Kroger 2014 Annual Report Download - page 23
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• adopted claw-back policies under which the repayment of bonuses may be required in certain
circumstances;
• eliminatedtaxgross-ups;
• adoptedtherecommendationofshareholdersthattheybepermittedannually,onanadvisorybasis,to
voteonexecutivecompensation;and
• adoptedapolicyprohibitinghedgingandshortsales,andrestrictingpledgingofKrogercommonshares
byourofficersanddirectors.
Inaddition,fiftypercentoftheequityawardsgrantedtothenamedexecutiveofficersareintheform
ofperformanceunitsthat areearnedonlytotheextentthat performanceobjectives are achieved.Equity
compensation awards continue to play an important role in rewarding named executive officers for the
achievementoflong-termbusinessobjectivesandprovidingincentivesforthecreationofshareholdervalue.
Thefollowingdiscussionandanalysisaddressesthecompensationofthenamedexecutiveofficersand
thefactorsconsideredbytheCommitteeinsettingcompensationforthenamedexecutiveofficersandmaking
recommendationstotheindependentdirectorsinthecaseoftheCEO’scompensation.Additionaldetailis
providedinthecompensationtablesandtheaccompanyingnarrativedisclosuresthatfollowthisdiscussion
and analysis.
RE S U L T S O F 2 0 14 A D V I S O R Y V O T E T O A P P R O V E E X E C U T I V E C O M P E N S A T I O N
At the 2014 Annual Meeting of Shareholders, we held our fourth annual advisory vote on executive
compensation.Over96%ofthevotescastwereinfavoroftheadvisoryproposalin2014.TheCommittee
considersthistobeanoverwhelminglyfavorableoutcomeandbelievesitconveysourshareholders’support
oftheCommittee’sdecisionsandtheexistingexecutivecompensationprograms.Asaresult,theCommittee
made no material changes in the structure of our compensation programs or pay for performance philosophy.
Atthe2015AnnualMeetingofShareholders,inkeepingwithourshareholders’requestforanannualadvisory
vote,wewillagainholdanadvisoryvotetoapproveexecutivecompensation(seepage55).TheCommittee
willcontinuetoconsidertheresultsfromthisyear’sandfutureadvisoryvotesonexecutivecompensation.
EX E C U T I V E C O M P E N S A T I O N – OB J E C T I V E S
The Committeehasseveral related objectivesregardingcompensation.First,theCommittee believes
thatcompensationmustbedesigned toattractandretainthosebestsuitedtofulfillthe challengingroles
thatexecutiveofficersplayatKroger.Second,someelementsofcompensationshouldhelpaligntheinterests
of our officers with the interests of our shareholders. Third, compensation should create strong incentives
fortheofficers(a)toachievetheannualbusinessplantargetsestablishedbytheBoard,and(b)toachieve
Kroger’s long-term strategic objectives.Indevelopingcompensationprogramsand amounts tomeetthese
objectives,theCommitteeexercisesjudgmenttoensurethatexecutiveofficercompensationisappropriate
andcompetitiveinlightofKroger’sperformanceandtheneedsofthebusiness.
ST O C K O W N E R S H I P G U I D E L I N E S
To more closely align the interests of our officers and directors with your interests as shareholders, the
Board has adoptedstock ownershipguidelines.These guidelinesrequire non-employee directors, officers
andsomeotherkeyexecutivestoacquireandholdaminimumdollarvalueofKrogercommonsharesasset
forthbelow:
Position Multiple of Base Salary
ChiefExecutiveOfficer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5times
ChiefOperatingOfficer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4times
ExecutiveVicePresidentsandSeniorVicePresidents . . . . . . . . . . . . . 3times
OtherOfficersandKeyExecutives . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 times
Non-employeeDirectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3timesannualbasecashretainer