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Kroger:A True Retail Giant
IN THIS TOUGH ECONOMY...... 

more families are cutting back and eating at homepreferring to buy food at the grocery store instead of at restaurants. This has meant that while all businesses have been affected by the recession, grocery stores have suffered less. And Kroger has seen business suffer very little, still enjoying extraordinary profits as probably the most successful player in the grocery industry. Kroger is the national grocery market share leader among conventional grocers. At about 13%, it is second only to WalMart, and is poised to further expand market share with its continued success.

THE NUMBERS 

 

show this clearly.The company believes that it will see even more success as its high quality offerings help retain some of these new customers after the recession. And Krogers executives are clearly reaping the rewards of that continuing success.So why not share the success with the grocery workers who work hard every day to make it possible?Its the right thing to do. 

 


BY THE NUMBERSMost recent fiscal year:

 

 

The amount of profit per dollar the company generated held steady from 2007 to 2008.

 

Kroger continued to gain market share in 36 of its 42 major markets, and believes it will continue to gain even more in months to come. And in the most recent quarter:

 

Total sales were $17.7 billion this quarter, a decline from $18.1 billion over last yearbut this is due to the decline in fuel prices.

 

Excluding fuel, supermarket sales were up 3.5%.

 

Kroger had a decline in quarterly profits down from $276.4 million to $254.4 million. Identical store sales, excluding fuel, were up 2.6%.

 

Kroger continues to see strong sales in deli and bakery, which is at least partly because of former restaurant-goers trading down to prepared food at the grocery. And Krogers executives are being rewarded for the companys continuing dominance of the industry:

 

In fiscal year 2008 (which ended January 31, 2009), David Dillon, the Chairman and CEO of Kroger, earned $1,220,000 in base salary, and his total compensation was over $8 million.

 

The other four top officers received total compensation of between $1.8 3.9 million.

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http://www.thekrogerco.com/finance/documents/proxystatement.pdf

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Kroger stock price reduces Dillons pay

Business Courier of Cincinnati - by Jon Newberry Staff Reporterroger Co. CEO David Dillons reported compensation decreased by 19 percent last year, from $8.3 million to $6.7 million, but the bulk of the decline was directly attributable to a decline in the companys stock price compared to the summer of 2008.

According to a preliminary proxy statement filed with the Securities and Exchange Commission, the Kroger chief was awarded exactly the same number of restricted shares (115,000) and stock options (225,000) as in the prior year under the grocers long-term incentive plan. But its stock price was just $22.34 on the grant date in June 2009, compared with $28.61 in 2008. The difference translated into a $1.2 million drop in the reported value of those plan awards.

Otherwise, Dillons base salary increased by 3 percent to $1.24 million from $1.2 million, while his payments under Krogers annual bonus plan fell 22 percent to $1.23 million from $1.57 million.

Krogers stock price is still mired in the low $20 range, but Dillon has expressed satisfaction with the companys performance in a very competitive economic environment. Profits have sagged, and sales (excluding fuel) growth has lagged, but Dillon remains upbeat as the number of loyal Kroger households grows and its share of what they spend increases.

Kroger (NYSE: KR), headquartered in Cincinnati, operates more than 2,400 supermarkets and multi-department stores in 31 states.



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Total Compensation: $ 3.98 M
Mr. Dillon was elected Chairman of the Board of Kroger in 2004, Chief Executive Officer in 2003, and President and Chief Operating Officer in 2000. He served as President in 1999, and as President and Chief Operating Officer from 1995 to 1999. Mr. Dillon was elected Executive Vice President of Kroger in 1990 and President of Dillon Companies, Inc. in 1986. He is a director of Convergys Corporation, and has served on that board during the past five years.
  • Compensation

    Salary
    $1.24 M
    Bonus
    $
    Total Cash Compensation
    $1.24 M
    Other Annual Compensation
    $
    Total Annual Compensation
    $1.24 M
    Long Term Incentive Plan
    $
    All Others
    $2.74 M
    Total Compensation:
    $3.98 M
  • Board Membership/Committee Assignments

    Committee NameRole
    Chairman of the Board
Total Compensation: $ 3.28 M
Mr. McMullen was elected President and Chief Operating Officer of Kroger in August 2009. Prior to that he was elected Vice Chairman in 2003, Executive Vice President in 1999, and Senior Vice President in 1997. Mr. McMullen is a director of Cincinnati Financial Corporation, and has served on that Board during the past five years.
  • Compensation

    Salary
    $875,062.00
    Bonus
    $
    Total Cash Compensation
    $875,062.00
    Other Annual Compensation
    $
    Total Annual Compensation
    $875,062.00
    Long Term Incentive Plan
    $
    All Others
    $2.40 M
    Total Compensation:
    $3.28 M
  • Board Membership/Committee Assignments

    Committee NameRole
Total Compensation: $ 822,289.00
Mr. Schlotman was elected Senior Vice President effective June 26, 2003, and Group Vice President and Chief Financial Officer effective January 26, 2000. Prior to that he was elected Vice President and Corporate Controller in 1995, and served in various positions in corporate accounting since joining the Company in 1985.
  • Compensation

    Salary
    $556,280.00
    Bonus
    $
    Total Cash Compensation
    $556,280.00
    Other Annual Compensation
    $
    Total Annual Compensation
    $556,280.00
    Long Term Incentive Plan
    $
    All Others
    $266,009.00
    Total Compensation:
    $822,289.00
  • Board Membership/Committee Assignments

    Committee NameRole
Christopher T. Hjelm - Chief Information Officer
Total Compensation: $
Mr. Hjelm joined the Company on August 28, 2005 as Senior Vice President and Chief Information Officer. From February 2005 to July 2005, he was Chief Information Officer of Travel Distribution Services for Cendant Corporation. From July 2003 to November 2004 Mr. Hjelm served as Chief Technology Officer for Orbitz LLC, which was acquired by Cendant Corporation in November 2004. Mr. Hjelm served as Senior Vice President for Technology at eBay Inc. from March 2002 to June 2003, and served as Executive Vice President for Broadband Network Services for At Home Company from June 2001 to February 2002. From January 2000 to June 2001, Mr. Hjelm served as Chairman, President and Chief Executive Officer of ZOHO Corporation. Prior to that, he held various key roles for 14 years with Federal Express Corporation, including that of Senior Vice President and Chief Information Officer.
  • Compensation

    Salary
    $
    Bonus
    $
    Total Cash Compensation
    $
    Other Annual Compensation
    $
    Total Annual Compensation
    $
    Long Term Incentive Plan
    $
    All Others
    $
    Total Compensation:
    $
  • Board Membership/Committee Assignments

    Committee NameRole
Paul W. Heldman - General Counsel
Total Compensation: $ 1.08 M
Mr. Heldman was elected Executive Vice President effective May 5, 2006, Senior Vice President effective October 5, 1997, Secretary on May 21, 1992, and Vice President and General Counsel effective June 18, 1989. Prior to his election, he held various positions in the Companys Law Department. Mr. Heldman joined the Company in 1982.
  • Compensation

    Salary
    $697,638.00
    Bonus
    $
    Total Cash Compensation
    $697,638.00
    Other Annual Compensation
    $
    Total Annual Compensation
    $697,638.00
    Long Term Incentive Plan
    $
    All Others
    $378,449.00
    Total Compensation:
    $1.08 M
  • Board Membership/Committee Assignments

    Committee NameRole
Donald E. Becker - Executive VP
Total Compensation: $ 1.04 M
Mr. Becker was elected Executive Vice President on September 16, 2004 and Senior Vice President on January 26, 2000. Prior to his election, Mr. Becker was appointed President of the Companys Central Marketing Area in 1996. Before this, Mr. Becker served in a number of key management positions in the Companys Cincinnati/Dayton Marketing Area, including Vice President of Operations and Vice President of Merchandising. He joined the Company in 1969.
  • Compensation

    Salary
    $632,816.00
    Bonus
    $
    Total Cash Compensation
    $632,816.00
    Other Annual Compensation
    $
    Total Annual Compensation
    $632,816.00
    Long Term Incentive Plan
    $
    All Others
    $406,415.00
    Total Compensation:
    $1.04 M
Total Compensation: $ 1.76 M
  • Compensation

    Salary
    $875,062.00
    Bonus
    $
    Total Cash Compensation
    $875,062.00
    Other Annual Compensation
    $
    Total Annual Compensation
    $875,062.00
    Long Term Incentive Plan
    $
    All Others
    $886,423.00
    Total Compensation:


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Highlight of Business Operations:

For the first quarter of 2010, net earnings totaled $374 million, or $0.58 per diluted share, compared to $435 million, or $0.66 per diluted share for the same period of 2009. The results for the first quarter of 2009 benefited from favorable commodity costs. This unfavorable comparison in the first quarter of 2010 was offset by improved profits from our retail fuel operations. In the first quarter of 2010, our retail fuel operations improved by approximately $0.04 per diluted share compared to the first quarter of 2009.


We generated $1.6 billion of cash from operating activities during the first quarter of 2010, compared to $1.3 billion in the first quarter of 2009. The cash provided by operating activities came from net earnings including noncontrolling interests, adjusted for non-cash expenses. In addition, an improvement in working capital provided cash of $662 million in the first quarter of 2010 and $484 million in the first quarter of 2009. The 2010 improvement in the working capital over 2009 was primarily the result of a larger decrease in inventories and prepaid assets offset by a smaller decline in trade accounts payable. Prepaid expenses decreased significantly from year end in both first quarters of 2009 and 2010, reflecting a decrease in the prepayment balance of some employee benefits at year end. We contributed $27 million in the first quarter of 2010, and $200 million in the first quarter of 2009, to Kroger-sponsored pension plans.


As of May 22, 2010, we maintained a committed $2.5 billion, five-year revolving credit facility that, unless extended, terminates on November 15, 2011. Outstanding borrowings under the credit agreement and commercial paper borrowings, and some outstanding letters of credit, reduce funds available under the credit agreement. In addition to the credit agreement, we maintained three uncommitted money market lines totaling $100 million in the aggregate. The money market lines allow us to borrow from banks at mutually agreed upon rates, usually at rates below the rates offered under the credit agreement. As of May 22, 2010, we did not have any borrowings under the credit facility, money market lines, or outstanding commercial paper. The outstanding letters of credit that reduced the funds available under our credit agreement totaled $315 million as of May 22, 2010.


Total debt, including both the current and long-term portions of capital leases and lease-financing obligations, decreased $388 million to $7.5 billion as of the end of the first quarter of 2010, from $7.9 billion as of the end of the first quarter of 2009. Total debt decreased $531 million as of the end of the first quarter of 2010, from $8.1 billion as of year-end 2009. The decrease as of the end of the first quarter of 2010, compared to the end of the first quarter of 2009, resulted from the payment at maturity in the second quarter of 2009 of $350 million of senior notes bearing an interest rate of 7.25% and the payment in the first quarter of 2010 of $500 million of senior notes bearing an interest rate of 8.05%, partially offset by the issuance in the third quarter of 2009 of $500 million of senior notes bearing an interest rate of 3.90%. As of May 22, 2010, our cash and temporary cash investments were $602 million compared to $424 million as of January 30, 2010.


During the first quarter of 2010, we invested $80 million to repurchase four million shares of Kroger common stock at an average price of $21.89 per share. From the end of the first quarter of 2010 through June 23, 2010, we have invested an additional $53 million to repurchase three million shares of Kroger common stock at an average price of $20.23 per share. These shares were reacquired under two separate stock repurchase programs. The first is a $1 billion repurchase program that was authorized by Krogers Board of Directors on January 18, 2008. The second is a program that uses the cash proceeds from the exercises of stock options by participants in Krogers stock option and long-term incentive plans as well as the associated tax benefits. On June 24, 2010, our Board of Directors authorized a new $500 million repurchase program to replace the existing $1 billion program, which had approximately $225 million remaining.


Capital expenditures, excluding acquisitions and the purchase of leased facilities, totaled $532 million for the first quarter of 2010, compared to $622 million for the first quarter of 2009. During the first quarter of 2010, we opened, acquired, expanded, or relocated fifteen food stores and also completed 35 within-the-wall remodels. Total food store square footage increased 1.2% from the first quarter of 2009. Excluding acquisitions and operational closings, total food store square footage increased 1.8% in the first quarter of 2010, as compared to the first quarter of 2009. Capital expenditures for the purchase of leased facilities totaled $10 million in the first quarter of 2010, compared to $32 million in the first quarter of 2009.



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Anonymous

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Despicable, isn't it? Poor bastard, how will he survive???

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