Kroger 2015 Annual Report Download - page 60

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Annual Compensation
Each non-employee director receives an annual cash retainer of $85,000. The chairs of each
of the Audit Committee and the Compensation Committee receive an additional annual cash retainer
of $20,000. The chair of each of the other committees receives an additional annual cash retainer of
$15,000. Each member of the Audit Committee receives an additional annual cash retainer of $10,000.
The director designated as the Lead Director receives an additional annual cash retainer of $25,000.
Approximately $165,000 worth of incentive shares (Kroger common shares) are issued to non-
employee directors as a portion of the directors’ overall compensation. On July 15, 2015, each non-
employee director, except for Ms. Gates, received 4,320 common shares. Ms. Gates received 2,386
common shares on December 10, 2015 upon joining the Board.
The Board has determined that compensation of non-employee directors must be competitive on
an ongoing basis to attract and retain directors who meet the qualifications for service on the Board.
Non-employee director compensation will be reviewed from time to time as the Corporate Governance
Committee deems appropriate.
Pension Plan
Non-employee directors first elected prior to July 17, 1997 receive an unfunded retirement benefit
equal to the average cash compensation for the five calendar years preceding retirement. Only Mr.
Moore is eligible for this benefit. Participants who retire from the Board prior to age 70 will be credited
with 50% vesting after five years of service, and 10% for each additional year up to a maximum of 100%.
Benefits for participants who retire prior to age 70 begin at the later of actual retirement or age 65.
Nonqualified Deferred Compensation
We also maintain a deferred compensation plan for non-employee directors. Participants may defer
up to 100% of their cash compensation and/or the receipt of all (and not less than all) of the annual award
of incentive shares.
Cash Deferrals
Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect
from either or both of the following two alternative methods of determining benefits:
• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral
year to represent Kroger’s cost of ten-year debt; and/or
• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with
the price of Kroger common shares.
In both cases, deferred amounts are paid out only in cash, based on deferral options selected by
the participant at the time the deferral elections are made. Participants can elect to have distributions
made in a lump sum or in quarterly installments, and may make comparable elections for designated
beneficiaries who receive benefits in the event that deferred compensation is not completely paid out
upon the death of the participant.
Incentive Share Deferrals
Participants may also defer the receipt of all (and not less than all) of the annual award of incentive
shares. Distributions will be made by delivery of Kroger common shares within 30 days after the date
which is 6 months after the participant’s separation of service.