Kroger 2014 Annual Report Download - page 44

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As฀“grandfathered฀participants”,฀Messrs.฀McMullen,฀Schlotman,฀Donnelly฀and฀Dillon฀will฀receive฀benefits฀
under฀the฀Consolidated฀Plan฀and฀the฀Excess฀Plans,฀determined฀as฀follows:
•฀ 1½%฀times฀years฀of฀credited฀service฀multiplied฀by฀the฀average฀of฀the฀highest฀five฀years฀of฀total฀earnings฀
(base฀salary฀and฀annual฀bonus)฀during฀the฀last฀ten฀calendar฀years฀of฀employment,฀reduced฀by฀1¼%฀times฀
years฀of฀credited฀service฀multiplied฀by฀the฀primary฀social฀security฀benefit;฀
•฀ normal฀retirement฀age฀is฀65;฀
•฀ unreduced฀benefits฀are฀payable฀beginning฀at฀age฀62;฀and฀
•฀ benefits฀ payable฀ between฀ ages฀ 55฀ and฀ 62฀ will฀ be฀ reduced฀ by฀ ⅓ of one percent for each of the first
24฀months฀and฀by฀½฀of฀one฀percent฀for฀each฀of฀the฀next฀60฀months฀by฀which฀the฀commencement฀of฀
benefits฀precedes฀age฀62.฀
Although฀ participants฀ generally฀ receive฀ credited฀ service฀ beginning฀ at฀ age฀ 21,฀ certain฀ participants฀ in฀
the฀ Consolidated฀ Plan฀ and฀the฀Kroger฀ Excess฀Plan฀who฀commenced฀employment฀prior฀to฀1986,฀including฀
Messrs.฀McMullen,฀Schlotman฀and฀ Dillon,฀began฀ to฀accrue฀ credited฀service฀after฀ attaining฀ age฀25฀and฀ one฀
year฀of฀service.฀In฀the฀event฀of฀a฀termination฀of฀employment฀other฀than฀death฀or฀disability,฀Messrs.฀Schlotman฀
and฀Donnelly฀currently฀are฀eligible฀for฀a฀reduced฀early฀retirement฀benefit,฀as฀each฀has฀attained฀age฀55,฀and฀
Mr.฀Dillon฀is฀eligible฀for฀the฀full฀retirement฀benefit,฀as฀he฀has฀attained฀age฀62.฀If฀a฀“grandfathered฀participant”฀
becomes฀disabled฀while฀employed฀by฀Kroger฀and฀after฀attaining฀age฀55,฀the฀participant฀will฀receive฀the฀full฀
retirement฀benefit.฀If฀ a฀married฀“grandfathered฀participant”฀dies฀ while฀employed฀by฀Kroger,฀the฀surviving฀
spouse฀will฀receive฀benefits฀as฀though฀a฀retirement฀occurred฀on฀such฀date,฀based฀on฀the฀greater฀of:฀actual฀
benefits฀payable฀to฀the฀participant฀if฀he฀was฀over฀age฀55,฀or฀the฀benefits฀that฀would฀have฀been฀payable฀to฀the฀
participant฀assuming฀he฀was฀age฀55฀on฀the฀date฀of฀death.
Mr.฀ Ellis฀ began฀participating฀ in฀ the฀ Consolidated฀Plan฀ and฀ the฀ Kroger฀Excess฀ Plan฀in฀April฀ 1999฀ as฀a฀
cash฀ balance฀ participant.฀ Until฀ those฀ plans฀ were฀ frozen฀ on฀ December฀ 31,฀ 2006,฀ cash฀ balance฀ participants฀
received฀an฀annual฀pay฀credit฀equal฀to฀5%฀of฀that฀year’s฀eligible฀earnings฀plus฀an฀annual฀interest฀credit฀equal฀
to฀the฀account฀balance฀at฀the฀beginning฀of฀the฀plan฀year฀multiplied฀by฀the฀annual฀rate฀of฀interest฀on฀30-year฀
Treasury฀Securities฀in฀effect฀prior฀to฀the฀plan฀year.฀Beginning฀on฀January฀1,฀2007,฀cash฀balance฀participants฀
receive฀an฀annual฀interest฀credit฀but฀no฀longer฀receive฀an฀annual฀pay฀credit.฀Upon฀retirement,฀cash฀balance฀
participants฀generally฀are฀eligible฀to฀receive฀a฀life฀annuity฀which฀is฀the฀actuarial฀equivalent฀of฀his฀account฀
balance,฀but฀may฀elect฀in฀some฀circumstances฀to฀receive฀a฀lump฀sum฀distribution฀equal฀to฀his฀account฀balance.฀
Normal฀retirement฀age฀is฀65฀and฀participants฀ are฀eligible฀ for฀reduced฀benefits฀ beginning฀at฀age฀55.฀ In฀the฀
event฀of฀a฀ termination฀of฀employment฀other฀ than฀ disability฀ or฀ death,฀ Mr.฀ Ellis฀ currently฀ is฀ eligible฀for฀the฀
reduced฀retirement฀benefit฀as฀he฀has฀attained฀age฀55.฀If฀a฀cash฀balance฀participant฀becomes฀disabled฀while฀still฀
employed฀by฀Kroger,฀he฀or฀she฀will฀receive฀the฀full฀retirement฀benefit.฀If฀a฀cash฀balance฀participant฀dies฀while฀
employed฀by฀Kroger,฀his฀or฀her฀beneficiary฀will฀receive฀a฀death฀benefit฀equal฀to฀the฀benefit฀the฀participant฀was฀
eligible฀to฀receive฀if฀a฀retirement฀occurred฀on฀such฀date.
Messrs.฀Donnelly฀ and฀Dillon฀also฀participate฀in฀ the฀Dillon฀Employees’฀Profit฀Sharing฀Plan,฀which฀is฀a฀
qualified฀defined฀contribution฀plan฀(the฀“Dillon฀Profit฀Sharing฀Plan”)฀under฀which฀Dillon฀Companies,฀Inc.฀and฀
its฀participating฀subsidiaries฀may฀choose฀to฀make฀discretionary฀contributions฀each฀year฀that฀are฀allocated฀to฀
each฀participant’s฀account.฀Participation฀in฀Dillon฀Profit฀Sharing฀Plan฀was฀frozen฀effective฀January฀1,฀2001.฀
Mr.฀Dillon฀is฀no฀longer฀eligible฀for฀employer฀contributions฀under฀the฀Dillon฀Profit฀Sharing฀Plan.฀Participants฀
in฀the฀Dillon฀Profit฀Sharing฀Plan฀elect฀from฀among฀a฀number฀of฀investment฀options฀and฀the฀amounts฀in฀their฀
accounts฀ are฀ invested฀ and฀ credited฀ with฀ investment฀ earnings฀ in฀ accordance฀ with฀ their฀ elections.฀ Prior฀ to฀
July฀1,฀2000,฀participants฀could฀elect฀to฀make฀voluntary฀contributions฀under฀the฀Dillon฀Profit฀Sharing฀Plan,฀but฀
that฀option฀was฀discontinued฀effective฀as฀of฀July฀1,฀2000.฀Participants฀can฀elect฀to฀receive฀their฀Dillon฀Profit฀
Sharing฀Plan฀benefit฀in฀the฀form฀of฀either฀a฀lump฀sum฀payment฀or฀installment฀payments.
Due฀ to฀ offset฀ formulas฀ contained฀ in฀ the฀ Consolidated฀ Plan฀ and฀ the฀ Dillon฀ Excess฀ Plan,฀ the฀ accrued฀
benefits฀under฀the฀Dillon฀Profit฀Sharing฀Plan฀for฀each฀of฀Messrs.฀Donnelly฀and฀Dillon฀offset฀a฀portion฀of฀the฀
benefit฀that฀would฀otherwise฀accrue฀for฀them฀under฀those฀plans฀for฀their฀service฀with฀Dillon฀Companies,฀Inc.฀
Although฀benefits฀that฀accrue฀under฀defined฀contribution฀plans฀are฀not฀reportable฀under฀the฀accompanying฀
table,฀we฀have฀added฀narrative฀disclosure฀of฀the฀Dillon฀Profit฀Sharing฀Plan฀because฀of฀the฀offsetting฀effect฀that฀
benefits฀under฀that฀plan฀has฀on฀benefits฀accruing฀under฀the฀Consolidated฀Plan฀and฀the฀Dillon฀Excess฀Plan.