Kroger 2015 Annual Report Download - page 54

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Harris Teeter Flexible Deferral Plan
Mr. Morganthall participates in the HT Flexible Deferral Plan, which is a nonqualified deferred
compensation plan that provides certain highly compensated employees of Harris Teeter, the opportunity
to defer the receipt and taxation on a portion of their annual compensation and supplements the benefits
under tax qualified retirement plans to the extent that such benefits are subject to limitation under the
Internal Revenue Code. Participants may elect to defer up to 50% of their base salary and up to 90% of
their non-equity incentive bonus compensation. Harris Teeter provides matching contributions of 50%
of the participant’s contribution, up to a maximum of 4% of the participant’s pay, less assumed matching
contributions under the HT Savings Plan. These deferred amounts and Company match are credited
to the participant’s account. Plan participants may choose deemed investments in the HT Flexible
Deferral Plan that represent choices that span a variety of diversified asset classes. Participants may
elect to receive a lump sum distribution, annual installment payments for 2-15 years, or a partial lump
sum and installment payments. Upon retirement, death, disability, or other separation of service, the
participant will receive distributions in accordance with his election, subject to limitations under Section
409A. Mr. Morganthall has reached the retirement age and is eligible for the full benefit. The HT Flexible
Deferral Plan also allows for an in-service withdrawal for an unforeseeable emergency based on facts
and circumstances that meet Internal Revenue Service and plan guidelines. Harris Teeter uses a non-
qualified trust to purchase and hold the assets to satisfy Harris Teeter’s obligation under the HT Flexible
Deferral Plan, and participants in the HT Flexible Deferral Plan are general creditors of Harris Teeter in
the event Harris Teeter becomes insolvent.
Potential Payments upon Termination or Change in Control
Kroger does not have employment agreements or other contracts, agreements, plans or
arrangements that provide for payments to the NEOs in connection with a termination of employment or
a change in control of Kroger. However, KEPP, our award agreements for stock options, restricted stock
and performance units and our long-term cash bonus plans provide for certain payments and benefits
to participants, including the NEOs, in the event of a termination of employment or a change in control
of Kroger, as described below. Our pension plans and nonqualified deferred compensation plan also
provide for certain payments and benefits to participants in the event of a termination of employment, as
described above in the Pension Benefits section and the Nonqualified Deferred Compensation section,
respectively.
A “change in control” under KEPP, and our equity and non-equity incentive awards occurs if:
• any person or entity (excluding Kroger’s employee benefit plans) acquires 20% or more of the voting
power of Kroger;
• a merger, consolidation, share exchange, division, or other reorganization or transaction with Kroger
results in Kroger’s voting securities existing prior to that event representing less than 60% of the
combined voting power immediately after the event;
• Kroger’s shareholders approve a plan of complete liquidation or winding up of Kroger or an
agreement for the sale or disposition of all or substantially all of Kroger’s assets; or
• during any period of 24 consecutive months, individuals at the beginning of the period who
constituted Kroger’s Board of Directors cease for any reason to constitute at least a majority of the
Board of Directors.
KEPP
KEPP applies to all management employees and administrative support personnel who are not
covered by a collective bargaining agreement, with at least one year of service, and provides severance
benefits when a participant’s employment is terminated actually or constructively within two years
following a change in control of Kroger, including the NEOs. The actual amount is dependent on pay level
and years of service. The NEOs are eligible for the following benefits:
• a lump sum severance payment equal to up to two times the sum of the participant’s annual base
salary and 70% of the greater of the current annual cash bonus potential or the average of the
actual annual cash bonus payments for the prior three years;