Kroger 2015 Annual Report Download - page 26

Download and view the complete annual report

Please find page 26 of the 2015 Kroger annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 153

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153

24
Equity
60%
Non-
Equity
40% Equity
55%
Non-
Equity
45%
60% of CEO pay is Equity 55% of Other NEO pay is Equity
CEO Average of Other NEOs
The following discussion and analysis addresses the compensation of the NEOs and the factors
considered by the Compensation Committee in setting compensation for the NEOs and, in the case
of the CEO’s compensation, making recommendations to the independent directors. Additional detail
is provided in the compensation tables and the accompanying narrative disclosures that follow this
discussion and analysis.
Our Compensation Philosophy and Objectives
As one of the largest retailers in the world, our executive compensation philosophy is to attract
and retain the best management talent and to motivate these employees to achieve our business and
financial goals. Kroger’s incentive plans are designed to reward the actions that lead to long-term
value creation. The Compensation Committee believes that there is a strong link between our business
strategy, the performance metrics in our short-term and long-term incentive programs, and the business
results that drive shareholder value.
We believe our strategy creates value for shareholders in a manner consistent with our focus on our
core values: honesty, integrity, respect, inclusion, diversity and safety.
To achieve our objectives, the Compensation Committee seeks to ensure that compensation is
competitive and that there is a direct link between pay and performance. To do so, it is guided by the
following principles:
• A significant portion of pay should be performance-based, with the percentage of total pay tied to
performance increasing proportionally with an executive’s level of responsibility.
• Compensation should include incentive-based pay to drive performance, providing superior pay for
superior performance, including both a short- and long-term focus.
• Compensation policies should include an opportunity for, and a requirement of, equity ownership to
align the interests of executives and shareholders.
• Components of compensation should be tied to an evaluation of business and individual
performance measured against metrics that directly drive our business strategy.
The Compensation Committee has three related objectives regarding compensation:
• First, the Compensation Committee believes that compensation must be designed to attract and
retain those best suited to fulfill the challenging roles that officers play at Kroger.
• Second, a majority of compensation should help align the interests of our officers with the interests
of our shareholders.
• Third, compensation should create strong incentives for the officers to achieve the annual business
plan targets established by the Board, and to achieve Kroger’s long-term strategic objectives.