ of฀ the฀ corresponding฀ federal฀ rate฀ is฀ deemed฀ to฀ be฀ above-market฀ or฀
preferential. In twelve of the twenty years in which at least one named executive officer deferred
compensation,฀the฀Company฀rate฀set฀under฀the฀plan฀for฀that฀year฀exceeds฀120%฀of฀the฀corresponding฀
federal฀rate.฀For฀each฀of฀the฀deferral฀accounts฀in฀which฀the฀Company฀rate฀is฀deemed฀to฀be฀above-market,฀
the฀Company฀calculates฀the฀amount฀by฀which฀the฀actual฀annual฀earnings฀on฀the฀account฀exceed฀what฀
the฀annual฀earnings฀would฀have฀been฀if฀the฀account฀earned฀interest฀at฀120%฀of฀the฀corresponding฀federal฀
rate, and discloses those amounts as preferential earnings. Amounts deferred in 2013 earned interest at
a฀rate฀higher฀than฀120%฀of฀the฀corresponding฀federal฀rate,฀accordingly฀there฀are฀preferential฀earnings฀on฀
these amounts.
฀ In฀accordance฀with฀SEC฀rules,฀negative฀amounts฀are฀required฀to฀be฀disclosed฀in฀the฀footnotes,฀but฀not฀
reflected฀in฀the฀sum฀of฀total฀compensation฀reported฀in฀the฀table.฀Mr.฀Dillon’s฀pension฀value฀decreased฀
by฀ $1,863,504;฀ Mr.฀ McMullen’s฀ pension฀ value฀ decreased฀ by฀ $450,556;฀ Mr.฀ Schlotman’s฀ pension฀ value฀
decreased฀by฀$98,636;฀Mr.฀Heldman’s฀pension฀value฀decreased฀by฀$149,721;฀and฀Mr.฀Ellis’฀pension฀values฀
decreased฀by฀$6,080.฀During฀2013,฀pension฀values฀decreased฀primarily฀due฀to฀an฀increase฀in฀the฀discount฀
rate฀ for฀ the฀ plans,฀ as฀ determined฀ by฀ the฀ plan฀ actuary฀ and฀ decreased฀ slightly฀ due฀ to฀ annuity฀ election฀
assumptions.฀Ms.฀Barclay฀does฀not฀participate฀in฀a฀Company฀defined฀benefit฀pension฀plan฀or฀the฀deferred฀
compensation plan.