Kroger 2014 Annual Report Download - page 32

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30
representing฀Kroger’s฀cost฀of฀ten-year฀debt฀in฀the฀year฀the฀rate฀is฀set,฀as฀determined฀by฀the฀CEO,฀and฀reviewed฀
with฀ the฀ Committee,฀prior฀ to฀ the฀beginning฀of฀each฀ deferral฀year.฀In฀ 2014,฀ that฀ rate฀ was฀3.25%.฀Deferred฀
amounts฀are฀paid฀out฀only฀in฀cash,฀in฀accordance฀with฀a฀deferral฀option฀selected฀by฀the฀participant฀at฀the฀time฀
the deferral election is made.
Kroger฀also฀maintains฀The฀Kroger฀Co.฀Employee฀Protection฀Plan,฀or฀KEPP,฀in฀which฀all฀of฀our฀management฀
employees฀and฀administrative฀support฀personnel฀whose฀employment฀is฀not฀covered฀by฀a฀collective฀bargaining฀
agreement,฀with฀at฀least฀one฀year฀of฀service,฀are฀covered.฀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฀the฀plan).฀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.
Stock฀option,฀restricted฀stock฀and฀performance฀unit฀agreements฀with฀participants฀in฀Kroger’s฀long-term฀
incentive฀plans฀provide฀that฀those฀awards฀“vest,”฀with฀options฀becoming฀immediately฀exercisable,฀restrictions฀
on฀restricted฀stock฀lapsing,฀and฀common฀shares฀equal฀to฀50%฀of฀the฀performance฀units฀being฀awarded,฀upon฀
a฀change฀in฀control฀as฀described฀in฀the฀agreements.
Upon฀Mr.฀Dillon’s฀retirement,฀the฀Board฀of฀Directors฀determined฀that฀it฀was฀in฀the฀best฀interests฀of฀Kroger฀
to฀amend฀certain฀of฀Mr.฀Dillon’s฀restricted฀stock฀agreements฀to฀permit฀the฀restrictions฀on฀the฀restricted฀stock฀
awards฀to฀lapse฀in฀accordance฀with฀the฀original฀vesting฀schedule,฀provided฀Mr.฀Dillon฀executed฀a฀non-compete฀
agreement,฀which฀he฀did.฀If฀Mr.฀Dillon฀were฀to฀breach฀the฀terms฀of฀his฀non-compete฀agreement,฀the฀unvested฀
restricted฀stock฀would฀be฀forfeited.
None฀of฀the฀named฀executive฀officers฀is฀party฀to฀an฀employment฀agreement.฀
PE R Q U I S I T E S
The฀Committee฀does฀not฀believe฀that฀it฀is฀necessary฀for฀the฀attraction฀or฀retention฀of฀management฀talent฀
to฀provide฀the฀named฀executive฀officers฀a฀substantial฀amount฀of฀compensation฀in฀the฀form฀of฀perquisites.฀In฀
2014,฀the฀only฀perquisites฀available฀to฀our฀named฀executive฀officers฀were:
•฀ premiums฀paid฀on฀life฀insurance฀policies;
•฀ premiums฀paid฀on฀accidental฀death฀and฀dismemberment฀insurance;฀and
•฀ premiums฀paid฀on฀long-term฀disability฀insurance฀policies.
Currently,฀154฀active฀executives,฀including฀the฀named฀executive฀officers,฀and฀98฀retired฀executives,฀are฀
eligible฀for฀these฀perquisites.
In฀ addition,฀ the฀ named฀ executive฀ officers฀ are฀ entitled฀ to฀ the฀ personal฀ use฀ of฀ Kroger฀ aircraft,฀ which฀
officers฀may฀lease฀from฀Kroger,฀making฀officers฀more฀available฀and฀allowing฀for฀a฀more฀efficient฀use฀of฀their฀
time.฀This฀is฀not฀considered฀a฀perquisite฀as฀we฀are฀reimbursed฀by฀the฀executives฀for฀the฀average฀variable฀cost฀
of such use.
The฀ total฀amount฀of฀perquisites฀furnished฀to฀the฀named฀ executive฀officers฀is฀shown฀in฀the฀Summary฀
Compensation฀Table฀and฀described฀in฀more฀detail฀in฀footnote฀6฀to฀that฀table.
EX E C U T I V E C O M P E N S A T I O N R E C O U P M E N T P O L I C Y
If฀ a฀ material฀ error฀ of฀ facts฀ results฀ in฀ the฀ payment฀ to฀ an฀ executive฀ officer฀ at฀ the฀ level฀ of฀ Group฀ Vice฀
President฀ or฀ higher฀ of฀ an฀ annual฀ bonus฀ or฀ a฀ long-term฀ bonus฀ in฀ an฀ amount฀ higher฀ than฀ otherwise฀ would฀
have฀ been฀ paid,฀ as฀ determined฀ by฀ the฀ Committee,฀ then฀ the฀ officer,฀ upon฀ demand฀ from฀ the฀ Committee,฀
will฀reimburse฀Kroger฀for฀the฀amounts฀that฀would฀not฀have฀been฀paid฀if฀the฀error฀had฀not฀occurred.฀This฀
recoupment฀policy฀applies฀ to฀those฀ amounts฀paid฀by฀Kroger฀within฀36฀months฀prior฀to฀ the฀detection฀and฀
public฀disclosure฀of฀the฀error.฀In฀enforcing฀the฀policy,฀the฀Committee฀will฀take฀into฀consideration฀all฀factors฀
that฀it฀deems฀appropriate,฀including:
•฀ The฀materiality฀of฀the฀amount฀of฀payment฀involved;