Kroger 2015 Annual Report Download - page 37

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As discussed below under Stock Ownership Guidelines, covered individuals, including the NEOs,
must hold 100% of common shares issued pursuant to performance units earned, the shares received
upon the exercise of stock options or upon the vesting of restricted stock, except those necessary to
pay the exercise price of the options and/or applicable taxes, until applicable stock ownership guidelines
are met, unless the disposition is approved in advance by the CEO, or by the Board or Compensation
Committee for the CEO.
Retirement and Other Benefits
Kroger maintains a defined benefit and several defined contribution retirement plans for its
employees. The NEOs participate in one or more of these plans, as well as one or more excess plans
designed to make up the shortfall in retirement benefits created by limitations under the Internal Revenue
Code on benefits to highly compensated individuals under qualified plans. Additional details regarding
certain retirement benefits available to the NEOs can be found below in the 2015 Pension Benefits Table
and the accompanying narrative description that follows this discussion and analysis.
Kroger also maintains an executive deferred compensation plan in which some of the NEOs
participate. This plan is a nonqualified plan under which participants can elect to defer up to 100% of
their cash compensation each year. Additional details regarding our nonqualified deferred compensation
plans available to the NEOs can be found below in the Nonqualified Deferred Compensation Table and
the accompanying narrative.
Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our
management employees and administrative support personnel who have provided services to Kroger
for at least one year and whose employment is not covered by a collective bargaining agreement. KEPP
provides for severance benefits and extended 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 control of Kroger (as defined in KEPP). Participants are
entitled to severance pay of up to 24 months’ salary and bonus. The actual amount is dependent upon
pay level and years of service. KEPP can be amended or terminated by the Board at any time prior to a
change in control.
Performance-based long-term cash bonus, performance unit, stock option, and restricted stock
agreements with award recipients provide that those awards “vest,” with 50% of the long-term cash
bonus potential being paid, common shares equal to 50% of the performance units being awarded,
options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in
control as described in the grant agreements.
None of the NEOs is party to an employment agreement.
Perquisites
NEOs receive limited perquisites because the Compensation Committee does not believe that it is
necessary for the attraction or retention of management talent to provide the NEOs a substantial amount
of compensation in the form of perquisites. In 2015, the only perquisites available to our NEOs were:
• premiums paid on life insurance policies;
• premiums paid on accidental death and dismemberment insurance; and
• premiums paid on long-term disability insurance policies.
Because he was an officer of Harris Teeter during 2015, Mr. Morganthall also was eligible for the
following Harris Teeter perquisites:
• premiums paid on executive bonus insurance policies; and
• tax reimbursements for the taxes due on insurance premiums paid by Harris Teeter.
The total amount of perquisites furnished to the NEOs is shown in the Summary Compensation
Table and described in more detail in footnote 6 to that table.