Kroger 2014 Annual Report Download - page 38

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36
maximum฀amounts฀are฀prorated฀to฀reflect฀the฀increase.฀Accordingly,฀the฀amounts฀reported฀for฀Messrs.฀
McMullen฀and฀Ellis฀reflect฀the฀prorated฀targets฀and฀maximums.฀The฀amounts฀actually฀earned฀under฀this฀
plan฀were฀ paid฀in฀March฀2015฀and฀are฀included฀in฀the฀Summary฀Compensation฀Table฀for฀2014฀ in฀the฀
“Non-Equity฀Incentive฀Plan฀Compensation”฀column฀and฀are฀described฀in฀footnote฀4฀to฀that฀table.฀
(2)฀ These฀amounts฀relate฀to฀the฀2014฀Long-Term฀Cash฀Bonus฀Plan,฀which฀covers฀performance฀during฀fiscal฀
years฀2014,฀2015฀and฀2016.฀The฀cash฀bonus฀potential฀amount฀equals฀the฀annual฀base฀salary฀of฀the฀named฀
executive฀officers฀as฀of฀the฀last฀day฀of฀fiscal฀2013.฀By฀the฀terms฀of฀the฀plan,฀payouts฀are฀limited฀to฀no฀
more฀than฀100%฀of฀a฀participant’s฀bonus฀potential;฀accordingly,฀the฀amount฀listed฀under฀“Maximum”฀
equals฀the฀participant’s฀bonus฀potential.฀Because฀the฀actual฀payout฀is฀based฀on฀the฀level฀of฀performance฀
achieved,฀ the฀ target฀ amount฀ is฀ not฀ determinable฀ and฀ therefore฀ the฀ amount฀ listed฀ under฀ “Target”฀ is฀
a฀ representative฀ amount฀ based฀ on฀ the฀ probable฀ outcome฀ of฀ the฀ performance฀ conditions.฀ Due฀ to฀ his฀
retirement,฀Mr.฀Dillon’s฀award฀was฀prorated฀with฀service฀accruing฀through฀February฀28,฀2015.฀
(3)฀ These฀amounts฀represent฀performance฀units฀awarded฀under฀the฀Company’s฀2014฀Long-Term฀Incentive฀
Plan,฀ which฀ covers฀ performance฀ during฀ fiscal฀ years฀ 2014,฀ 2015฀ and฀ 2016.฀ The฀ amount฀ listed฀ under฀
“Maximum”฀ represents฀ the฀ maximum฀ number฀ of฀ common฀ shares฀ that฀ can฀ be฀ earned฀ by฀ the฀ named฀
executive฀ officer฀ under฀ the฀ award.฀ Because฀ the฀ actual฀ payout฀ is฀ based฀ on฀ the฀ level฀ of฀ performance฀
achieved,฀the฀target฀amount฀is฀not฀determinable฀and฀therefore฀the฀amount฀listed฀under฀“Target”฀reflects฀
a฀representative฀amount฀based฀on฀the฀probable฀outcome฀of฀the฀performance฀conditions.฀The฀grant฀date฀
fair฀value฀reported฀in฀the฀last฀column฀is฀based฀on฀the฀probable฀outcome฀of฀the฀performance฀conditions฀
as฀of฀the฀grant฀date.฀This฀amount฀is฀consistent฀with฀the฀estimate฀of฀aggregate฀compensation฀cost฀to฀be฀
recognized฀by฀the฀Company฀over฀the฀three-year฀performance฀period฀of฀the฀award฀determined฀as฀of฀the฀
grant฀date฀under฀FASB฀ASC฀Topic฀718,฀excluding฀the฀effect฀of฀estimated฀forfeitures.฀Due฀to฀his฀retirement,฀
Mr.฀Dillon’s฀award฀was฀prorated฀with฀service฀accruing฀through฀February฀28,฀2015.฀The฀aggregate฀grant฀
date฀fair฀value฀of฀these฀awards฀is฀included฀in฀the฀Summary฀Compensation฀Table฀for฀2014฀in฀the฀“Stock฀
Awards”฀column฀and฀described฀in฀footnote฀2฀to฀that฀table.
(4)฀ These฀amounts฀represent฀the฀number฀of฀shares฀of฀restricted฀stock฀granted฀under฀one฀of฀the฀Company’s฀
long-term฀incentive฀plans.฀The฀aggregate฀grant฀date฀fair฀value฀reported฀in฀the฀last฀column฀is฀calculated฀
in฀accordance฀with฀FASB฀ASC฀Topic฀718.฀The฀aggregate฀grant฀date฀fair฀value฀of฀these฀awards฀is฀included฀
in฀the฀Summary฀Compensation฀Table฀for฀2014฀in฀the฀“Stock฀Awards”฀column฀and฀described฀in฀footnote฀2฀
to฀that฀table.฀
(5)฀ These฀amounts฀represent฀the฀number฀of฀stock฀options฀granted฀under฀one฀of฀the฀Company’s฀long-term฀
incentive฀plans.฀Options฀are฀granted฀with฀an฀exercise฀price฀equal฀to฀the฀closing฀price฀of฀Kroger฀common฀
shares on the grant date. The aggregate grant date fair value reported in the last column is calculated in
accordance฀with฀FASB฀ASC฀Topic฀718.฀The฀aggregate฀grant฀date฀fair฀value฀of฀these฀awards฀is฀included฀in฀
the฀Summary฀Compensation฀Table฀for฀2014฀in฀the฀“Option฀Awards”฀column.฀
The฀ Compensation฀ Committee,฀ and฀ the฀ independent฀ members฀ of฀ the฀ Board฀ in฀ the฀ case฀ of฀ the฀ CEO,฀
established฀the฀bonus฀potentials฀shown฀in฀this฀table฀as฀“Target”฀amounts฀for฀the฀performance-based฀annual฀
awards,฀ and฀ established฀ the฀ amounts฀ shown฀ in฀ this฀ table฀ as฀ “Maximum”฀ amounts฀ for฀ the฀ long-term฀ cash฀
bonus฀awards.฀Amounts฀are฀payable฀to฀the฀extent฀that฀performance฀meets฀specific฀objectives฀established฀at฀
the฀beginning฀of฀the฀performance฀period.฀As฀described฀in฀the฀Compensation฀Discussion฀and฀Analysis,฀actual฀
earnings฀under฀the฀annual฀ cash฀bonus฀plan฀ may฀exceed฀ the฀ target฀amount฀if฀ the฀Company’s฀performance฀
exceeds฀ the฀ performance฀ objectives,฀ but฀ are฀ limited฀ to฀ 200%฀ of฀ the฀ target฀ amount.฀ The฀ Compensation฀
Committee,฀and฀the฀independent฀members฀of฀the฀Board฀in฀the฀case฀of฀the฀CEO,฀also฀determined฀the฀number฀
of฀ performance฀ units฀ to฀ be฀ awarded฀ to฀ each฀ named฀ executive฀ officer,฀ under฀ which฀ common฀ shares฀ are฀
earned฀to฀the฀extent฀performance฀meets฀specific฀objectives฀established฀at฀the฀beginning฀of฀the฀performance฀
period.฀The฀performance฀units฀and฀the฀long-term฀cash฀bonus฀awards฀are฀more฀particularly฀described฀in฀the฀
Compensation฀Discussion฀and฀Analysis.