Kroger 2014 Annual Report Download - page 46

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PO T E N T I A L P A Y M E N T S U P O N T E R M I N A T I O N O R C H A N G E I N C O N T R O L
Kroger฀does฀not฀have฀employment฀agreements฀or฀other฀contracts,฀agreements,฀plans฀or฀arrangements฀
that฀provide฀for฀payments฀to฀the฀named฀executive฀officers฀in฀connection฀with฀a฀termination฀of฀employment฀
or฀a฀change฀in฀control฀of฀Kroger.฀However,฀The฀Kroger฀Co.฀Employee฀Protection฀Plan,฀or฀KEPP,฀our฀award฀
agreements฀for฀stock฀options,฀restricted฀stock฀and฀performance฀units,฀and฀our฀long-term฀cash฀bonus฀plans฀
provide฀for฀certain฀payments฀and฀benefits฀to฀participants,฀including฀the฀named฀executive฀officers,฀in฀the฀event฀
of฀a฀termination฀of฀employment฀or฀a฀change฀in฀control฀of฀Kroger,฀as฀described฀below.฀Our฀pension฀plans฀and฀
nonqualified฀deferred฀compensation฀plan฀also฀provide฀for฀certain฀payments฀and฀benefits฀to฀participants฀in฀the฀
event฀of฀a฀termination฀of฀employment,฀as฀described฀above฀in฀the฀Pension฀Benefits฀section฀and฀the฀Nonqualified฀
Deferred฀Compensation฀section,฀respectively.฀For฀purposes฀of฀KEPP,฀and฀our฀equity฀and฀non-equity฀incentive฀
awards,฀a฀change฀in฀control฀occurs฀if:
•฀ any฀person฀or฀entity฀(excluding฀Kroger’s฀employee฀benefit฀plans)฀acquires฀20%฀or฀more฀of฀the฀voting฀
power฀of฀Kroger;฀
•฀ a฀merger,฀consolidation,฀share฀exchange,฀division,฀or฀other฀reorganization฀or฀transaction฀with฀Kroger฀
results฀ in฀ Kroger’s฀ voting฀ securities฀ existing฀ prior฀ to฀ that฀ event฀ representing฀ less฀ than฀ 60%฀ of฀ the฀
combined฀voting฀power฀immediately฀after฀the฀event;฀
•฀ Kroger’s฀shareholders฀approve฀a฀plan฀of฀complete฀liquidation฀or฀winding฀up฀of฀Kroger฀or฀an฀agreement฀
for฀the฀sale฀or฀disposition฀of฀all฀or฀substantially฀all฀of฀Kroger’s฀assets;฀or
•฀ during฀any฀period฀of฀24฀consecutive฀months,฀individuals฀at฀the฀beginning฀of฀the฀period฀who฀constituted฀
Kroger’s฀Board฀of฀Directors฀cease฀for฀any฀reason฀to฀constitute฀at฀least฀a฀majority฀of฀the฀Board฀of฀Directors.฀
The Kroger Co. Employee Protection Plan
The฀ Kroger฀ Co.฀ Employee฀ Protection฀ Plan,฀ or฀ KEPP,฀ applies฀ to฀ all฀ management฀ employees฀ and฀
administrative฀support฀personnel฀who฀are฀not฀covered฀by฀a฀collective฀bargaining฀agreement,฀with฀at฀least฀one฀
year฀of฀service,฀and฀provides฀severance฀benefits฀when฀a฀participant’s฀employment฀is฀terminated฀actually฀or฀
constructively฀within฀two฀years฀following฀a฀change฀in฀control฀of฀Kroger.฀The฀actual฀amount฀is฀dependent฀on฀
pay฀level฀and฀years฀of฀service.฀The฀named฀executive฀officers฀are฀eligible฀for฀the฀following฀benefits:
•฀ a฀lump฀sum฀severance฀payment฀equal฀to฀up฀to฀two฀times฀the฀sum฀of฀the฀participant’s฀annual฀base฀salary฀
and฀70%฀of฀the฀greater฀of฀the฀current฀annual฀bonus฀potential฀or฀the฀average฀of฀the฀actual฀annual฀bonus฀
payments฀for฀the฀prior฀three฀years;฀
•฀ a฀lump฀sum฀payment฀equal฀to฀the฀participant’s฀accrued฀and฀unpaid฀vacation,฀including฀banked฀vacation;฀
•฀ a฀ lump฀ sum฀ payment฀ equal฀ to฀ 1/12th฀ of฀ the฀ sum฀ of฀ the฀ participant’s฀ annual฀ vacation฀ pay฀ plus฀ 70%฀
of฀ the฀ greater฀ of฀ the฀ current฀ year’s฀ annual฀ cash฀ bonus฀ potential฀ or฀ the฀ average฀ of฀ the฀ actual฀ annual฀
bonus฀payments฀for฀the฀prior฀three฀years,฀multiplied฀by฀the฀number฀of฀months฀elapsed฀in฀the฀current฀
calendar฀year;฀
•฀ continued฀medical฀and฀dental฀benefits฀for฀up฀to฀24฀months฀and฀continued฀life฀insurance฀coverage฀for฀up฀
to฀6฀months;฀and
•฀ up฀to฀$5,000฀as฀reimbursement฀for฀eligible฀tuition฀expenses฀and฀up฀to฀$10,000฀as฀reimbursement฀for฀
eligible฀outplacement฀expenses.฀
Payments฀to฀executive฀officers฀under฀KEPP฀will฀be฀reduced,฀to฀the฀extent฀necessary,฀so฀that฀payments฀
will฀not฀exceed฀2.99฀times฀the฀officers฀average฀W-2฀earnings฀over฀the฀preceding฀five฀years.