Kroger 2014 Annual Report Download - page 23

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21
•฀ adopted฀ claw-back฀ policies฀ under฀ which฀ the฀ repayment฀ of฀ bonuses฀ may฀ be฀ required฀ in฀ certain฀
circumstances;฀
•฀ eliminated฀tax฀gross-ups;฀
•฀ adopted฀the฀recommendation฀of฀shareholders฀that฀they฀be฀permitted฀annually,฀on฀an฀advisory฀basis,฀to฀
vote฀on฀executive฀compensation;฀and฀
•฀ adopted฀a฀policy฀prohibiting฀hedging฀and฀short฀sales,฀and฀restricting฀pledging฀of฀Kroger฀common฀shares฀
by฀our฀officers฀and฀directors.฀
In฀addition,฀fifty฀percent฀of฀the฀equity฀awards฀granted฀to฀the฀named฀executive฀officers฀are฀in฀the฀form฀
of฀performance฀units฀that฀ are฀earned฀only฀to฀the฀extent฀that฀ performance฀objectives฀ are฀ achieved.฀Equity฀
compensation฀ awards฀ continue฀ to฀ play฀ an฀ important฀ role฀ in฀ rewarding฀ named฀ executive฀ officers฀ for฀ the฀
achievement฀of฀long-term฀business฀objectives฀and฀providing฀incentives฀for฀the฀creation฀of฀shareholder฀value.฀
The฀following฀discussion฀and฀analysis฀addresses฀the฀compensation฀of฀the฀named฀executive฀officers฀and฀
the฀factors฀considered฀by฀the฀Committee฀in฀setting฀compensation฀for฀the฀named฀executive฀officers฀and฀making฀
recommendations฀to฀the฀independent฀directors฀in฀the฀case฀of฀the฀CEO’s฀compensation.฀Additional฀detail฀is฀
provided฀in฀the฀compensation฀tables฀and฀the฀accompanying฀narrative฀disclosures฀that฀follow฀this฀discussion฀
and analysis.
RE S U L T S O F 2 0 14 A D V I S O R Y V O T E T O A P P R O V E E X E C U T I V E C O M P E N S A T I O N
At฀ the฀ 2014฀ Annual฀ Meeting฀ of฀ Shareholders,฀ we฀ held฀ our฀ fourth฀ annual฀ advisory฀ vote฀ on฀ executive฀
compensation.฀Over฀96%฀of฀the฀votes฀cast฀were฀in฀favor฀of฀the฀advisory฀proposal฀in฀2014.฀The฀Committee฀
considers฀this฀to฀be฀an฀overwhelmingly฀favorable฀outcome฀and฀believes฀it฀conveys฀our฀shareholders’฀support฀
of฀the฀Committee’s฀decisions฀and฀the฀existing฀executive฀compensation฀programs.฀As฀a฀result,฀the฀Committee฀
made no material changes in the structure of our compensation programs or pay for performance philosophy.
At฀the฀2015฀Annual฀Meeting฀of฀Shareholders,฀in฀keeping฀with฀our฀shareholders’฀request฀for฀an฀annual฀advisory฀
vote,฀we฀will฀again฀hold฀an฀advisory฀vote฀to฀approve฀executive฀compensation฀(see฀page฀55).฀The฀Committee฀
will฀continue฀to฀consider฀the฀results฀from฀this฀year’s฀and฀future฀advisory฀votes฀on฀executive฀compensation.
EX E C U T I V E C O M P E N S A T I O N – OB J E C T I V E S
The฀ Committee฀has฀several฀ related฀ objectives฀regarding฀compensation.฀First,฀the฀Committee฀ believes฀
that฀compensation฀must฀be฀designed฀ to฀attract฀and฀retain฀those฀best฀suited฀to฀fulfill฀the฀ challenging฀roles฀
that฀executive฀officers฀play฀at฀Kroger.฀Second,฀some฀elements฀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฀(a)฀to฀achieve฀the฀annual฀business฀plan฀targets฀established฀by฀the฀Board,฀and฀(b)฀to฀achieve฀
Kroger’s฀ long-term฀ strategic฀ objectives.฀In฀developing฀compensation฀programs฀and฀ amounts฀ to฀meet฀these฀
objectives,฀the฀Committee฀exercises฀judgment฀to฀ensure฀that฀executive฀officer฀compensation฀is฀appropriate฀
and฀competitive฀in฀light฀of฀Kroger’s฀performance฀and฀the฀needs฀of฀the฀business.
ST O C K O W N E R S H I P G U I D E L I N E S
To more closely align the interests of our officers and directors with your interests as shareholders, the
Board฀ has฀ adopted฀stock฀ ownership฀guidelines.฀These฀ guidelines฀require฀ non-employee฀ directors,฀ officers฀
and฀some฀other฀key฀executives฀to฀acquire฀and฀hold฀a฀minimum฀dollar฀value฀of฀Kroger฀common฀shares฀as฀set฀
forth฀below:฀
Position Multiple of Base Salary
Chief฀Executive฀Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5฀times
Chief฀Operating฀Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4฀times
Executive฀Vice฀Presidents฀and฀Senior฀Vice฀Presidents . . . . . . . . . . . . . 3฀times
Other฀Officers฀and฀Key฀Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 times
Non-employee฀Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3฀times฀annual฀base฀cash฀retainer