Kroger 2014 Annual Report Download - page 29
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Theactualamountsofannualperformance-basedcashbonusespaidtothenamedexecutiveofficers
for2014arereportedintheSummaryCompensationTableinthe“Non-EquityIncentivePlanCompensation”
columnandfootnote4tothattable.Theseamountsrepresentthebonuspotentialsforeachnamedexecutive
officermultipliedbythe121.5%payoutpercentageearnedin2014.Innoeventcananyparticipantreceive
aperformance-basedannualcashbonusinexcessof$5,000,000.Themaximumamountthataparticipant,
including each named executive officer, can earn is further limited to 200% of the participant’s bonus
potential amount.
LO N G - T E R M I N C E N T I V E S
TheCommitteebelievesintheimportanceofprovidinganincentivetothenamedexecutiveofficersto
achievethelong-termgoalsestablishedbytheBoardbyconditioningasignificantportionofcompensation
on the achievement of those goals.
In2006,theCommitteeadoptedthefirstinaseriesoflong-termperformancebasedcompensationplans
designedtorewardparticipantsfortheircontributiontothelong-termperformanceofKroger.Theseearlier
plansprovided foroverlappingfouryear performanceperiodsthat allowed fortheearning ofalong-term
cashbonus.In2010,Kroger’slong-termincentiveprogramwasredesignedtocombinethetotalvalueofour
long-term cash bonus and equity programs into a cohesive, strategic reward for eligible executives at the
VicePresidentlevelandabove.Approximatelyfiftypercentoftheplanvalueisperformance-based,delivered
in cash and performance units, contingent on the achievement of certain strategic performance measures.
Theotherfiftypercentofthevalueistime-basedanddeliveredinstockoptionsandrestrictedstock.Each
componentisdescribedinmoredetailbelow.
PE R F O R M A N C E B A S E D L O N G - T E R M C O M P E N S A T I O N
The long-term incentive plan originally adopted in 2010 provides the model for our combined plan
structure.Eachyearweadoptasimilarplanwiththefollowingcharacteristics:
• Performanceismeasuredoverathreeyearperiod.
• Between130and170executives,includingthenamedexecutiveofficers,participateineachplan.
• Awardsincludebothcashandperformanceunits.
Ø Thecashbonusbaseequalstheexecutive’ssalaryattheendofthefiscalyearprecedingtheplan
adoption date (or for those participants entering the plan after the commencement date, as of the
dateofcommencingparticipationintheplan).Thesecashawardsareseparatefromawardsunder
ourperformance-basedannualcashbonusplan.
Ø A fixed number of performance units is awarded to each participant. The awards are paid out
in Kroger common shares, along with a cash amount equal to the dividends paid during the
performanceperiodonthenumberofissuedcommonshares.
• Compensationundertheplanisearnedbasedonourperformanceagainstmetricsestablishedbythe
Committee(ortheindependentdirectors)atthebeginningoftheperformanceperiod.
• Thepayoutpercentage,basedontheextenttowhichtheperformancemetricsareachieved,isapplied
toboththecashbonusbaseandthenumberofperformanceunitsawarded.
• Actual payouts cannot exceed 100% of the cash bonus base or 100% of the number of performance
units awarded.
• Innoeventcanacashbonusawardexceed$5,000,000.