Kroger 2014 Annual Report Download - page 32
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representingKroger’scostoften-yeardebtintheyeartherateisset,asdeterminedbytheCEO,andreviewed
with the Committee,prior to thebeginningofeach deferralyear.In 2014, that rate was3.25%.Deferred
amountsarepaidoutonlyincash,inaccordancewithadeferraloptionselectedbytheparticipantatthetime
the deferral election is made.
KrogeralsomaintainsTheKrogerCo.EmployeeProtectionPlan,orKEPP,inwhichallofourmanagement
employeesandadministrativesupportpersonnelwhoseemploymentisnotcoveredbyacollectivebargaining
agreement,withatleastoneyearofservice,arecovered.KEPPprovidesforseverancebenefitsandextended
Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an
employee is actually or constructively terminated without cause within two years following a change in
controlofKroger(asdefinedintheplan).Participantsareentitledtoseverancepayofupto24months’salary
andbonus.Theactualamountisdependentuponpaylevelandyearsofservice.KEPPcanbeamendedor
terminatedbytheBoardatanytimepriortoachangeincontrol.
Stockoption,restrictedstockandperformanceunitagreementswithparticipantsinKroger’slong-term
incentiveplansprovidethatthoseawards“vest,”withoptionsbecomingimmediatelyexercisable,restrictions
onrestrictedstocklapsing,andcommonsharesequalto50%oftheperformanceunitsbeingawarded,upon
achangeincontrolasdescribedintheagreements.
UponMr.Dillon’sretirement,theBoardofDirectorsdeterminedthatitwasinthebestinterestsofKroger
toamendcertainofMr.Dillon’srestrictedstockagreementstopermittherestrictionsontherestrictedstock
awardstolapseinaccordancewiththeoriginalvestingschedule,providedMr.Dillonexecutedanon-compete
agreement,whichhedid.IfMr.Dillonweretobreachthetermsofhisnon-competeagreement,theunvested
restrictedstockwouldbeforfeited.
Noneofthenamedexecutiveofficersispartytoanemploymentagreement.
PE R Q U I S I T E S
TheCommitteedoesnotbelievethatitisnecessaryfortheattractionorretentionofmanagementtalent
toprovidethenamedexecutiveofficersasubstantialamountofcompensationintheformofperquisites.In
2014,theonlyperquisitesavailabletoournamedexecutiveofficerswere:
• premiumspaidonlifeinsurancepolicies;
• premiumspaidonaccidentaldeathanddismembermentinsurance;and
• premiumspaidonlong-termdisabilityinsurancepolicies.
Currently,154activeexecutives,includingthenamedexecutiveofficers,and98retiredexecutives,are
eligiblefortheseperquisites.
In addition, the named executive officers are entitled to the personal use of Kroger aircraft, which
officersmayleasefromKroger,makingofficersmoreavailableandallowingforamoreefficientuseoftheir
time.Thisisnotconsideredaperquisiteaswearereimbursedbytheexecutivesfortheaveragevariablecost
of such use.
The totalamountofperquisitesfurnishedtothenamed executiveofficersisshownintheSummary
CompensationTableanddescribedinmoredetailinfootnote6tothattable.
EX E C U T I V E C O M P E N S A T I O N R E C O U P M E N T P O L I C Y
If a material error of facts results in the payment to an executive officer at the level of Group Vice
President or higher of an annual bonus or a long-term bonus in an amount higher than otherwise would
have been paid, as determined by the Committee, then the officer, upon demand from the Committee,
willreimburseKrogerfortheamountsthatwouldnothavebeenpaidiftheerrorhadnotoccurred.This
recoupmentpolicyapplies tothose amountspaidbyKrogerwithin36monthspriorto thedetectionand
publicdisclosureoftheerror.Inenforcingthepolicy,theCommitteewilltakeintoconsiderationallfactors
thatitdeemsappropriate,including:
• Thematerialityoftheamountofpaymentinvolved;