Kroger 2013 Annual Report Download - page 45

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43
(12)฀ This฀amount฀reflects฀the฀value฀of฀gift฀cards฀in฀the฀amount฀of฀$75฀and฀the฀cost฀to฀the฀Company฀per฀director฀
for฀providing฀accidental฀death฀and฀dismemberment฀insurance฀coverage฀for฀non-employee฀directors฀in฀
the฀amount฀of฀$114.฀These฀premiums฀are฀paid฀on฀an฀annual฀basis฀in฀July.
(13)฀ In฀connection฀with฀his฀retirement,฀Mr.฀LaMacchia฀received฀a฀gift฀valued฀at฀$867฀and฀a฀charitable฀donation฀
was฀given฀in฀his฀name฀in฀the฀amount฀of฀$2,500.
Effective฀August฀1,฀2013,฀each฀non-employee฀director฀receives฀an฀annual฀retainer฀of฀$85,000.฀The฀chairs฀
of each of the Audit Committee and the Compensation Committee receive an additional annual retainer of
$20,000.฀The฀chair฀of฀each฀of฀the฀other฀committees฀receives฀an฀additional฀annual฀retainer฀of฀$15,000.฀Each฀
member฀of฀the฀Audit฀Committee฀receives฀an฀additional฀annual฀retainer฀of฀$10,000.฀The฀director฀designated฀
as฀the฀Lead฀Director฀receives฀an฀additional฀annual฀retainer฀of฀$25,000.฀Beginning฀in฀2013,฀incentive฀shares฀
were฀issued฀to฀non-employee฀directors฀in฀lieu฀of฀options฀and฀restricted฀stock,฀as฀a฀portion฀of฀the฀directors’฀
overall฀compensation.฀On฀July฀15,฀2013,฀each฀non-employee฀director,฀except฀for฀Mr.฀LaMacchia,฀received฀4,370฀
common฀shares.฀Mr.฀LaMacchia฀received฀1,796฀common฀shares,฀as฀his฀award฀was฀prorated฀as฀a฀result฀of฀his฀
planned retirement.
Non-employee฀directors฀first฀elected฀prior฀to฀July฀17,฀1997฀receive฀a฀major฀medical฀plan฀benefit฀as฀well฀
as฀an฀unfunded฀retirement฀benefit.฀The฀retirement฀benefit฀equals฀the฀average฀cash฀compensation฀for฀the฀five฀
calendar฀years฀preceding฀retirement.฀Participants฀who฀retire฀from฀the฀Board฀prior฀to฀age฀70฀will฀be฀credited฀
with฀ 50%฀ vesting฀ after฀five฀years฀of฀ service,฀and฀10%฀ for฀each฀additional฀year฀up฀to฀a฀ maximum฀of฀ 100%.฀
Benefits฀for฀participants฀who฀retire฀prior฀to฀age฀70฀begin฀at฀the฀later฀of฀actual฀retirement฀or฀age฀65.
We฀also฀maintain฀a฀deferred฀compensation฀plan,฀in฀which฀all฀non-employee฀members฀of฀the฀Board฀are฀
eligible฀to฀participate.฀Participants฀may฀defer฀up฀to฀100%฀of฀their฀cash฀compensation.฀They฀may฀elect฀from฀
either฀or฀both฀of฀the฀following฀two฀alternative฀methods฀of฀determining฀benefits:
•฀ interest฀accrues฀until฀paid฀out฀at฀the฀rate฀of฀interest฀determined฀prior฀to฀the฀beginning฀of฀the฀deferral฀
year฀to฀represent฀Kroger’s฀cost฀of฀ten-year฀debt;฀and
•฀ amounts฀are฀credited฀in฀“phantom”฀stock฀accounts฀and฀the฀amounts฀in฀those฀accounts฀fluctuate฀with฀the฀
price of Kroger common shares.
In฀ both฀cases,฀deferred฀amounts฀are฀paid฀out฀only฀in฀cash,฀based฀on฀deferral฀options฀selected฀by฀the฀
participants฀at฀the฀time฀the฀deferral฀elections฀are฀made.฀Participants฀can฀elect฀to฀have฀distributions฀made฀in฀
a฀lump฀ sum฀or฀in฀ quarterly฀installments,฀and฀ may฀make฀comparable฀elections฀for฀ designated฀ beneficiaries฀
who฀receive฀benefits฀in฀the฀event฀that฀deferred฀compensation฀is฀not฀completely฀paid฀out฀upon฀the฀death฀of฀
the participant.
The฀ Board฀ has฀ determined฀ that฀ compensation฀ of฀ non-employee฀ directors฀ must฀ be฀ competitive฀ on฀ an฀
on-going฀basis฀to฀attract฀and฀retain฀directors฀who฀meet฀the฀qualifications฀for฀service฀on฀Kroger’s฀Board.฀Non-
employee฀director฀compensation฀will฀be฀reviewed฀from฀time฀to฀time฀as฀the฀Corporate฀Governance฀Committee฀
deems appropriate.
PO T E N T I A L P A Y M E N T S U P O N T E R M I N A T I O N O R C H A N G E I N C O N T R O L
Kroger has no employment agreements with its named executive officers and no contracts, agreements,
plans or arrangements that provide for payments to the named executive officers in connection with
resignation,฀severance,฀retirement,฀termination,฀or฀change฀in฀control,฀except฀for฀those฀available฀generally฀to฀
salaried employees. The Kroger Co. Employee Protection Plan, or KEPP, applies to all management employees
and฀administrative฀support฀personnel฀who฀are฀not฀covered฀by฀a฀collective฀bargaining฀agreement,฀with฀at฀least฀
one฀year฀of฀service,฀and฀provides฀severance฀benefits฀when฀a฀participant’s฀employment฀is฀terminated฀actually฀
or constructively within two years following a change in control of Kroger. The actual amount is dependent
on pay level and years of service. For purposes of KEPP, a change in control occurs if:
•฀ any฀person฀or฀entity฀(excluding฀Kroger’s฀employee฀benefit฀plans)฀acquires฀20%฀or฀more฀of฀the฀voting฀
power฀of฀Kroger;฀
•฀ a฀merger,฀consolidation,฀share฀exchange,฀division,฀or฀other฀reorganization฀or฀transaction฀with฀Kroger฀
results฀ in฀ Kroger’s฀ voting฀ securities฀ existing฀ prior฀ to฀ that฀ event฀ representing฀ less฀ than฀ 60%฀ of฀ the฀
combined฀voting฀power฀immediately฀after฀the฀event;