Kroger 2015 Annual Report Download - page 22

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20
Although neither the Compensation Committee nor the Board expressly approved the other
services, after taking into consideration the NYSE’s independence standards and the SEC rules, the
Compensation Committee determined that the consultant is independent and his work has not raised any
conflict of interest because:
• the consultant was first engaged by the Compensation Committee before he became associated
with Mercer;
• the consultant works exclusively for the Compensation Committee and not for our management;
• the consultant does not benefit from the other work that Mercer’s parent and affiliated companies
perform for Kroger; and
• neither the consultant nor the consultant’s team perform any other services for Kroger.
The Compensation Committee may engage an additional compensation consultant from time to
time as it deems advisable.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was an officer or employee of Kroger during fiscal
2015, and no member of the Compensation Committee is a former officer of Kroger or was a party to any
disclosable related person transaction involving Kroger. During fiscal 2015, none of our executive officers
served on the board of directors or on the compensation committee of any other entity that has or had
executive officers serving as a member of Kroger’s Board of Directors or Compensation Committee of
the Board.
Board Oversight of Enterprise Risk
While risk management is primarily the responsibility of Kroger’s management team, the Board is
responsible for strategic planning and overall supervision of our risk management activities. The Board’s
oversight of the material risks faced by Kroger occurs at both the full Board level and at the committee level.
The Board receives presentations throughout the year from various department and business unit
leaders that include discussion of significant risks as necessary. At each Board meeting, the Chairman
and CEO addresses matters of particular importance or concern, including any significant areas of risk
that require Board attention. Additionally, through dedicated sessions focusing entirely on corporate
strategy, the full Board reviews in detail Kroger’s short- and long-term strategies, including consideration
of significant risks facing Kroger and their potential impact. The independent directors, in executive
sessions led by the Lead Director, address matters of particular concern, including significant areas of
risk, that warrant further discussion or consideration outside the presence of Kroger employees. At the
committee level, reports are given by management subject matter experts to each committee on risks
within the scope of their charters.
The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major
financial exposures and the steps management has taken to monitor and control those exposures, but
also for the effectiveness of management’s processes that monitor and manage key business risks facing
Kroger, as well as the major areas of risk exposure and management’s efforts to monitor and control
that exposure. The Audit Committee also discusses with management its policies with respect to risk
assessment and risk management.
Management, including our Chief Ethics and Compliance Officer, provides regular updates
throughout the year to the respective Board committees regarding management of the risks they oversee,
and each of these committees reports on risk to the full Board at each regular meeting of the Board.
We believe that our approach to risk oversight, as described above, optimizes our ability to assess
inter-relationships among the various risks, make informed cost-benefit decisions, and approach emerging
risks in a proactive manner for Kroger. We also believe that our risk structure complements our current
Board leadership structure, as it allows our independent directors, through the five fully independent Board
committees, and in executive sessions of independent directors led by the Lead Director, to exercise
effective oversight of the actions of management, led by Mr. McMullen as Chairman of the Board and CEO,
in identifying risks and implementing effective risk management policies and controls.