Kroger 2014 Annual Report Download - page 46
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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
Krogerdoesnothaveemploymentagreementsorothercontracts,agreements,plansorarrangements
thatprovideforpaymentstothenamedexecutiveofficersinconnectionwithaterminationofemployment
orachangeincontrolofKroger.However,TheKrogerCo.EmployeeProtectionPlan,orKEPP,ouraward
agreementsforstockoptions,restrictedstockandperformanceunits,andourlong-termcashbonusplans
provideforcertainpaymentsandbenefitstoparticipants,includingthenamedexecutiveofficers,intheevent
ofaterminationofemploymentorachangeincontrolofKroger,asdescribedbelow.Ourpensionplansand
nonqualifieddeferredcompensationplanalsoprovideforcertainpaymentsandbenefitstoparticipantsinthe
eventofaterminationofemployment,asdescribedaboveinthePensionBenefitssectionandtheNonqualified
DeferredCompensationsection,respectively.ForpurposesofKEPP,andourequityandnon-equityincentive
awards,achangeincontroloccursif:
• anypersonorentity(excludingKroger’semployeebenefitplans)acquires20%ormoreofthevoting
powerofKroger;
• amerger,consolidation,shareexchange,division,orotherreorganizationortransactionwithKroger
results in Kroger’s voting securities existing prior to that event representing less than 60% of the
combinedvotingpowerimmediatelyaftertheevent;
• Kroger’sshareholdersapproveaplanofcompleteliquidationorwindingupofKrogeroranagreement
forthesaleordispositionofallorsubstantiallyallofKroger’sassets;or
• duringanyperiodof24consecutivemonths,individualsatthebeginningoftheperiodwhoconstituted
Kroger’sBoardofDirectorsceaseforanyreasontoconstituteatleastamajorityoftheBoardofDirectors.
The Kroger Co. Employee Protection Plan
The Kroger Co. Employee Protection Plan, or KEPP, applies to all management employees and
administrativesupportpersonnelwhoarenotcoveredbyacollectivebargainingagreement,withatleastone
yearofservice,andprovidesseverancebenefitswhenaparticipant’semploymentisterminatedactuallyor
constructivelywithintwoyearsfollowingachangeincontrolofKroger.Theactualamountisdependenton
paylevelandyearsofservice.Thenamedexecutiveofficersareeligibleforthefollowingbenefits:
• alumpsumseverancepaymentequaltouptotwotimesthesumoftheparticipant’sannualbasesalary
and70%ofthegreaterofthecurrentannualbonuspotentialortheaverageoftheactualannualbonus
paymentsforthepriorthreeyears;
• alumpsumpaymentequaltotheparticipant’saccruedandunpaidvacation,includingbankedvacation;
• a lump sum payment equal to 1/12th of the sum of the participant’s annual vacation pay plus 70%
of the greater of the current year’s annual cash bonus potential or the average of the actual annual
bonuspaymentsforthepriorthreeyears,multipliedbythenumberofmonthselapsedinthecurrent
calendaryear;
• continuedmedicalanddentalbenefitsforupto24monthsandcontinuedlifeinsurancecoverageforup
to6months;and
• upto$5,000asreimbursementforeligibletuitionexpensesandupto$10,000asreimbursementfor
eligibleoutplacementexpenses.
PaymentstoexecutiveofficersunderKEPPwillbereduced,totheextentnecessary,sothatpayments
willnotexceed2.99timestheofficersaverageW-2earningsovertheprecedingfiveyears.