NEW YORK (AP) — The Kroger Co. gave CEO David Dillon a 66
percent pay bump last year as a reward for the company’s improved
performance.
The nation’s largest traditional supermarket chain
gave its top executive a pay package worth $8.9 million, up from $5.4
million in 2010, according to an Associated Press analysis of a
regulatory filing made Friday.
The hike reflected a bigger cash
performance bonus, which rose to $2.7 million, from $808,020. The
Cincinnati-based grocer, which operates Kroger, Ralphs, Food 4 Less and
other chains, uses a formula based on the company’s financial results to
determine incentive pay for its executives.
Dillon, who became
CEO in 2003, also saw his stock and option awards rise to $5.2 million
last year, from $2.9 million in 2010. His salary edged up 1 percent to
$1.3 million. All other compensation of $115,600 primarily covered
insurance premiums.
Kroger, like many supermarkets chains, has
struggled to keep prices low for customers in recent years because
rising commodity costs are forcing it to pay more to stock its shelves.
Kroger has managed the balancing act by controlling its operating and
administrative costs. It has also intensified its focus on marketing its
store brands, which help keep costs in check.
In its filing with
the Securities and Exchange Commission, Kroger noted that revenue at
supermarkets open at least a year rose 4.9 percent in 2011 compared with
the year before; the company noted that was substantially better than
most its competitors and above its own goals.
Adjusted earnings,
excluding charges related to the consolidation of worker pension plan,
were $2 a share for the year, which also exceeded the company’s
expectations. Adjusted net income in 2010 was $1.76 per share
The
AP formula for CEO pay includes salary, bonuses, perks, above-market
interest the company pays on deferred compensation and the estimated
value of stock and stock options awarded. The AP formula does not count
changes in the present value of pension benefits. That makes the AP
total slightly different in most cases from the total reported by
companies to the Securities and Exchange Commission.
The value
that a company assigned to an executive’s stock and option awards for
2011 was the present value of what the company expected the awards to be
worth over time. Companies use one of several formulas to calculate
that value. However, the number is just an estimate, and what an
executive ultimately receives will depend on the performance of the
company’s stock.
Most stock compensation programs require an executive to wait a specified amount of time to receive
shares or exercise options
Copyright 2012 The Associated Press.