diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_1.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0c7af06f03b0e8307ae534fc6fa7e56e8a43baf --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,5 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_10.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c6d4b81ce34ce9a92f4df4adbef4b5ef496c1ea --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,44 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_100.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..6376a89461c7f60fd8188fd2e95281efc1454706 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,27 @@ +98 + +Householding of Proxy Materials +We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders +of record who have the same address and last name will receive only one copy of the proxy materials unless one or +more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will +reduce our printing costs and postage fees. Householding will not in any way affect dividend check mailings. +If you are eligible for householding, but you and other shareholders of record with whom you share an address +currently receive multiple copies of our proxy materials or if you hold in more than one account, and in either case +you wish to receive only a single copy for your household or if you prefer to receive separate copies of our +documents in the future, please contact your bank or broker, or contact Kroger’s Secretary at 1014 Vine Street, +Cincinnati, Ohio 45202 or via telephone at 513-762-4000. +Beneficial shareholders can request information about householding from their banks, brokers or other holders +of record. +The management knows of no other matters that are to be presented at the meeting, but, if any should be +presented, the Proxy Committee expects to vote thereon according to its best judgment. +Available Information +The Company files Annual Reports on Form 10-K with the Securities and Exchange Commission. A copy of +the Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (except for certain exhibits thereto), +including our audited financial statements and financial statement schedules, may be obtained, free of charge, upon +written request by any shareholder to Kroger’s Secretary at 1014 Vine Street, Cincinnati, Ohio 45202 or via +telephone at 513-762-4000. Copies of all exhibits to the Annual Report on Form 10-K are available upon a similar +request, subject to reimbursing the Company for its expenses in supplying any exhibit. +By order of the Board of Directors, +Christine S. Wheatley, Secretary + +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_11.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..977471825a636ead53e75464d4ba7084368778ff --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,11 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_12.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..00f7da72cf655169b82756af0e1d6ee8cd39b23a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,5 @@ +10 + +Director Nominee Highlights + +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_13.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..21fa2fe6aa65e8ae4aa22b68ddac4c351b7fcdb2 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,31 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_14.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dc961c272b10b6ee60b24a7fcb887bfae75a53d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,85 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_15.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cf96fa592a026eb5c9ddb68d3b16d60e012776a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,31 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_16.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..27230a9e5cdae0e7a4ac3c3f539199a473c2384f --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,54 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_17.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..6dcfd2fa23c4cc9c9e6b6ff1a667da4bc50f0f37 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,43 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_18.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e78742c4bd31a4c229732dc322409a577cc3b71a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_19.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..19ab4e6fca6e5105e5f981867f8fe59c69d76415 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,49 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_2.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6922b8ec516685f824b70d70b4b4adf1a53e0 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_20.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a869a85dc1168de632937464371498311a50f03 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,50 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_21.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bad8a31ff37c391201c0c6451d5352a0fc746f8 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,7 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_22.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..40eb9593558d4c161a3c8a2bb57ab5ee4d0aacb1 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_23.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..4971bfa624dfe1f307c141478545e2da2f508024 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,74 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_24.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..9003669563d5a34e56c53b6e25b47133955f27eb --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,60 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_25.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..502a7ddaf381a05cbc0a7c5c4ddf6737f483c3a2 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,45 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_26.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..25bb2326a6d25e68232723d9a43ccb3c1f1acad2 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,54 @@ +24 + + +Elaine L. Chao +Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017 +until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor +from January 2001 until January 2009, and was the first woman of Asian +American & Pacific Islander heritage to serve in a President’s cabinet in history. +Previously, Ms. Chao was President and CEO of United Way of America, +Director of the Peace Corps, and a banker with Citicorp and BankAmerica +Capital Markets Group. She earned her M.B.A. from Harvard Business School +and has served on a number of Fortune 500 boards. She currently serves on the +Board of Directors of ChargePoint Holdings, Inc., which is a new economy +technology company in the mobile sector focusing on sustainable and +environmentally friendly transportation. In the past five years, she also served as +a director of Embark Technology, Inc. and Hyliion Holdings Corp. Recognized +for her extensive record of accomplishments and public service, she is also the +recipient of 38 honorary doctorate degrees. In her capacity as a director on +numerous public boards while out of government, she has advocated for +innovation and business transformations. She has also been a director on many +private and nonprofit boards, including Harvard Business School Board of +Dean’s Advisors and Global Advisory Board, Los Angeles Organizing +Committee for the Olympic and Paralympic Games 2028, and a trustee of the +Kennedy Center for the Performing Arts. +Ms. Chao brings to the Board extensive experience in the public, private , and +non-profit sectors. In her two cabinet positions, she led high-profile +organizations, navigating complex regulatory and public policy environments, +and she provides the Board with valuable insight on strategy, logistics, +transportation, and workforce issues. Under her leadership, the Department of +Labor set up a record number of health and safety partnerships with labor +unions. While she was Director of the Peace Corps, she launched the first Peace +Corps programs in the newly independent Baltic states and the former republics +of the former Soviet Union, including Ukraine. This experience leading social +impact at scale is of value to the Board in her role as an independent director +and member of the Public Responsibilities Committee. Ms. Chao’s leadership +and governance expertise gained from her government service, nonprofits, and +public company boards is of value to the Board. +Age +71 + Director Since +2021 +Committees: +Corporate Governance +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_27.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..b172b37a5e8c3bef1002795205a64a9c9d41d4df --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +25 + + +Anne Gates +Ms. Gates was President of MGA Entertainment, Inc., a privately-held +developer, manufacturer, and marketer of toy and entertainment products for +children, from 2014 until her retirement in 2017. Ms. Gates held roles of +increasing responsibility with The Walt Disney Company from 1992 -2012. Her +roles included Chief Financial Officer for Disney Consumer Products (DCP) +and Managing Director, DCP, Europe, and emerging markets. She is currently a +director of Tapestry, Inc., where she serves as Chair of the Governance +Committee, serves on the Audit Committee, and is on the Tapestry Foundation +Board. She is also a director of Raymond James Financial, Inc., where she is the +Chair of the Corporate Governance ESG Committee. She is also a member of +the Boards of the Salzburg Global Seminar, PBS SoCal, Save the Children, and +the Packard Foundation, one of the largest global foundations focused on +environmental and other key ESG issues. +Ms. Gates has over 25 years of experience in the retail and consumer products +industry. She brings to Kroger financial expertise gained while serving as +President of MGA and CFO of a division of The Walt Disney Company. +Ms. Gates has a broad business background in finance, marketing, strategy, and +business development, including international business. As the chair of the +Corporate Governance and ESG Committee at Raymond James Financial, Inc., +she oversees their code of ethics, Board composition, including diversity, +environmental policies and programs, sustainability targets and ESG reporting +which are aligned with SASB, shareholder proposals, and shareholder +engagements efforts, including social justice, community relations, and +charitable giving. Ms. Gates is also Chair of the Tapestry Governance +Committee, which also includes oversight of ESG responsibilities. These +experiences are of particular value to the Board in her role as an independent +director and member of the Corporate Governance Committee. Her financial +leadership and consumer products expertise is of particular value to the Board. +Ms. Gates has been designated an Audit Committee financial expert and serves +as Chair of the Audit Committee. +Age +64 + Director Since +2015 +Committees: +Audit1 +Corporate Governance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_28.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe6bf1aea53ff50da7437a5167e7cdd6c64449ee --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,78 @@ +26 + + +Karen M. Hoguet +Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from +October 1997 until July 2018 when she became a strategic advisor to the Chief +Executive Officer until her retirement in 2019. Previously, she served on the +boards of Nielsen Holdings plc, The Chubb Corporation, and Cincinnati Bell as +the chairman of the Audit Committee and a member of the Finance Committee, +member of the Audit and Finance Committee, and the Audit Committee, +respectively. She also serves on the board of UCHealth. +Ms. Hoguet has over 35 years of broad financial and operational leadership +experience within the omnichannel retail sector. She has a proven track record +of success in driving transformations, delivering strong financial performance, +and forming strong relationships with investors and industry analysts. She has +extensive knowledge across all areas of finance, including financial planning, +investor relations, M&A, accounting, treasury and tax, as well as strategic +planning, credit card services and real estate. Ms. Hoguet played a critical role +in the successful turnaround of Federated Department Stores, from bankruptcy +to an industry leading omnichannel retailer, which was accomplished through +acquisitions, divestiture and other strategic changes including building an +omnichannel model and developing a new strategic approach to real estate. Her +long tenure as a senior executive of a publicly traded company with financial, +audit, strategy, and risk oversight experience is of value to the Board as is her +public company experience, both as a long serving executive, and as a board +member. In addition, her strong business acumen, understanding of diverse +cross-functional issues, and ability to identify potential risks and opportunities +are also of value to the Board. Ms. Hoguet has been designated an Audit +Committee financial expert and serves as Chair of the Finance Committee. +Age +67 + Director Since +2019 +Committees: +Audit +Finance1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +ESG + + +W. Rodney McMullen +Mr. McMullen was elected Chairman of the Board in January 2015 and Chief +Executive Officer of Kroger in January 2014. He served as Kroger’s President +and Chief Operating Officer from August 2009 to December 2013. Prior to that, +Mr. McMullen was elected to various roles at Kroger including Vice Chairman +in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999, +Senior Vice President in 1997, Group Vice President and Chief Financial +Officer in June 1995, and Vice President, Planning and Capital Management in +1989. He is a director of VF Corporation. In the past five years, he also served +as a director of Cincinnati Financial Corporation. +Mr. McMullen has broad experience in the supermarket business, having spent +his career spanning over 40 years with Kroger. He has a strong background in +finance, operations, and strategic partnerships, having served in a variety of +roles with Kroger, including as our CFO, COO, and Vice Chairman. His +previous service as chair of Cincinnati Financial Corporation’s Compensation +Committee and on its Executive and Investment Committees, as well as his +service on the Audit and Governance and Corporate Responsibilities +Committees of VF Corporation, adds depth to his extensive retail experience. +Age +63 + Director Since +2003 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_29.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed2730931c8c6709c141f96e5ba43d54c7a98b23 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,92 @@ +27 + + +Clyde R. Moore +Mr. Moore was Chairman and Chief Executive Officer of First Service +Networks, a national provider of facility and maintenance repair services, from +2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore +was President and CEO of Thomas & Betts, a global manufacturer of electric +connectors and components, and President and COO of FL Industries, Inc., an +electrical component manufacturing company. Mr. Moore is currently President +and CEO of Gliocas LLC, a management consulting firm serving small +businesses and non-profits. Mr. Moore was a leader in the founding of the +Industry Data Exchange Association (IDEA), which standardized product +identification data for the electrical industry, allowing the industry to make the +successful transition to digital commerce. Mr. Moore was Chairman of the +National Electric Manufacturers Association and served on the Executive +Committee of the Board of Governors. He served on the advisory board of +Mayer Electrical Supply for over 20 years, including time as lead director, until +the sale of the company in late 2021. +Mr. Moore has over 30 years of general management experience in public and +private companies. He has extensive experience as a corporate leader overseeing +all aspects of a facilities management firm and numerous manufacturing +companies. Mr. Moore’s expertise broadens the scope of the Board’s experience +to provide oversight to Kroger’s facilities, digital, and manufacturing +businesses, and he has a wealth of Fortune 500 experience in implementing +technology transformations. Additionally, his expertise and leadership as Chair +of the Compensation Committee is of particular value to the Board. Mr. Moore +presided over the Compensation Committee during the company’s introduction +of its Framework for Action: Diversity, Equity, & Inclusion plan, and led the +inclusion of talent development into the Committee’s name and charter. +Age +70 + Director Since +1997 +Committees: +Compensation & Talent +Development1 +Corporate Governance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ronald L. Sargent +Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a +business products retailer, where he was employed from 1989 until his +retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with +Kroger in various positions. He is a director of Five Below, Inc. and Wells +Fargo & Company. Previously, he served as a director of The Home Depot, Inc. +and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors +of the Boys & Girls Clubs of America, the board of directors of City of Hope, +and the board of trustees of Northeastern University. He is also chairman of the +board of directors of the John F. Kennedy Library Foundation. +Mr. Sargent has over 35 years of retail experience, first with Kroger and then +with increasing levels of responsibility and leadership at Staples, Inc. His efforts +helped carve out a new market niche for the international retailer. In his role as +Chair of the Wells Fargo Human Resources Committee, he oversees human +capital management, including diversity, equity, and inclusion, human capital +risk, and culture and ethics. In his role as a member of the Five Below +Nominating and Corporate Governance Committee, he oversees social and +environmental governance, including corporate citizenship. These committee +experiences are of value to the Board in his role as a member of the Public +Responsibilities Committee and Lead Director of the Board. His understanding +of retail operations, consumer insights, and e-commerce are also of value to the +Board. Mr. Sargent has been designated an Audit Committee financial expert +and serves as Chair of the Corporate Governance Committee and Lead Director +of the Board. Mr. Sargent’s strong insights into corporate governance and his +executive leadership experience serve as the basis for his leadership role as Lead +Director. +Age +68 + Director Since +2006 +Committees: +Audit +Corporate Governance1 +Public Responsibilities +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + +1 Denotes Chair of Committee +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_3.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fba412c5522670857e7def297ea2da9842326054 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,60 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_30.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a30c582a07369f1d3d12e09ac5c981da8ede3f58 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,54 @@ +28 + + +J. Amanda Sourry Knox (Amanda Sourry) +Ms. Sourry was President of North America for Unilever, a personal care, foods, +refreshment, and home care consumer products company, from 2018 until her +retirement in December 2019. She held leadership roles of increasing +responsibility during her more than 30 years at Unilever, both in the U.S. and +Europe, including president of global foods, executive vice president of global +hair care, and executive vice president of the firm’s UK and Ireland business. +From 2015 to 2017, she served as President of their Global Foods Category. +Ms. Sourry currently serves on the board for PVH Corp., where she chairs the +Compensation Committee and serves on the Nominating, Governance & +Management Development Committee. She is also a non-executive director of +OFI, a provider of on-trend, natural and plant-based products, focused on +delivering sustainable and innovative solutions to consumers across the world, +and a member of their Remuneration and Talent Committee, the Audit and Risk +Committee, and the Sustainability Committee. She is also a supervisory director +of Trivium Packaging B.V., a sustainable packaging company. +Ms. Sourry has over thirty years of experience in the CPG and retail industry. +As a member of PVH Corp.’s Nominating, Governance, & Management +Development Committee, her experience with monitoring issues of corporate +conduct and culture, and providing oversight of diversity, equity and inclusion +policies and programs as it relates to management development, talent +assessment, and succession planning programs and processes is of particular +value to her role as a member of the Compensation & Talent Development +Committee and the Board. She brings to the Board her extensive global +marketing and business experience in consumer-packaged goods as well as +customer development, including overseeing Unilever’s digital efforts. +Ms. Sourry was actively involved in Unilever’s global diversity, gender balance, +and sustainable living initiatives which is of value to the Board and to the +Compensation & Talent Development Committee. She also has a track record of +driving sustainable, profitable growth across scale operating companies and +global categories across both developed and emerging markets. Ms. Sourry’s +history in profit and loss responsibility and oversight, people and ESG +leadership, and capabilities development is of value to the Board. +Age +60 + Director Since +2021 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_31.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9f3bab4cdc92ce26e59260e8c5ff38673254d6b --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,86 @@ +29 + + +Mark S. Sutton +Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a +leading global producer of renewable fiber-based packaging, pulp, and paper +products. Prior to becoming CEO in 2014, he served as President and Chief +Operating Officer with responsibility for running International Paper’s global +business. Mr. Sutton joined International Paper in 1984 as an Electrical +Engineer. He held roles of increasing responsibility throughout his career, +including Mill Manager, Vice President of Corrugated Packaging Operations +across Europe, the Middle East and Africa, Vice President of Corporate +Strategic Planning, and Senior Vice President of several business units, +including global supply chain. Mr. Sutton is a member of The Business Council, +serves on the American Forest & Paper Association board of directors, and on +the Business Roundtable. He also serves on the board of directors of Memphis +Tomorrow. +Mr. Sutton has over 30 years of leadership experience with increasing levels of +responsibility and leadership at International Paper. At International Paper, he +oversees their robust ESG disclosures which are aligned with GRI, and their +Vision 2030, which sets forth ambitious forest stewardship targets and plans to +transition to renewable solutions and sustainable operations. He also oversees +International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He +brings to the Board the critical thinking that comes with an electrical +engineering background as well as his experience leading a global company +with labor unions. His strong strategic planning background, manufacturing and +supply chain experience, and his ESG leadership are of value to the Board. +Age +62 + Director Since +2017 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ashok Vemuri +Mr. Vemuri was Chief Executive Officer and a Director of Conduent +Incorporated, a global digital interactions company, from its inception as a +result of the spin-off from Xerox Corporation in January 2017 to 2019. He +previously served as Chief Executive Officer of Xerox Business Services, LLC +and as an Executive Vice President of Xerox Corporation from July 2016 to +December 2016. Prior to that, he was President, Chief Executive Officer, and a +member of the Board of Directors of IGATE Corporation, a New Jersey-based +global technology and services company now part of Capgemini, from 2013 to +2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a +multinational consulting and technology services company, in a variety of +leadership and business development roles and served on the board of Infosys +from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the +investment banking industry at Deutsche Bank and Bank of America. In the past +five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a +member of the Board of Directors of Opal Fuels and is chair of the Audit +Committee. +Mr. Vemuri brings to the Board a proven track record of leading technology +services companies through growth and corporate transformations. His +experience as CEO of global technology companies as well as his experience +with cyber security and risk oversight are of value to the Board as he brings a +unique operational, financial, and client experience perspective. Additionally, +Mr. Vemuri served on our Public Responsibilities Committee which gives him +additional perspectives on risk oversight that he brings to the Audit Committee. +Mr. Vemuri has been designated an Audit Committee financial expert. +Age +56 + Director Since +2019 +Committees: +Audit +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG + + +YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote +“FOR ALL” of Kroger’s director nominees. diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_32.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..a87f2621e3cbb14b60e124cc8f015021204da82d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,54 @@ +30 + +Information Concerning the Board of Directors +Board Leadership Structure and Independent Lead Director +Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight. +The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to +evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance +Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as +appropriate. We believe that Kroger is well-served by this flexible leadership structure. +In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership +includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among +the independent directors. The Lead Director works with the Chairman to share governance responsi bilities, +facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of +roles, consistent with current best practices, including: +• reviewing and approving Board meeting agendas, materials, and schedules to confirm that the +appropriate topics are reviewed, with sufficient information provided to directors on each topic and +appropriate time is allocated to each; +• serving as the principal liaison between the Chairman, management, and the independent directors; +• presiding at the executive sessions of independent directors and at all other meetings of the Board at +which the Chairman is not present; +• calling meetings of independent directors at any time; and +• serving as the Board’s representative for any consultation and direct communication, following a request, +with major shareholders. +The independent Lead Director carries out these responsibilities in numerous ways, including by: +• facilitating communication and collegiality among the Board members; +• soliciting direct feedback from independent directors; +• overseeing the succession planning process, including meeting with a wide range of associates including +corporate and division management associates; +• meeting with the CEO frequently to discuss strategy; +• serving as a sounding board and advisor to the CEO; and +• leading annual CEO evaluation process. + +Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance +Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the +Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018. +Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his: +• independence; +• deep strategic and operational understanding of Kroger obtained while serving as a Kroger director; +• insight into corporate governance; +• experience as the CEO of an international ecommerce and brick and mortar retailer; +• experience on the Boards of other large publicly traded companies; and +• engagement and commitment to carrying out the role and responsibilities of the Lead Director. +With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether +it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this +judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership +structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate +in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong +Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong +background in finance, operations, and strategic collaborations is particularly important to the Board given Kroger’s +current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the +Company are also especially critical in the midst of the rapidly evolving retail and di gital landscape. The Board +believes that the structure of the Chairman and independent Lead Director position should continue to be considered +as part of the succession planning process. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_33.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb3dcb2d2f40ee373eff521a45fe9595c7d6d8c7 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,47 @@ +31 + +Annual Board Evaluation Process +The Board and each of its Committees conduct an annual evaluation to determine whether the Board is +functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board +assesses whether the current leadership structure and function continues to be appropriate for Kroger and its +shareholders, including in consideration of director succession planning. +Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations +are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong +corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees +an annual evaluation process led by either the Lead Independent Director or an independent third party. +Each director completes a detailed annual evaluation of the Board and the Committees on which he or she +serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year, +the annual evaluation was conducted by the Lead Director. +Topics covered include, among others: +• The effectiveness of the Board and Board Committees and the active participation of all directors +• The Board and Committees’ skills and experience and whether additional skills or experience are needed +• The effectiveness of Board and Committee meetings, including the frequency of the meetings +• Board interaction with management, including the level of access to management, and the responsiveness +of management +• The effectiveness of the Board’s evaluation of management performance +• Additional subject matters the Board would like to see presented at their meetings or Committee meetings +• Board’s governance procedures +• The culture of the Board to promote participation in a meaningful and constructive way +The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and +changes to the Board’s and its Committees’ practices are implemented as appropriate. +Over the past several years, this evaluation process has contributed to various enhancements in the way the +Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its +members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and +provide adequate time for director discussion and input. +Board Succession Planning and Refreshment Mechanisms +Board succession planning is an ongoing, year-round process. The Corporate Governance Committee +recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying +attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and +Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall +Board and Committee effectiveness, as well as the future needs of the Board and it s Committees in light of Kroger’s +current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in +the future including as a result of our Board retirement policy, under which directors retire at the annual meeting +following their 72nd birthday. +Outside Board Service +No director who is an officer of the Company may serve as a director of another company without the approval +of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director +of another company if in so doing such service would interfere with the director’s ability to properly perform his or +her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance +Committee. Currently, our CEO serves on one other public company board. None of our current directors serve on +more than three total public company Boards, including Kroger’s Board. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_34.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a911b22b76fbbb21b7646ffe2145bc4a3876a604 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,25 @@ +32 + +Board Diversity +Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually +qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and +independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our +Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional +knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this +blend of qualifications, attributes, and tenure enables highly effective Board leadership. +The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements +in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential +nominees to our Board, the Corporate Governance Committee considers director candidates who would help the +Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate, +including by considering their geographic locations to align directors’ physical locations with Kroger’s operating +areas where possible. In connection with the use of a third-party search firm to identify candidates for Board +positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list +qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self -identify as +racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and +Mr. Vemuri self-identify as Asian. Five of our 11 directors are women. +The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and +ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the +Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and +Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of +different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively +oversees the Company’s strategy and management. The charts below show the diversity of our director nominees: diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_35.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0fce219d07f01ecd0aa0a8f669499dc61de2329 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,75 @@ +33 + +Director Onboarding and Engagement +All directors are expected to invest the time and energy required to gain an in -depth understanding of our +business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans +for each new director. We arrange meetings for each new director with appropriate officers and associates in order to +familiarize him or her with the Company’s strategic plans, financial s tatements, and key policies and practices. We +also provide training on fiduciary obligations of board members and corporate governance topics, as well as +committee-specific onboarding. From time to time, the Company will provide Board members with presentations +from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of +the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings +are periodically held at a location away from our home office in a geography in which we operate. In connection +with these Board meetings, our directors learn more about the local business environment through meetings with our +regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities, +and/or customer fulfillment centers. +Committees of the Board of Directors +To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of +company oversight, the Board has established five standing Committees: Audit, Compensation and Talent +Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are +composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee +has the responsibilities set forth in its respective charter, each of which has bee n approved by the Board. The current +charter of each Board Committee is available on our website at ir.kroger.com under Investors  — Governance — +Corporate Governance Guidelines. +The current membership, 2023 meetings, and responsibilities of each Committee are summarized below : + +Name of Committee, Number of +Meetings, and Current Members Primary Committee Responsibilities +Audit Committee +Meetings in 2023: 5 +Members: +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + + + +• Oversees the Company’s financial reporting and accounting +matters, including review of the Company’s financial +statements and the audit thereof, the Company’s financial +reporting and accounting process, and the Company’s +systems of internal control over financial reporting +• Selects, evaluates, and oversees the compensation and work +of the independent registered public accounting firm and +reviews its performance, qualifications, and independence +• Oversees and evaluates the Company’s internal audit +function, including review of its audit plan, policies and +procedures, and significant findings +• Oversees enterprise risk assessment and risk management, +including review of cybersecurity risks and regular reports +received from management and independent third parties +• Reviews significant legal and regulatory matters +• Reviews and monitors the Company’s operational and third- +party compliance programs and updates thereto +• Reviews Ethics Hotline reports and discusses material +matters +• Reviews and approves related party transactions +• Conducts executive sessions with independent registered +public accounting firm and Vice President, Internal Audit at +each meeting +• Conducts executive sessions with the Senior Vice President, +General Counsel, and Secretary, Vice President and Chief +Ethics & Compliance Officer, and Senior Vice President and +Chief Financial Officer individually at least once per year + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_36.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..cacc99960dcace86a27ab046b63c43dcfb0d4506 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,88 @@ +34 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Compensation Committee +Meetings in 2023: 4 +Members: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark S. Sutton + + + + +• Recommends for approval by the independent directors the +compensation of the CEO and approves the compensation of +senior officers +• Administers the Company’s executive compensation policies +and programs, including determining grants of equity awards +under the plans +• Reviews annual incentive plans and long-term incentive plan +metrics and plan design +• Reviews emerging legislation and governance issues and +retail compensation trends +• Reviews the Company’s executive compensation peer group +• Reviews CEO pay analysis +• Reviews Human Capital Management, including Diversity, +Equity, & Inclusion +• Has sole authority to retain and direct the Committee’s +compensation consultant +• Assists the full Board with senior management succession +planning +• Conducts executive sessions with the Senior Vice President +and Chief People Officer and independent compensation +consultant + + + + + + + + + + +Corporate Governance Committee +Meetings in 2023: 2 +Members: +Ronald L. Sargent, Chair +Elaine L. Chao +Anne Gates +Clyde R. Moore + + + + +• Oversees the Company’s corporate governance policies and +procedures +• Develops criteria for selecting and retaining directors, +including identifying and recommending qualified +candidates to be director nominees +• Designates membership and Chairs of Board Committees +• Oversees and administers Board evaluation process +• Reviews the Board’s performance +• Establishes and reviews the practices and procedures by +which the Board performs its functions +• Reviews director independence, financial literacy, and +designation of financial expertise +• Administers director nomination process +• Interviews and nominates candidates for director election +• Reviews compliance with share ownership guidelines +• Reviews and participates in shareholder engagement +• Reviews and establishes independent director compensation +• Oversees the annual CEO evaluation process conducted by +the full Board + + + + + + + + + + + + +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_37.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bdf6d32ce8bd7e11fa89af5afe3a73a1568f188 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,90 @@ +35 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Finance Committee +Meetings in 2023: 4 +Members: +Karen M. Hoguet, Chair +Nora A. Aufreiter +Amanda Sourry +Mark Sutton +Ashok Vemuri + + + + +• Oversees the Company’s financial affairs and management +of the Company’s financial resources +• Reviews the Company’s annual and long-term financial +plans, capital spending plans, capital allocation strategy, and +use of cash +• Approves and recommends for approval to the Board certain +capital expenditures +• Reviews the Company’s dividend policy and share buybacks +• Reviews strategic transactions, capital structure, including +potential issuance of debt or equity securities, credit +agreements, and other financing transactions +• Monitors the investment management of assets held in +pension and profit-sharing plans administered by the +Company +• Oversees the Company’s policies and procedures on +hedging, swaps, risk management, and other derivative +transactions +• Oversees the Company’s engagement and relationships with, +and standing in, the financial community + + + + + + + +Public Responsibilities Committee +Meetings in 2023: 3 +Members: +Nora A. Aufreiter, Chair +Kevin M. Brown +Elaine L. Chao +Ronald L. Sargent + + + + +• Reviews the practices of the Company affecting its +responsibility as a corporate citizen +• Examines and reviews the Company’s practices related to +environmental sustainability, and social impact, including +but not limited to +✓ climate impacts +✓ packaging +✓ food and operational waste +✓ food access +✓ responsible sourcing +✓ supplier diversity +✓ people safety, food safety, and pharmacy safety +• Examines and reviews the Company’s Sustainability and +Social Impact strategy +• Reviews the Company’s community engagement and +philanthropy +• Reviews the Company’s advocacy and public policy +• Reviews the Company’s communications and Corporate +Brand stewardship +• Assesses the Company’s effort in evaluating and responding +to changing public expectations and public issues that affect +the business + + + + + + + + + + + + + + + +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_38.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f48f1e7e36fd30cad3d7356b933e9cdb29339d7 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,33 @@ +36 + +Shareholder Engagement +Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a +priority for both our Board and management team. We have a longstanding history of engaging with our +shareholders through our investor relations program and our year-round governance outreach program, including +participation for our independent directors. In 2023, under the direction of the Board, we requested engagement +meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16 +shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once). +Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time. + +We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important +to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed +Board discussions and decisions, including but not limited to: +Business Strategy +• Kroger’s growth strategy, priorities, and value drivers +• Our strong value creation model and recent performance +ESG Practices & Disclosures +• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic +management approach, and long-term sustainability and social impact goals +• Board oversight of ESG strategy and updated Committee responsibilities +• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting +frameworks +• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry -leading platform for collective +action and systems change to end hunger in our communities and eliminate waste across our Company +Human Capital Management +• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities +we serve +• Our focus on our associates’ well-being, including increasing our average hourly associate wage, +comprehensive benefits, and opportunities for internal progression and leadership development training +• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies +• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain + diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_39.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d654b51474a5c55ea74de8e92c9d6b6fd81817c --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,49 @@ +37 + +Compensation Structure +• Overview of compensation program design and alignment of pay and performance +• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG +metrics +• The balance of equity and cash compensation, as well as fixed versus at risk compensation +Board and Board Oversight +• Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of +board skills and experience with Kroger’s current and long-term business strategies +• Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management +• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double +materiality, and discussions with environmentally and socially conscious investors and NGOs helped +inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the +opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices. +Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving +Together, and how our Board oversees this strategy, including our goals and initiatives. These +conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared +with our full Board. +Board’s Response to Shareholder Proposals +Accountability to our shareholders continues to be an important component of our success. We actively engage +with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate +Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate +Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the +voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our +shareholders. +In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay +Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay- +Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into +this proxy statement. +Director Nominee Selection Process +The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for +election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for +Board membership through its own efforts and through recommendations from other directors and shareholders. In +addition, the Corporate Governance Committee retains an independent, third -party search firm to assist in +identifying and recruiting director candidates who meet the criteria established by the Corporate Governance +Committee. +These criteria are: +• demonstrated ability in fields considered to be of value to the Board, including business management, +retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education, +science, law, and government; +• experience in high growth companies and nominees whose business experience can help the Company +innovate and derive new value from existing assets; +• highest standards of personal character and conduct; +• willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable, +including regular attendance and participation at Board and Committee meetings, and preparation for all +meetings, including review of all meeting materials provided in advance of the meeting; and +• ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our +customers, including regional and geographic differences. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_4.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d3945853a200410c0c2df449b0e9347c854080b --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,60 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_40.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..3292c344510e77d9cddb8ab08795534276b2429b --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +38 + +The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity” +above, and the specific experience and abilities of director candidates in light of our current business, strategy , and +structure, and the current or expected needs of the Board in its identification and recruitment of director candidates. +The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of +potential Board members does not vary based on whether a candidate is recommended by our directors, a third -party +search firm, or shareholders. + +Candidates Nominated by Shareholders +The Corporate Governance Committee will consider shareholder recommendations for director nominees for +election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 202 5 +annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in +accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age, +business address, and residence address of such person, the principal occupation or employment of such person, the +number of Kroger common shares owned of record or beneficially by such person and any other information relating +to the person that would be required to be included in a proxy statement relating to the election of directors. The +Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate +Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in +evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director +Nominee Selection Process.” +Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of +director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information +required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional +requirements of Rule 14a-19(b). +Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the +2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common +shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Corporate Governance Guidelines +The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of +the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance — +Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a +written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are +summarized below. + diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_41.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..81bc299eda75283ca02ddc9417344a26bc3e7e0a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,51 @@ +39 + +Independence +The Board has determined that all of the current independent directors and nominees have no material +relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed +Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE +listing standards. The Board made its determination based on information furnished to the Company by each of the +directors regarding their relationships with Kroger and its management, and other relevant information. The Board +considered, among other things, that +• the value of any business transactions between Kroger and entities with which the directors are affiliated +falls below the thresholds identified by the NYSE listing standards, and +• no directors had any material relationships with Kroger other than serving on our Board. + +The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is +Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The +Board determined that these transactions do no impair independence as they are in the ordinary course of business +on the same terms offered to similar purchases and do not exceed applicable independence thresholds. +Audit Committee Independence and Expertise +The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri, +independent directors, each of whom is a member of the Audit Committee, are “ Audit Committee financial experts” +as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the +Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in +accordance with Rule 10A-3 of the Securities Exchange Act of 1934. +Code of Ethics +The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and +directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics +is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics. +Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s +Secretary at our executive offices. +Communications with the Board +The Board has established two separate mechanisms for shareholders and interested parties to communicate +with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger +assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website +(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice +President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit +Committee as deemed appropriate. +Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s +Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or +companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems +appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for +further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems +appropriate, which may include referral to the full Corporate Governance Committee or the entire Board. +Executive Officer Succession Planning +The Guidelines provide that the Compensation Committee will review Company policies and programs for +talent development and evaluation of executive officers, and will review management succession planning. In +connection with the use of a third-party search firm to identify external candidates for executive officer positions, +including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third -party +search firm to include in its initial list qualified female and racially/ethnically diverse candidates. +Attendance +The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least +75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_42.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7a3951bbc4ebcc02e174fe34e42251fe33637b8 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +40 + +the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members +attended last year’s virtual annual meeting. +Independent Compensation Consultants +The Compensation Committee directly engages a compensation consultant to advise the Compensation +Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn +Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn +Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and +policies. +In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee. +Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 202 3 +for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons, +salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved +Korn Ferry performing these additional services. After taking into consideration th e NYSE’s independence +standards and the SEC rules, the Compensation Committee determined that Korn Ferry was independent, and their +work has not raised any conflict of interest. +The Compensation Committee may engage an additional compensation consultant from time to time as it +deems advisable. +Compensation Committee Interlocks and Insider Participation +No member of the Compensation Committee was an officer or associate of Kroger during fiscal 202 3, and no +member of the Compensation Committee is a former officer of Kroger or was a party to any related person +transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of +our executive officers served on the board of directors or on the compensation committee of any other entity that has +or had executive officers serving as a member of Kroger’s Board of Di rectors or Compensation Committee of the +Board. +The Board’s Role in Risk Oversight +While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible +for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the +material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may +engage advisors and experts from time to time to provide advice and counsel on risk -related matters. +We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the +various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger. +We also believe that our risk oversight structure complements our current Board leadership structure, as it allows +our independent directors, through the five fully independent Board Committees, and in executive sessions of +independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s +identification of risk and implementation of effective risk management policies and controls. +The Board receives presentations throughout the year from various department and business unit leaders that +include discussion of significant risks, including newly identified and evolving high priority risks. When new risks +are identified, management conducts, and either the full Board or the appropriate Board committee reviews and +discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain, +associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss +the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures +of material risks. +At each Board meeting, the CEO addresses matters of particular importance or concern, including any +significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated +sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term +strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their +potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of +particular concern, including significant areas of risk, that warrant further discussion or consideration outside the +presence of Kroger employees. At the committee level, reports are given by management subject matter experts to +each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each +meeting, including any areas of risk discussed by the Committee. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_43.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..41ad83bba9d212c73bf38d36d10ecbd2fe6bc71f --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,56 @@ +41 + +The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial +exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness +of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of +risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit +Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with +management its policies with respect to risk assessment and risk management. + +Cybersecurity Governance + +Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on +our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with +oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our +Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on +cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually, +and inform the Committee immediately if a cybersecurity incident is deemed material. They report to t he Audit +Committee and the Board on compliance and regulatory issues, provide updates concerning continuously -evolving +threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and +CISO discuss and present strategies to address geopolitical threats that may impact operations as well as +technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee +focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates +strategy metrics, third party assessments, and internal audit and controls. An independen t third party also regularly +reports to the Audit Committee and the full Board on cybersecurity, and outside counsel a dvises the Board on best +practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also +reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact . We experience +cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity +threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably +likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially +affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a +material effect on us in the future. +For more information please see Item 1C. Cybersecurity in the Company’s Form 10 -K for the year ended February +3, 2024, filed with the SEC on April 2, 2024. +Board Oversight of ESG Topics +We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and +reduce our impacts on the environment while continuing to create positive economic value over the long -term. +Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of +environmental, social, and governance topics. Key ESG topics our Board Committees oversee are as follows: + +Audit • Legal & Regulatory +• Ethics +• Operational and Third-Party Compliance +• Data Privacy & Cyber Security +• Financial Integrity +Compensation & Talent +Development +• Human Capital Management +• Talent Development +• Executive Compensation +• Diversity, Equity & Inclusion +Corporate Governance • Board recruitment/diversity +• Board succession +• Shareholder engagement program +• Shareholder advisory votes & shareholder proposals +• Independent director compensation +Finance • Capital spending to ensure consistency with strategy and goals \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_44.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..509cefc7489fbaa2e6a0a0e7eb7c98f3e810425e --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,37 @@ +42 + +Public Responsibilities • Environmental Sustainability +✓ Climate Impacts +✓ Resource Conservation +✓ Food Waste (Zero Waste) +• Social Impact +✓ Food Access and Affordability (Zero Hunger) +✓ Health & Nutrition +✓ Philanthropy +✓ Responsible Supply Chain & Sourcing +➢ Human Rights +➢ Animal Welfare +• Safety +✓ Food +✓ People +✓ Pharmacy +• Advocacy & Public Policy +✓ Government Relations +✓ Political action (KroPAC) +• Communications & Brand Stewardship +✓ Associate & External Communications +• Stakeholder Relations + +Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was +established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our +progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit +https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or +incorporated by reference into, this proxy statement. +In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity +and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations +function – with human resources professionals in place across our lines of business and retail divisions – leads our +Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals, +and identifies potential opportunities for improvement. + + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_45.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f9c484526b13eb1dd47ddaa844853b41639bf2d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,45 @@ +43 + +Director Compensation +2023 Director Compensation +The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does +not receive compensation for his Board service. +Name +Fees Earned or Paid in +Cash Stock Awards(1) +Change in Pension +Value and Nonqualified +Deferred +Compensation(2) Total +Nora A. Aufreiter $122,839 $198,528 $0 $321,367 +Kevin M. Brown $112,626 $198,528 $0 $311,154 +Elaine L. Chao $104,627 $198,528 $0 $303,155 +Anne Gates $140,215 $198,528 $0 $338,743 +Karen M. Hoguet $133,007 $198,528 $0 $331,535 +Clyde R. Moore $124,964 $198,528 — $323,492 +Ronald L. Sargent $172,610 $198,528 $5,762 $376,900 +Amanda Sourry $104,627 $198,528 $0 $303,155 +Mark S. Sutton $104,627 $198,528 $0 $303,155 +Ashok Vemuri $114,794 $198,528 $0 $313,322 + + +(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual +incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each +independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528. +(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation. +For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation +Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value +of his accumulated benefit under the pension plan for independent directors. This change in value of +accumulated pension benefits is not included in the Director Compensation Table be cause the value decreased. +Pension values may fluctuate significantly from year to year depending on a number of factors, including age, +average annual earnings, and the assumptions used to determine the present value, such as the discount rate. +The decrease in the actuarial present value of his accumulated pension benefit for 202 3 is primarily due to the +increase in the discount rate as well as the change in value due to aging , partially offset by the mortality +assumption change. +Annual Compensation +Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an +additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional +annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and +the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent +director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately +$200,000. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_46.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f270848ef6748c39b659f33daee52ef8ca0e1f68 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,30 @@ +44 +The Board has determined that compensation of independent directors must be competitive on an ongoing basis +to attract and retain directors who meet the qualifications for service on the Board. Independent director +compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee +deems appropriate. +Pension Plan +Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the +average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this +benefit. Benefits begin at the later of actual retirement or age 65. +Nonqualified Deferred Compensation +We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of +their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares. +Cash Deferrals +Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either +or both of the following two alternative methods of determining benefits: +• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to +represent Kroger’s cost of ten-year debt; and/or +• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price +of Kroger common shares. +In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant +at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in +quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the +event that deferred compensation is not completely paid out upon the death of the participant. +Incentive Share Deferrals +Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares. +Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months +after the participant’s separation of service. +Director Stock Ownership Guidelines +Independent directors are required to own shares equivalent to five times their annual base cash retainer. For +more details on the Stock Ownership Guidelines, see page 62. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_47.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..e3aefe09f6fa66386d421aecb6f53bf6f2c4abbf --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,44 @@ +45 +Beneficial Ownership of Common Stock +The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s +directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on +727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned +include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well +as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial +owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned +by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The +Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202. +Name +Amount and Nature of +Beneficial Ownership(1) +Options Exercisable on +or before June 29, 2024 – +included in column (a) +Stuart W. Aitken(2) 548,627 328,086 +Nora A. Aufreiter(3) 53,016 — +Kevin M. Brown 15,228 — +Elaine L. Chao(3) 12,438 +Yael Cosset 510,663 316,043 +Anne Gates(3) 47,728 — +Karen M. Hoguet(4) 23,776 — +Timothy A. Massa 536,035 305,174 +W. Rodney McMullen 6,551,175 2,801,970 +Gary Millerchip 106,693 11,646 +Clyde R. Moore 122,147 — +Ronald L. Sargent(3) 186,560 — +Amanda Sourry 15,228 — +Mark S. Sutton(3) 42,847 — +Ashok Vemuri 29,124 — +Directors and executive officers as a group (23 persons, including +those named above) +10,177,799 4,429,738 +(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as +a group beneficially owned 1.4% of Kroger common shares. +(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these +shares. +(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for +independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703; +Mr. Sargent, 61,649; Mr. Sutton, 7,080. +(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these +shares. +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_48.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a87b2bb4882c4b051e09780043dd74fd712b12d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,40 @@ +46 + +The following table sets forth information regarding the beneficial owners of more than five percent of Kroger +common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC. + +Name Address +Amount and Nature of +Ownership Percentage of Class +BlackRock, Inc. 50 Hudson Yards +New York, NY 10001 59,194,278(1) 8.2% +The Vanguard Group 100 Vanguard Blvd. +Malvern, PA 19355 81,623,904(2) 11.35% + +(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 202 3, as reported on Amendment No. 16 +to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to +53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares. +(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment +No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to +854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of +2,814,856 common shares. + +Related Person Transactions +The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or +continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related +Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive +officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect +material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit +Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the +aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other +company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at +regular committee meetings. +The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with, +the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance +with its business judgment. No director may participate in any review, approval, or ratification of any transaction if +he or she, or an immediate family member, has a direct or indirect material interest in the transaction. +Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for +management to follow in its ongoing dealings with the related person and the Audit Committee will review and +assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person +Transaction remains appropriate. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_49.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1b79ff0b67dd531df4f5715c549df981884a37 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,52 @@ +47 + +Compensation Discussion and Analysis +This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our +executive compensation program as well as how and why the Compensation Committee and our Board of Directors +make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”). +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_5.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ceeff1d873052bbd256bdf23ebd8b49e037cca3 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,59 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_50.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b6c00885bc1762a472dc9fc4a7dcb6809248110 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +48 + +Our Named Executive Officers for Fiscal 2023 +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +Fiscal 2023 Financial and Strategic Performance Highlights +Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we +executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022. +Our associates are customer-focused, delivering the products customers want, when and how they want them, with +zero compromise on quality, convenience, and selection. +In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales +without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers +a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery +solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our +customers more deeply engaged with personalized coupons and fuel rewards. +Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, +comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than +$2.4 billion in incremental wage investments. +Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than +$1 billion to balance these investments without compromising food affordability for our customers across our +communities. +As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 202 3, we donated nearly +455 million meals to feed families across America. +Our proven go-to-market strategy enables us to successfully navigate many operating environments. We +believe that by delivering value for our customers, investing in our associates and serving our communities, we will +continue to achieve attractive and sustainable total returns for our shareholders. +2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement +At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91% +of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding +governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding +shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding +shares accepted our invitation to share feedback. Some investors we con tacted either did not respond or confirmed +that a discussion was not needed at that time. +Conversations in these meetings included discussions about our NEOs’ compensation program, with our +shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay +program. The Compensation Committee considers both the general and specific feedback received from +shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay +design. +During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in +executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but +none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to +our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational +priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee +decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation +decisions made for our associates who supervise a team of others, which range from store department leaders + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_51.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d69e17ce62267e29a7e2119e8e5fb737b677533 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,31 @@ +49 + +through our NEOs. Specifically, one of several performance goals established for these associates and senior officers +relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual Associate +Insights Survey and active mentorship and development of at least one other associate with a different background. +These performance goals are factored into compensation decisions for these associates and senior officers, including +salary increases and the amount of the annual grant of equity awards, consistent with our program design as +described herein. +2023 Compensation Program Overview +The fixed and at-risk pay elements of the NEO compensation program are reflected in the following table and +charts. + +Fiscal Year 2023 CEO Compensation +The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 8% of his +compensation is fixed. The remaining 92% of target compensation is at-risk, meaning that the actual compensation +Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by +the Compensation Committee, and with respect to all of the equity vehicle s, the future value of Kroger common +shares. +The table below compares fiscal 2023 to 2022 target direct compensation. Target total direct compensation is a +more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than +the disclosure provided in the Summary Compensation Table, which includes a combi nation of actual base salary +and annual incentive compensation earned in the fiscal year, the grant date fair market value of at -risk equity +compensation to be earned in future fiscal years, and the actuarial value of future pension benefits. +Mr. McMullen’s total target direct compensation shown below was based on our independent compensation +consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer +group. Mr. McMullen’s base salary and target annual incentive remained unchanged in fiscal 2023. The only +increase was to his long-term equity compensation to position his total target direct compensation to market median. +Target total compensation, which is the sum of target annual compensatio n and target long- term compensation, is +positioned around market median. + +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_52.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..7978880a370e8ec869b2cfef65116d593e1d0c35 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,49 @@ +50 +($000s) +Annual Long-Term +Year Salary +Target +Annual +Incentive +Total +Annual +Performance +Units +Restricted +Stock +Stock +Options +Total +LTI +Target +TDC Increase +2023 1,400 2,800 4,200 6,250 3,750 2,500 12,500 16,700 +6.4% +2022 1,400 2,800 4,200 5,750 3,450 2,300 11,500 15,700 +CEO and Named Executive Officer Target Pay Mix +The amounts used in the charts below are based on 2023 target total direct compensation for the CEO and the +average of other NEOs. As illustrated below, 92% of the CEO’s target total direct compensation is at-risk. On +average, 84% of the other NEOs’ compensation is at risk. +CEO Pay Mix Average of Other NEOs +Our Compensation Philosophy and Objectives +Our executive compensation philosophy is to attract and retain the best management talent as well as motivate +these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the +actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner +consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a +strong link between our business strategy, the performance metrics in our short-term and long-term incentive +programs, and the business results that drive shareholder value. +To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and +that there is a direct link between pay and performance. To do so, it is guided by the following principles: +• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at +Kroger. +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an NEO’s level of responsibility. +• Compensation should include incentive-based pay to drive performance, providing superior pay for superior +performance, including both a short- and long-term focus. +• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership +to align the interests of NEOs and shareholders. +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy and progress toward our corporate ESG +priorities. +• Compensation plans should provide a direct line of sight to company performance. +• Compensation programs should be aligned with market practices. +• Compensation programs should serve to both motivate and retain talent. diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_53.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..85ba0ef6c89a7b741e4761492e50907e4f3420cd --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +51 +What we do: What we do not do: +✓ Alignment of pay and performance +✓ Stock ownership guidelines for executives +✓ Multiple performance metrics under our short- +and long-term performance-based plans +discourage excessive risk taking and align with +our long-term value creation strategy +✓ Double-trigger change in control provisions in all +equity awards +✓ Double-trigger change in control provisions in +cash severance benefits +✓ All long-term compensation is equity-based +✓ Engagement of an independent compensation +consultant +✓ Robust clawback policy +✓ Ban on hedging, pledging, and short sales of +Kroger securities +✓ Minimal perquisites +× No employment contracts with executive officers +× No special severance or change in control +programs applicable only to executive officers +× No cash component in long-term incentive plans +× No tax gross-up payments for executives +× No special executive life insurance benefit +× No re-pricing or backdating of stock options +without shareholder approval +× No guaranteed salary increases or bonuses +× No payment of dividends or dividend equivalents +until performance units are earned +× No evergreen or reload feature; no shares can be +added to stock plan without shareholder approval +Establishing Each Component of Executive Compensation +The Compensation Committee recommends, and the independent members of the Board determine, each +component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each +component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to +compensation in March of 2023. Equity awards were granted in March and salary and annual incentive plan +increases were effective April 1, 2023. +The Compensation Committee determines the amount of each NEO’s salary, annual cash incentive plan target, +and long-term equity compensation by taking into consideration numerous factors including: +• An assessment of individual contribution and performance; +• Benchmarking with comparable positions at peer group companies; +• Level in organization and tenure in role; and +• Internal equity among executives. +The assessment of individual contribution and performance is a qualitative determination, based on the +following factors: +• Leadership; +• Contribution to the executive officer group; +• Achievement of established performance objectives; +• Decision-making abilities; +• Performance of the areas or groups directly reporting to the NEO; +• Support of company culture; +• Strategic thinking; and +• Demonstrated commitment to Kroger’s Values: Safety, Honesty, Integrity, Respect, Diversity, and Inclusion, +including improvement in the DE&I category score as measured by our annual Associate Insights Survey +and active mentorship and development of at least one other associate with a different background. +Summary of Key Compensation Practices \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_54.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca9970feba295522a38d3b1bc57a6054692fcb70 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,42 @@ +52 + +At the end of each year, individual performance is evaluated based on the NEO’s performance objectives listed +above, and the results of that evaluation are used in the determination of salary increases and the grant amount of all +annual equity awards: restricted stock and stock options, which are time-based, and performance units granted under +the long-term incentive plan, which are performance-based. +Elements of Compensation +Salary +Our philosophy with respect to salary is to provide a sufficient and stable source of fixed cash compensation +that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April +1, 2022 and April 1, 2023 were as follows: +Name 2022 Base Salary 2023 Base Salary +W. Rodney McMullen $1,400,000 $1,400,000 +Gary Millerchip $825,000 $900,000 +Stuart W. Aitken $925,000 $1,000,000 +Yael Cosset $825,000 $875,000 +Timothy A. Massa $850,000 $900,000 + +2023 Annual Incentive Plan +The NEOs participate in a corporate performance-based annual cash incentive plan. The corporate annual cash +incentive plan is a broad-based plan used across the Kroger enterprise. Approximately 54,000 associates are eligible +to receive incentive payouts based all or in part on the incentive plan described below. The value of annual cash +incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to +goals established by the Compensation Committee based on the business plan adopted by the Board of Directors. +A minimum level of performance must be achieved before any payout is earned, while a payout of up to 200% +of target incentive potential can be achieved for superior performance on the corporate plan metrics. There are no +guaranteed or minimum payouts; if none of the performance goals are achieved, then none of the incentive amount +is earned, and no payout is made. +The annual cash incentive plan is designed to encourage decisions and behavior that drive the annual operating +results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and +accordingly, the Compensation Committee believes that it is important to encourage behavior that supports multiple +elements of our business strategy. +NEO target incentive potentials for fiscal years 2022 and 2023, were as follows: +Name 2022 Target Annual Incentive 2023 Target Annual Incentive +W. Rodney McMullen $2,800,000 $2,800,000 +Gary Millerchip $850,000 $950,000 +Stuart W. Aitken $850,000 $950,000 +Yael Cosset $850,000 $950,000 +Timothy A. Massa $775,000 $850,000 + + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_55.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4eb7a3ae8d20a86c33e41473861853656f67a4e4 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,42 @@ +53 + +2023 Annual Incentive Plan Metrics +Metric Rationale for Use +Sales and Profit Grid, Maximum Payout of 200% of Target +ID Sales, excluding Fuel +• Identical Sales (“ID Sales”) represent sales, excluding fuel, at our supermarkets that +have been open without expansion or relocation for five full quarters, excluding +supermarket fuel sales, plus sales growth at all other customer-facing non- +supermarket businesses. +• We believe that ID Sales are the best measure of real growth of our sales across the +enterprise. A key driver of our model is ID Sales growth. +Adjusted FIFO Operating Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to-day +operational effectiveness. It is a useful measure to investors because it reflects the +revenue and expense that a company can control. +Potential payouts under the plan are based on Company performance on two primary metrics, ID Sales, +excluding Fuel, and Adjusted FIFO Operating Profit, including Fuel. The performance objectives are shown in the +grid below, with payouts interpolated for actual performance between levels. +The goals established by the Compensation Committee were as follows: + +ID Sales, excluding Fuel and Adjusted FIFO Operating Profit, including Fuel +ID Sales, excluding Fuel + + + -1.30% 0.95% 3.20% 5.45% 7.70% +Adjusted FIFO Operating +Profit, including fuel ($M) ≥4,983 0% 14% 20% 29% 40% + ≥5,083 10% 25% 45% 60% 75% + ≥5,183 20% 65% 80% 95% 115% + ≥5,283 30% 75% 90% 105% 130% + ≥5,383 40% 85% 100% 115% 160% + ≥5,483 55% 95% 110% 125% 170% + ≥5,583 70% 105% 120% 135% 180% + ≥ 5,683 100% 115% 130% 155% 190% + ≥5,783 110% 125% 140% 170% 200% + + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_56.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a0a842092769270847ddc3e2598d6b3a151ccaf --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,40 @@ +54 + +2023 Annual Incentive Plan – Actual Results and Payout Percentage + +Corporate Plan Metric 2023 Performance(1) Payout +Identical Sales, excluding fuel 0.9% 24.02% Adjusted FIFO Operating Profit, including fuel $5.0B +Total Payout 24.02% +(1) See grid above. +Following the close of the 2023 fiscal year, the Compensation Committee reviewed Kroger’s performance +against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our +performance compared to the goals established by the Compensation Com mittee resulted in a payout of 24.02% of +the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken. +Mr. Aitken’s annual bonus payout equaled 22.71% of his bonus potential because it included the corporate +annual plan described above and a team metric as follows. The merchandising team metric measured supermarket +ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments +excluding pharmacy and fuel. + Payout Percentage Weight +Corporate Annual Bonus Plan 24.02 % 60 % +Merchandising Team Metric 20.75 % 40 % +Total Payout (24.02% x 0.6) + (20.75% x 0.4%) = 22.71% +The Compensation Committee maintains the ability to reduce the annual cash incentive payout for all executive +officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if +they determine for any reason that the incentive payouts were not appr opriate given their assessment of Company or +individual performance. No adjustments were made to the incentive payout amount in 202 3. +As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan +target which is determined by the Compensation Committee, and the independent directors in the case of the CEO. +The actual amounts of performance-based annual incentive paid to the NEOs for 2023 are reported in the Summary +Compensation Table in the “Non-Equity Incentive Plan Compensation” column. +Long-Term Compensation Program +The Compensation Committee believes in the importance of providing an incentive to the NEOs to achieve the +long-term goals established by the Board. As such, a majority of NEO compensation is dependent on the +achievement of those goals. Long-term compensation promotes long-term value creation and discourages the over- +emphasis of attaining short-term goals at the expense of long-term growth. +The long-term incentive program is structured to be a combination of performance- and time-based +compensation that reflects elements of financial and common share performance to provide both retention value and +alignment with company performance. The Compensation Committee determined that all long-term compensation +would be equity-based as follows: 50% of equity granted under the program would be performance -based and the +remaining 50% of equity would be time-based, consisting of 30% in restricted stock and 20% in stock options. + +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_57.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cb9d0cfe43aac0649a2b9c710c8b2647f3f85bd --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,60 @@ +55 + +Each year, NEOs receive grants under the long-term compensation program, which is structured as follows: +• Performance-Based (50% of NEO long-term target compensation) +• Long-term performance-based compensation is provided under a Long-Term Incentive Plan adopted by +the Compensation Committee. The Committee adopts a new plan every year, measuring improvement +on the Company’s long-term goals over successive three-year periods. Accordingly, at any one time +there are three plans outstanding, which are summarized below. +• Under the Long-Term Incentive Plans, NEOs receive grants of equity called performance units. A target +number of performance units based on level and individual performance is awarded to each participant +at the beginning of the three-year performance period. +• Payouts under the plan are contingent on the achievement of certain strategic performance and financial +measures and incentivize recipients to promote long-term value creation and enhance shareholder +wealth by supporting the Company’s long-term strategic goals. +• The payout percentage, based on the extent to which the performance metrics are achieved, is applied to +the target number of performance units awarded. Then, a modifier based on Relative Total Shareholder +Return compared to the S&P 500 is applied, which can increase or decrease the payout. +• Performance units are paid out in Kroger common shares based on actual performance, along with +dividend equivalents for the performance period on the number of issued common shares. +• Time-Based (50% of NEO long-term target compensation) +• Long-term time-based compensation consists of 20% stock options and 30% restricted stock, which are +linked to common share performance, creating alignment between the NEOs’ and our shareholders’ +interests. Grants vest ratably over four years. +• Stock options have no initial value and recipients only realize benefits if the value of our common +shares increases following the date of grant, further aligning the NEOs’ and our shareholders’ interests. +Amounts of long-term compensation awards issued and outstanding for the NEOs are set forth in the Executive +Compensation Tables section. +Summary of The Three Long-Term Incentive Plans Outstanding During 2023 +With respect to our long-term performance-based compensation, the Compensation Committee designed plan +metrics to align with Kroger’s long-term business plans and growth model. These metrics are the key elements in +driving Kroger’s TSR. +The Compensation Committee adopts a new Long-Term Incentive Plan each year, which provides for +overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below, +and a summary of the design of the plans outstanding during 2023 is as follows: + + 2021 – 2023 LTIP 2022 – 2024 LTIP 2023 – 2025 LTIP +Performance Units and +Dividend Equivalents +Performance units are equity grants which are paid out in Kroger common shares, based on actual performance at +the end of the 3-year performance period, along with dividend equivalents for the performance period on the +number of issued common shares ultimately earned. +Performance Metrics • Total Sales without Fuel + Fuel +Gallons; +• Growth in Adjusted FIFO; +Operating Profit, including Fuel; +• Cumulative Adjusted Free Cash +Flow; +• Fresh Equity metric; and +• Relative Total Shareholder Return +modifier +• Total Sales without Fuel + Fuel Gallons; +• Value Creation Metric (iTSR) Percentage; +• Fresh Equity metric; and +• Relative Total Shareholder Return modifier +Determination of Payout The payout percentage, based on the extent to which the performance metrics are achieved, is applied to number +of performance units awarded. +Maximum Payout 187.5% 187.5% 187.5% +Payout Date March 2024 March 2025 March 2026 + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_58.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e408bfcac53515954224212be55d66ec12542c4 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,50 @@ +56 + +2021-2023 Long-Term Incentive Plan – Metrics +The 2021-2023 Long-Term Incentive Plan has the following components which support our long-term business +plans, each accounting for 25% of the payout calculation: + +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of fuel +gallons sold over the three-year term of the plan. It represents the important +metric of top line growth of the business from all channels. +25% +Growth in Adjusted FIFO Operating +Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to- +day operational effectiveness. It is a useful measure to investors because it +reflects the revenue and expense that a company can control. It is particularly +important to focus on growth of this financial measure over time. +25% +Cumulative Adjusted Free Cash Flow +• Cumulative Adjusted Free Cash Flow is an adjusted free cash flow measure +calculated as net cash provided by operating activities minus payments for +property and equipment, including payments for lease buyout, plus or minus +adjustments for certain items. +• It is an important measure for the business because it reflects the cash left over +after the company pays for operating expenses and capital expenditures. +25% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives trips and +therefore delivers business results. Fresh is the core focus of how we +differentiate and drive great engagement with customers and it will be a key +driver of our growth. +25% + +After the calculation of the four metrics above, a modifier based on Relative Total Shareholder Return +compared to the S&P 500 will be applied which can increase or decrease the payout, as follows, interpolated for +actual results between thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the target number of +performance units granted under the plan to determine the payout amount. The maximum payout under the 2021- +2023 Long-Term Incentive Plan is 187.5% as further described below. + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_59.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1336cb9628ecad0dfa66abf6b9ce5d1f4016fcc --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,25 @@ +57 + + +Going into 2021, there were an extraordinary number and degree of unknowns that could have impacted our +financial results. The Compensation Committee considered, among other factors, the course of the pandemic, +including new COVID variants, availability and outcomes of vaccine progr ams, continuing sales trends, food at +home and food away from home trends, inflation/deflation, and other potential market influencing events. To +account for these unknowns, the Compensation Committee designed the 2021-2023 Long-Term Incentive Plan with +an incremental goal setting approach due to our inability to forecast reliable long -term performance targets against +the background of the economic uncertainty at the time. The Committee designed the plan to take into account the +extraordinary uncertainties going into the three-year plan, while aligning to our identical sales and operating profit +growth and productivity improvement goals, all in support of our long -term value creation model. Under the +incremental goal setting approach, the plan was designed with clearly defined financial performance goals for 2021, +and a mechanism for setting the 2022-2023 goals based on actual 2021 results. +For the 2021-2023 Long-Term Incentive Plan, the Compensation Committee aligned the plan with market +practices, increasing the maximum payout potential on the four metrics from 100% to 150%. The highest payout +from the four metrics alone equals 100%. However, the payout may exceed 100%, if for years 2 and 3 of the plan: +(1) the Total Sales without Fuel + Fuel Gallons metric, the Growth in Adjusted FIFO Operating Profit, including +Fuel, metric, and the Cumulative Adjusted Free Cash Flow metric all achieve 100 %, and (2) the 2-year compound +annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will increase +incrementally from 100%, up to 150% maximum if the 2-year compound annual growth rate on the Total Sales +without Fuel + Fuel Gallons metric is 5.0%. With the potential application of the relative TSR modifier, the total +maximum payout would be 187.5%. + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_6.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ea396b17db1c6e04b1f6b90c3bd437a62c2e3ad --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_60.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1f5435ba4ebbe951c125357dd69cd53f6004b6 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,77 @@ +58 + +2021-2023 Long-Term Incentive Plan – Results and Payout + +The results and payout of the 2021-2023 Long-Term Incentive Plan are as follows. + +2021 Results +Metric + + +Performance + + +Goal +Payout +Percentage for +2021 + Portion of Plan +Total Sales without Fuel + Fuel Gallons $127.96B $123.99B 100% +Adjusted FIFO Operating Profit $4.31B $3.48B 100% +Adjusted Free Cash Flow $3.94B $1.7B 100% +Fresh Equity Metric N/A + Payout for 2021 Portion of Plan (1/3) 100% + +2022-2023 Results +Metric + + + + + + +Payout +Percentage +For 2022-2023 +Portion of Plan +Total Sales without Fuel + Fuel Gallons $135.61B $135.75B 97.26% +Adjusted FIFO Operating Profit $4.80B $4.75B 100% +Adjusted Cumulative Free Cash Flow $4.9 $4.7B 100% +Fresh Equity Metric 43.2 46.1 0% + Payout for 2022-2023 Portion of Plan (2/3) 74.32% + +Combined Results +Metric + +Calculation + + +Payout +Percentage for +Full 2021-2023 +Plan +Total Sales without Fuel + Fuel Gallons (100% x 1/3) + (97.25% x 2/3) 98.17% +Adjusted FIFO Operating Profit (100% x 1/3) + (100% x 2/3) 100% +Adjusted Cumulative Free Cash Flow (100% x 1/3) + (100% x 2/3) 100% +Fresh Equity Measure 0% + Payout before Modifier (98.17% x 1/4) + (100% x 1/4) + (100% x 1/4) + (0% x 1/4) 74.54% +Relative TSR Modifier* 191st out of 500 in S&P 500 resulting in multiplier +between 100% and 125% 111.8% +Total Payout for 2021-2023 Plan 83.34% + +* The Company ranked 191st in the S&P 500 over the three year period for TSR. Based on this result, the Company +is in the second quartile of TSR results within the S&P 500. Because the Company ranking falls between 125 and +375, the multiplier to be applied in order to calculate the final LTIP payout is calculated based on an interpolation of +payouts between 75% and 125%, illustrated below: +TSR Rank in S&P 500 Payout Multiplier +1 to 125 125% +250 100% +375 to 500 75% +Actual Result = 191 111.8% + +The NEOs were issued the number of Kroger common shares equal to 83.34% of the target number of +performance units awarded to each executive, along with dividend equivalents for the three-year performance period +on the number of issued common shares. +The dividend equivalents paid on common shares earned under the 202 1 – 2023 Long-Term Incentive Plan are +paid at the end of the plan and are reported in the “All Other Compensation” column of the Summary Compensation +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_61.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d15b5538c66f02c19313df5c7a8e85db80614d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,57 @@ +59 + +Table and footnote 5 to that table, and the common shares issued under the plan are reported in the 202 3 Option +Exercises and Stock Vested Table and footnote 2 to that table. +The annual and long-term performance-based compensation awards described herein were made pursuant to +our 2019 Long-Term Incentive Plan, which was approved by our shareholders in June 2019, and the 2019 Amended +and Restated Long-Term Incentive Plan, which was approved by our shareholders in June 2022. + +2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan Metrics + Both the 2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan metrics have been designed to reflect +commitments made to our investors and other stakeholders regarding long -term sales growth, our Value Creation +algorithm (through intrinsic Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic +differentiator. The plan also includes a modifier based on our shareholder return relative to the S&P 500 shareholder +return. +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of +fuel gallons sold over the three-year term of the plan. It represents the +important metric of top line growth of the business from all channels. +25% +Value Creation Metric (iTSR) Percentage • This financial metric equals adjusted earnings per diluted share (EPS) +growth plus dividend yield. 50% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives +trips and therefore delivers business results. Fresh is the core focus of +how we differentiate and drive great engagement with customers and it +will be a key driver of our growth. +25% + +The highest payout from the three metrics alone equals 100%. However, the payout may exceed 100% if: (1) +both the Total Sales without Fuel + Fuel Gallons metric and the iTSR metric achieve 100%, and (2) the 3 -year +compound annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will +increase incrementally from 100%, up to 150% maximum if the 3-year compound annual growth rate on the Total +Sales without Fuel + Fuel Gallons metric is 5.0%. +After the calculation described above, a modifier based on Relative Total Shareholder Return compared to the +S&P 500 will be applied, as follows, interpolated for actual results between the 25 th percentile and 75th percentile +thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of +performance units granted under the plan to determine the payout amount. If all three metrics are achieved at the +maximum level and the Relative Total Shareholder Return modifier is maximized, the total plan payout would be +187.5%. +Stock Options and Restricted Stock +Stock options and restricted stock continue to play an important role in rewarding NEOs for the achievement of +long-term business objectives and providing incentives for the creation of shareholder value. Awards based on +Kroger’s common shares are granted annually to the NEOs. Kroger historically has distributed time-based equity +awards widely, aligning the interests of associates with interests of shareholders. +The options permit the holder to purchase Kroger common shares at an option price equal to the closing price +of Kroger common shares on the date of the grant. Options are granted only on one of the four dates of Board +meetings conducted at least one business day after Kroger’s public release of its quarterly earnings results. +The Compensation Committee determines the vesting schedule for stock options and restricted stock. During +2023, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four -year +ratable vesting schedule. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_62.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..69a9b5141d0b58026fcbe5351e1287525ad75a5a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,51 @@ +60 + +Restricted stock awards are reported in the “Stock Awards” column of the Summary Compensation Table and +footnote 1 to the table and the 2023 Grants of Plan Based Awards Table. Stock option awards are reported in the +“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the +2023 Grants of Plan Based Awards Table. +Retirement and Other Benefits +Kroger maintains several defined benefit and defined contribution retirement plans for its associates. The NEOs +participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in +retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly +compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to +the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2023 Pension Benefits +Table and the accompanying narrative. +Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate. +This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation +each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be +found below in the 2023 Nonqualified Deferred Compensation Table and the accompanying narrative. +Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our +management associates who are classified as exempt under the federal Fair Labor Standards Act and certain +administrative or technical support personnel who are not covered by a collective bargaining agreement, with at least +one year of service. KEPP has a double trigger change in control provision, and it provides for severance benefits +and extended Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an +associate is actually or constructively terminated without cause within two years following a change in control of +Kroger (as defined in KEPP). Participants are entitled to severance pay of up to 24 months’ salary and annual +incentive target. The actual amount is dependent upon pay level and years of service. KEPP can be amended or +terminated by the Board at any time prior to a change in control. +Stock option and restricted stock grant agreements with award recipients provide that those awards “vest,” with +options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in control as +described in the grant agreements, but only if an associate is actually or constructively terminated without cause +within two years following a change in control of Kroger (as defined in the grant agreement, and consistent with +KEPP). +None of the NEOs are party to an employment agreement. +Perquisites +Our NEOs receive limited perquisites as the Compensation Committee does not believe that it is necessary for +the attraction or retention of management talent to provide executives with a substantial amount of compensation in +the form of perquisites. +Process for Establishing Executive Compensation +The Compensation Committee of the Board has the primary responsibility for establishing the compensation of +our executive officers, including the NEOs, with the exception of the CEO. The Compensation Committee’s role +regarding the CEO’s compensation is to make recommendations to the independent members of the Board; those +members of the Board establish the CEO’s compensation. +The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the +Compensation Committee in the design of compensation for executive officers and to advise with respect to the +unique circumstances of the 2023 compensation cycle. +Korn Ferry conducted an annual competitive assessment of executive positions at Kroger for the Compensation +Committee. The assessment is one of several factors, as described above, on which the Compensation Committee +determines compensation. The consultant assessed: +• base salary; +• target performance-based annual cash incentive; +• target annual cash compensation (the sum of salary and annual cash incentive potential); +• long-term incentive compensation, comprised of performance units, stock options and restricted stock; and The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_63.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc0fccb56158baeaa436066f4445973707409e12 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,64 @@ +61 + +• total direct compensation (the sum of target annual cash compensation and long -term compensation). +In addition to the factors identified above, the consultant also reviewed actual payout amounts against the +targeted amounts. +The consultant compared these elements against those of other companies in a group of publicly traded +companies selected by the Compensation Committee. For 2023, our peer group consisted of: +Albertsons +Best Buy +Cardinal Health +Cencora, Inc (formerly known as +AmerisourceBergen) +Costco Wholesale +CVS Health +Home Depot +Johnson & Johnson +Lowe’s +Procter & Gamble +Sysco +Target +TJX Companies +Walgreens Boots Alliance +Walmart +The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. In +addition, the Compensation Committee considered supplemental data provided by its independent compensation +consultant from “general industry” companies, a representation of the Fortune 40, excluding financial services +companies. This data provided reference points, particularly for senior executive positions where competition for +talent extends beyond the retail sector. The peer group includes a combina tion of food and drug retailers, other large +retailers based on revenue size, and large consumer-facing companies. Median 2023 revenue for the peer group was +$108 billion, compared to our 2023 revenue of $150 billion. +Considering the size of Kroger in relation to other peer group companies, the Compensation Committee +believes that salaries paid to our NEOs should be competitively positioned relative to amounts paid by peer group +companies for comparable positions. The Compensation Committee also aims to provide an annual cash incentive +potential to our NEOs around the market median. Actual payouts may be as low as zero if performance does not +meet the baselines established by the Compensation Committee while superior fin ancial performance is rewarded +with compensation falling above the median. +The independent members of the Board have the exclusive authority to determine the amount of the CEO’s +compensation. In setting total compensation, the independent directors consider the median compensation of the +peer group’s CEOs. With respect to the annual incentive plan, the independent directors make two determinations: +(1) the annual cash incentive potential that will be multiplied by the corporate annual cash incentive +payout percentage earned that is applicable to the NEOs and (2) the annual cash incentive amount paid to the CEO +by retaining discretion to reduce the annual cash incentive percentage payout the CEO would otherwise receive +under the formulaic plan. The independent directors also retain discretion to determine the form of payout, to +include a portion in equity in place of cash. +The Compensation Committee performs the same function and exercises the same authority as to the other +NEOs. In its annual review of compensation for the NEOs, the Compensation Committee: +• Conducts an annual review of all components of compensation, quantifying total compensation for the NEOs +including a summary for each NEO of salary; performance-based annual cash incentive; and long-term +performance-based equity comprised of performance units, stock options and restricted stock. +• Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The +Compensation Committee has determined that the compensation of the CEO and that of the other NEOs +bears a reasonable relationship to the compensation levels of other executive positions at Kroger taking into +consideration performance and differences in responsibilities. +• Reviews a report from the Compensation Committee’s compensation consultant reflecting a comprehensive +review of each element of pay, both annual and long-term and comparing NEO compensation with that of +other companies, including both our peer group of competitors and a larger general industry group, to ensure +that the Compensation Committee’s objectives of competitiveness are met. +• Takes into account a recommendation from the CEO for salary, annual cash incentive potential and long - +term compensation awards for each of the senior officers including the other NEOs. The CEO’s +recommendation takes into consideration the objectives established by and the reports received by the +Compensation Committee as well as his assessment of individual job performance and contribution to our +management team. +The Compensation Committee does not make use of a formula, but both qualitatively and quantitatively +considers each of the factors identified above in setting compensation. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_64.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..af9665a4e1895bcdf51027a396c3dbc677ca2df0 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,52 @@ +62 +Stock Ownership Guidelines +To more closely align the interests of our officers and directors with your interests as shareholders, the Board +has adopted stock ownership guidelines. These guidelines require independent directors, executive officers, and +other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below: +Position Multiple +Chief Executive Officer 5 times base salary +President and Chief Operating Officer 4 times base salary +Executive Vice Presidents and Senior Vice Presidents 3 times base salary +Independent Directors 5 times annual base cash retainer +All covered individuals are expected to achieve the target level within five years of appointment to their +positions. Until the requirements are met, covered individuals, including the NEOs, must hold 100% of common +shares issued pursuant to performance units earned, shares received upon the exercise of stock options and upon the +vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes, +and must retain all Kroger common shares unless the disposition is approved in advance by the CEO, or by the +Board or Compensation Committee for the CEO. +Executive Compensation Recoupment Policy (Clawback) +Under the 2019 Amended and Restated Long-Term Incentive Plan (the “2019 Plan”), unless an award +agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after +termination the Compensation Committee determines either that (i) prior to termination, the participant engaged in +an act or omission that would have warranted termination for cause or (ii) after termination, the participant violates +any continuing obligation or duty of the participant with respect to Kroger, any gain realized by the participant from +the exercise, vesting or payment of any award may be cancelled, forfeited or recouped in the sole discretion of the +Committee. Under the 2019 Plan, any gain realized by the participant from the exercise, vesting or payment of any +award may also be recouped if, within one year after such exercise, vesting or payment, (i) a participant is +terminated for cause, (ii) the Compensation Committee determines that the participant is subject to recoupment +pursuant to any Kroger policy, or (iii) after a participant’s termination for any reason, the Compensation Committee +determines either that (1) prior to termination the participant engaged in an act or omission that would have +warranted termination for cause, or (2) after termination the participant violates any continuing obligation or duty of +the participant with respect to Kroger. Unless otherwise defined under 2019 Plan award agreement, “cause” has the +meaning as defined in The Kroger Co. Employee Protection Plan, as amended from time to time. +Additionally, if an award based on financial statements that are subsequently restated in a way that would +decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written +request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been +received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy +or applicable law. +We have adopted a +policy on incentive compensation-based recovery, which meets the requirements of +NYSE listing standards and Section 10D of the Exchange Act. The policy requires the recoupment of incentive- +based compensation paid to certain current and former executive officers in the event that the Company is required +to restate its financial results due to the Company’s material non-compliance with any financial reporting +requirement under the securities laws. Under the policy, the Company will seek recovery of erroneously awarded +incentive-based compensation received by current and former executive officers during the three-year fiscal year +period prior to the date the Company is required to prepare an accounting restatement. The Policy is administered b +y +the Compensation Committee of the Board. +Kroger also has an additional recoupment policy, which provides that if a material error of facts results in +the payment to an executive officer at the level of Group Vice President or higher of an annual or a long-term +incentive in an amount higher than otherwise would have been paid, as determined by the Compensation Committee, +then the officer, upon demand from the Compensation Committee, will reimburse Kroger for the amounts that would +not have been paid if the error had not occurred. This recoupment policy applies to those amounts paid by Kroger +within 36 months prior to the detection and public disclosure of the error or restatement. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_65.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1db0895ee54d913786b5c9b5a5b15cfb5b0872c --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,35 @@ +63 + +Prohibition on Hedging and Pledging +The Board has adopted a policy prohibiting Kroger directors and executive officers from engaging, directly or +indirectly, in the pledging of, hedging transactions in, or short sales of, Kroger securities. +Section 162(m) of the Internal Revenue Code +Prior to the effective date of the Tax Cuts and Jobs Act of 2017, Section 162(m) of the Code generally +disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year +to specified executive officers unless the compensation was “qualified performance-based compensation” under that +section. Pursuant to the Tax Cuts and Jobs Act of 2017, the exception for “qualified performance -based +compensation” under Section 162(m) of the Code was eliminated with respect to all remuneration in excess of +$1 million other than qualified performance-based compensation pursuant to a written binding contract in effect on +November 2, 2017 or earlier which was not modified in any material respect on or after such date (the legisl ation +providing for such transition rule, the “Transition Rule”). +As a result, performance-based compensation that the Compensation Committee structured with the intent of +qualifying as performance-based compensation under Section 162(m) prior to the change in the law may or may not +be fully deductible, depending on the application of the Transition Rule. In addition, compensation arrangements +structured following the change in law will be subject to the Section 162(m) limitation (without any exception for +performance-based compensation). Consistent with its past practice, the Committee will continue to retain flexibility +to design compensation programs that are in the best long-term interests of the Company and our shareholders, with +deductibility of compensation being one of a variety of considerations taken into account . +Compensation Committee Report +The Compensation Committee has reviewed and discussed with Kroger’s management the Compensation +Discussion and Analysis contained in this proxy statement. Based on its review and discussions with management, +the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be +included in Kroger’s proxy statement and incorporated by reference into its Annual Report on Form 10 -K. +Compensation Committee: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark Sutton + + + +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_66.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..cdc7e70cbb4bee3bf7546132ffec1afeff4a1dfd --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,89 @@ +64 + + Executive Compensation Tables +Summary Compensation Table +The following table and footnotes provide information regarding the compensation of the NEOs for the +fiscal years presented. + +Name and Principal +Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(1) +Option +Awards +($)(2) +Non-Equity +Incentive Plan +Compensation +($)(3) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($)(4) +All Other +Compensation +($)(5) +Total +($) +W. Rodney McMullen +Chairman and Chief +Executive Officer +2023 1,422,581 10,000,038 2,500,632 672,560 193,388 921,373 15,710,572 +2022 1,388,495 10,367,639 2,299,636 4,130,769 175,750 847,554 19,209,843 +2021 1,351,358 8,800,023 2,199,162 4,647,750 159,640 1,010,797 18,168,730 + +Gary Millerchip +Senior Vice President +and Chief Financial Officer +2023 901,411 3,400,063 850,220 224,176 313,928 5,689,798 +2022 809,879 3,358,792 749,879 1,269,231 265,342 6,453,123 +2021 726,815 2,800,022 699,735 1,498,006 261,842 5,986,420 + +Stuart W. Aitken +Senior Vice President and +Chief Merchant & Marketing +Officer +2023 1,003,024 3,400,063 850,220 211,950 325,497 5,790,754 +2022 915,632 3,346,838 749,879 1,269,231 277,694 6,559,274 +2021 878,387 2,800,022 699,735 1,527,013 300,214 6,205,371 + +Yael Cosset +Senior Vice President +and Chief Information Officer +2023 880,376 3,400,063 850,220 224,176 318,427 5,673,262 +2022 809,879 3,358,792 749,879 1,269,231 267,548 6,455,329 +2021 739,685 2,800,022 699,735 1,498,006 265,342 6,002,790 + +Timothy A. Massa +Senior Vice President +and Chief People Officer +2023 905,780 2,400,017 600,162 201,159 234,018 4,341,136 +2022 839,113 2,320,484 499,919 1,133,654 208,794 5,001,964 +2021 780,914 1,760,033 439,836 1,194,114 210,350 4,385,247 +(1) Amounts reflect the grant date fair value of restricted stock and performance units granted each fiscal year, as +computed in accordance with FASB ASC Topic 718. The following table reflects the value of each type of +award granted to the NEOs in 2023: +Name Restricted Stock Performance Units +Mr. McMullen $3,750,044 $6,249,994 +Mr. Millerchip $1,275,041 $2,125,022 +Mr. Aitken $1,275,041 $2,125,022 +Mr. Cosset $1,275,041 $2,125,022 +Mr. Massa $900,018 $1,499,999 + +The Restricted Stock values include the annual grant of restricted stock in 2023. +The grant date fair value of the performance units reflected in the stock awards column and in the table above is +computed 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. The assumptions used in calculating the val uations are set forth in Note 11 to +the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_67.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..c61c971d54919c2efda243441463d2e66143f100 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,52 @@ +65 + +Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 202 3 +performance unit awards at the grant date is as follows: + +Name +Value of Performance Units +Assuming Maximum Performance +Mr. McMullen $11,718,756 +Mr. Millerchip $3,984,404 +Mr. Aitken $3,984,404 +Mr. Cosset $3,984,404 +Mr. Massa $2,812,509 + +(2) These amounts represent the aggregate grant date fair value of option awards computed in accordance with +FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the +consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. +(3) Non-equity incentive plan compensation earned for 2023 consists of amounts earned under the 2023 Annual +Incentive Plan. The 2023 Annual Incentive Plan was calculated at 24.02.% and was applied to each NEO’s +annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 22.71% of his annual incentive +target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. See +“2023 Annual Incentive Plan Results” in the Compensation Discussion and Analysis for more information on +this plan. +(4) The amount reported consists of preferential earnings on nonqualified deferred compensation, which only +applies to Mr. McMullen. The remainder of the NEOs do not participate in a defined benefit pension plan or in +a nonqualified deferred compensation plan. + Change in Pension Value. The actuarial present value of Mr. McMullen’s accumulated pension benefits +decreased by $168,788. This change in value of accumulated pension benefits is not included in the Summary +Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the +change in value of the benefit due to the increase in discount rates as well as the change in value of the benefit +due to aging. The Company froze the compensation and service periods used to calculate pension benefits for +active associates who participate in the affected pension plans, including Mr. McMullen’s, as of December 31, +2019. Beginning January 1, 2020, the affected active associates will no longer accrue additional benefits for +future service and eligible compensation received under these plans. Please see the 202 3 Pension Benefits +section for further information regarding the assumptions used in calculating pension benefits. + Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co. +Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings +of $193,388. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten - +year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of +each deferral year. For each participant, a separate deferral account is created each year and the interest rate +established for that year is applied to that deferral account until the deferred compensation is paid out. If the +interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long -term +interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of +the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts +in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual +earnings on the account exceed what the annual earnings would have been if the account earned interest at +120% of the corresponding federal rate, and discloses those amounts as prefer ential earnings. +(5) Amounts reported in the “All Other Compensation” column for 202 3 include Company contributions to defined +contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on +unvested restricted stock. In 2023, the total amount of perquisites and personal benefits for each of the NEOs +was less than $10,000. The following table identifies the value of each element of All Other Compensation: + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_68.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..f993f363c27de19e760db940b6c92b71d99286eb --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,104 @@ +66 + +Name +Retirement Plan +Contributions(a) +Payment of +Dividend +Equivalents +on Earned +Performance +Units +Dividends +Paid on +Unvested +Restricted +Stock +Mr. McMullen $ 307,075 $ 369,950 $ 244,348 +Mr. Millerchip $ 117,025 $ 117,712 $ 79,191 +Mr. Aitken $ 127,351 $ 117,712 $ 80,434 +Mr. Cosset $ 120,463 $ 117,712 $ 80,252 +Mr. Massa $ 106,831 $ 73,991 $ 53,196 + +(a) Retirement plan contributions. The Company makes automatic and matching contributions to NEOs’ +accounts under the applicable defined contribution plan on the same terms and using the same formulas as +other participating associates. The Company also makes contributions to NEOs’ accounts under the +applicable defined contribution plan restoration plan, which is intended to make up the shortfall in +retirement benefits caused by the limitations on benefits to highly compensated individuals under the +defined contribution plans in accordance with the Code. + +2023 Grants of Plan-Based Awards +The following table provides information about equity and non-equity incentive awards granted to the NEOs in +2023. + Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Future +Payouts Under +Equity Incentive +Plan Awards +All Other +Stock +Awards: +Number +of +Shares of +Stock or +Units +(#)(3) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#)(4) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards +($) +Name Grant +Date +Target +($)(1) +Maximum +($)(1) +Target +(#)(2) +Maximum +(#)(2) +W. Rodney +McMullen 2,800,000 5,600,000 + 3/9/2023 79,366 3,750,044 + 3/9/2023 165,893 47.25 2,500,632 + 3/9/2023 132,275 248,016 6,249,994 +Gary Millerchip 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Stuart W. Aitken 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Yael Cosset 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Timothy A. +Massa 850,000 1,700,000 + 3/9/2023 19,048 900,018 + 3/9/2023 39,815 47.25 600,162 + 3/9/2023 31,746 59,524 1,499,999 + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_69.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e08a2d7274157996914fd972199fd91d9722325 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,43 @@ +67 + + +(1) These amounts relate to the 2023 performance-based annual incentive plan. The amount listed under “Target” +represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more +than 200% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is +200% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were +paid out in March 2024; are described in the Compensation Discussion and Analysis; and are included in the +Summary Compensation Table for 2023 in the “Non-Equity Incentive Plan Compensation” column and +described in footnotes 1 and 3 to that table. See “2023 Annual Cash Incentive Plan” in CD&A for more +information about the program for 2023. +(2) These amounts represent performance units awarded under the 2023 Long-Term Incentive Plan, which covers +performance during fiscal years 2023, 2024 and 2025. The amount listed under “Maximum” represents the +maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target +amount. 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 u nder FASB +ASC Topic 718, excluding the effect of estimated forfeitures. 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. The aggregate +grant date fair value of these awards is included in the Summary Compensation Table for 2023 in the “Stock +Awards” column and described in footnote 1 to that table. +(3) These amounts represent the number of shares of restricted stock granted in 202 3. 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 202 3 in the “Stock +Awards” column and described in footnote 1 to that table. +(4) These amounts represent the number of stock options granted in 202 3. 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 202 3 in the “Option Awards” +column and described in footnote 2 to that table. +The Compensation Committee, and the independent members of the Board in the case of the CEO, established +the incentive potential amounts for the performance-based annual incentive awards (shown in this table as “Target”) +and the number of performance units awarded for the long-term incentive awards (shown in this table as “Target”). +Amounts are payable to the extent that Kroger’s actual performance meets specific performance metrics established +by the Compensation Committee at the beginning of the performance period. There are no guaranteed or minimum +payouts; if none of the performance metrics are achieved, then none of the award is earned and no payout is made. +As described in the CD&A, actual earnings under the performance-based annual incentive plan may exceed the +target amount if the Company’s performance exceeds the performance goals, but are limited to 2 00% of the target +amount. The potential values for performance units awarded under the 2023-2025 Long-Term Incentive Plan are +more particularly described in the CD&A. +The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts +on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate. Any +dividends declared on Kroger common shares are payable on unvested restricted stock. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_7.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bb21433eed46a0e9c1fb9f24c8d91604ee6cc18 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,89 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_70.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c89e02edd61293ee5664c3d719865b541fd8332 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,104 @@ +68 + +2023 Outstanding Equity Awards at Fiscal Year-End +The following table provides information about outstanding equity-based incentive compensation awards for +the NEOs as of the end of 2023. The vesting schedule for each award is described in the footnotes to this table. The +market value of unvested restricted stock and unearned performance units is based on the closing price of Kroger’s +common shares of $46.14 on February 2, 2024, the last trading day of fiscal 2023. + + Option Awards Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares +or Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan Awards: +Number of +Unearned +Shares, +Units or +Other Rights +That Have +Not Vested +(#) +Equity +Incentive Plan +Awards: Market +or Payout Value +of Unearned +Shares, Units +or Other Rights +That Have Not +Vested +($) +W. Rodney McMullen 300,000 24.67 7/15/2024 27,044(5) 1,247,810 + 235,415 38.33 7/15/2025 47,224(6) 2,178,915 + 358,091 37.48 7/13/2026 45,324(7) 2,091,249 + 573,127 22.92 7/13/2027 79,366(8) 3,661,947 + 349,293 28.05 7/13/2028 24,712(9) 1,140,212 + 348,259 24.75 3/14/2029 64,510(10) 3,182,923 + 246,865 82,289(1) 29.12 3/12/2030 132,275(11) 6,555,550 + 130,486 130,487(2) 34.94 3/11/2031 + 35,714 107,144(3) 57.09 3/10/2032 + 165,893(4) 47.25 3/9/2033 +Gary Millerchip 9,600 24.67 7/15/2024 6,954(5) 320,858 + 13,992 38.33 7/15/2025 15,026(6) 693,300 + 27,972 37.48 7/13/2026 14,780(7) 681,949 + 34,905 22.92 7/13/2027 26,985(8) 1,245,088 + 30,251 28.05 7/13/2028 7,593(9) 350,341 + 82,919 24.75 3/14/2029 21,036(10) 1,037,916 + 51,116 22.08 7/15/2029 44,974(11) 2,228,911 + 63,480 21,160(1) 29.12 3/12/2030 + 41,518 41,519(2) 34.94 3/11/2031 + 11,646 34,938(3) 57.09 3/10/2032 + 56,404(4) 47.25 3/9/2033 +Stuart W. Aitken 11,149 22.92 7/13/2027 6,954(5) 320,858 + 33,124 28.05 7/13/2028 15,026(6) 693,300 + 99,503 24.75 3/14/2029 14,780(7) 681,949 + 63,480 21,160(1) 29.12 3/12/2030 26,985(8) 1,245,088 + 41,518 41,519(2) 34.94 3/11/2031 7,340(9) 338,668 + 11,646 34,938(3) 57.09 3/10/2032 21,036(10) 1,037,916 + 56,404(4) 47.25 3/9/2033 44,974(11) 2,228,911 +Yael Cosset 10,611 28.83 3/9/2027 6,954(5) 320,858 + 8,704 22.92 7/13/2027 15,026(6) 693,300 + 29,499 28.05 7/13/2028 14,780(7) 681,949 + 82,919 24.75 3/14/2029 26,985(8) 1,245,088 + 63,480 21,160(1) 29.12 3/12/2030 7,593(9) 350,341 + 41,518 41,519(2) 34.94 3/11/2031 21,036(10) 1,037,916 + 11,646 34,938(3) 57.09 3/10/2032 44,974(11) 2,228,911 + 56,404(4) 47.25 3/9/2033 + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_71.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a76f7bc0a81544531e47610774184cb4f1c294d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,67 @@ +69 + +Timothy A. Massa 29,970 38.33 7/15/2025 5,152(5) 237,713 + 25,889 37.48 7/13/2026 9,445(6) 435,792 + 45,065 22.92 7/13/2027 9,854(7) 454,664 + 40,561 28.05 7/13/2028 19,048(8) 878,875 + 66,336 24.75 3/14/2029 6,782(9) 312,921 14,024(10) 691,943 + 47,022 15,674(1) 29.12 3/12/2030 31,746(11) 1,573,331 + 26,097 26,098(2) 34.94 3/11/2031 + 7,764 23,292(3) 57.09 3/10/2032 + 39,815(4) 47.25 3/9/2033 + +(1) Stock options vest on 3/12/2024. +(2) Stock options vest in equal amounts on 3/11/2024 and 3/11/2025. +(3) Stock options vest in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(4) Stock options vest in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(5) Restricted stock vests on 3/12/2024. +(6) Restricted stock vests in equal amounts on 3/11/2024 and 3/11/2025. +(7) Restricted stock vests in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(8) Restricted stock vests in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(9) Restricted stock vests on 3/9/2024. +(10) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance through fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. +(11) Performance units granted under the 2023 long-term incentive plan are earned as of the last day of fiscal 2025, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance in fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. + +2023 Option Exercises and Stock Vested +The following table provides information regarding 2023 stock options exercised, restricted stock vested, and +common shares issued pursuant to performance units earned under long-term incentive plans. + + Option Awards(1) Stock Awards(2) +Name +Number of +Shares +Acquired on +Exercise +(#) +Value +Realized on +Exercise +($) +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized +on +Vesting +($) +W. Rodney McMullen 194,880 5,912,659 228,769 11,880,857 +Gary Millerchip — — 73,141 3,792,552 +Stuart W. Aitken — — 73,838 3,825,427 +Yael Cosset — — 72,323 3,753,949 +Timothy A. Massa 46,000 1,013,795 43,942 2,290,693 +(1) Stock options have a ten-year life and expire if not exercised within that ten-year period. The value +realized on exercise is the difference between the exercise price of the option and the closing price of +Kroger’s common shares on the exercise date. + +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_72.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..44b63cdbe70c850841da5b2a5c735a6d2035080a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,62 @@ +70 + +(2) The Stock Awards columns include vested restricted stock and earned performance units, as follows: + + Vested Restricted Stock Earned Performance Units +Name +Number of +Shares +Value +Realized +Number of +Shares +Value +Realized +W. Rodney McMullen 97,581 $4,598,611 131,188 $7,282,246 +Gary Millerchip 31,399 $1,475,454 41,742 $2,317,098 +Stuart W. Aitken 32,096 $1,508,329 41,742 $2,317,098 +Yael Cosset 30,581 $1,436,851 41,742 $2,317,098 +Timothy A. Massa 17,704 $834,222 26,238 $1,456,471 +Restricted stock. The table includes the number of shares acquired upon vesting of restricted stock and the +value realized on the vesting of restricted stock, based on the closing price of Kroger common shares on the vesting +date. +Performance Units. Participants in the 2021-2023 Long-Term Incentive Plan were awarded performance units +that were earned based on performance criteria established by the Compensation Committee as described in “20 21- +2023 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of +performance achieved and were paid in common shares. The number of common shares issued, and the value +realized based on the closing price of Kroger common shares of $ 55.51 on March 14, 2024, the date of deemed +delivery of the shares, are reflected in the table above. +2023 Pension Benefits +The following table provides information regarding pension benefits for the NEOs as of the last day of fiscal +2023. Only Mr. McMullen participates in a pension plan. +Name Plan Name +Number of +Years Credited +Service +(#)(1) +Present Value of +Accumulated +Benefit +($)(2) +Payments during +Last fiscal year +($) +W. Rodney McMullen Pension Plan 34 1,597,556 — + Excess Plan 34 17,854,044 — +Gary Millerchip Pension Plan — — — + Excess Plan — — — +Stuart W. Aitken Pension Plan — — — + Excess Plan — — — +Yael Cosset Pension Plan — — — + Excess Plan — — — +Timothy A. Massa Pension Plan — — — + Excess Plan — — — + +(1) In 2018, the Company froze the service periods used to calculate pension benefits and thus, Mr. McMullen’s +number of years of credited service is less than his actual 45 years of service. +(2) The discount rate used to determine the present values was 5.27% for The Kroger Consolidated Retirement +Benefit Plan Spin Off (the “Pension Plan”) and 5.25% for The Kroger Co. Consolidated Retirement Excess +Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting +purposes. Additional assumptions used in calculating the present values are set forth in Not e 14 to the +consolidated financial statements in Kroger’s 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_73.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..6833059c003086d3c74bf2668ee5d40f37c8e57c --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,59 @@ +71 + +Pension Plan and Excess Plan +In 2023, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan. +Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in +Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused +by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in +accordance with the Code. +Although participants generally receive credited service beginning at age 21, certain participants in the Pension +Plan and the Excess Plan who commenced employment prior to 1986, including Mr. McMullen, began to accrue +credited service after attaining age 25 and one year of service. The Pension Plan and the Excess Plan generally +determine accrued benefits using a cash balance formula but retain benefit formulas applicable under prior plans for +certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Mr. McMullen is +eligible for these grandfathered benefits. +Grandfathered Participants +Benefits for grandfathered participants are determined using formulas applicable under prior plans, including +the Kroger formula covering service to The Kroger Co. As a “grandfathered participant,” Mr. McMullen will receive +benefits under the Pension Plan and the Excess Plan, determined as follows: +• 11∕2% times years of credited service multiplied by the average of the highest five years of total earnings +(base salary and annual cash incentive) during the last ten calendar years of employment, reduced by 11∕4% +times years of credited service multiplied by the primary social security benefit; +• normal retirement age is 65; and +• unreduced benefits are payable beginning at age 62. + +In 2018, we announced changes to these company-sponsored pension plans. The Company froze the compensation +and service periods used to calculate pension benefits for active associates who participate in the affected pension +plans, including the NEO participants, as of December 31, 2019. Beginning January 1, 2020, the affected active +associates no longer accrue additional benefits for future service and eligible compensation received under these +plans. +2023 Nonqualified Deferred Compensation +The following table provides information on nonqualified deferred compensation for the NEOs for 2023. Only +Mr. McMullen participates in a nonqualified deferred compensation plan. + +Name +Executive Contributions +in Last FY +Aggregate Earnings +in Last FY(1) +Aggregate Balance +at Last FYE(2) +W. Rodney McMullen $77,500 $960,586 $15,144,738 +Gary Millerchip — — — +Stuart W. Aitken — — — +Yael Cosset — — — +Timothy A. Massa — — — +(1) This amount includes the aggregate earnings on Mr. McMullen’s account, including any above-market or +preferential earnings. The amount of $193,388 earned in 2023 is deemed to be preferential earnings and is +included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the +Summary Compensation Table for 2023. +(2) The amount of $4,188,521 for Mr. McMullen was reported in the Summary Compensation Tables covering +fiscal years 2006 – 2022. +Executive Deferred Compensation Plan +Mr. McMullen participates in the Deferred Compensation Plan, which is a nonqualified deferred compensation +plan. Participants may elect to defer up to 100% of the amount of their salary that exceeds the sum of the FICA +wage base and pre-tax insurance and other Code Section 125 plan deductions, as well as up to 100% of their cash +incentive compensation. Kroger does not match any deferral or provide other contributions. Deferral account +amounts are credited with interest at the rate representing Kroger’s cost of ten -year debt as determined by Kroger’s +CFO and approved by the Compensation Committee prior to the beginning of each deferral year. The interest rate +established for deferral amounts for each deferral year will be applied to those deferral amounts for all \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_74.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..aea3edcaa3dabbd4ad483d5405cd98c7fc41d64c --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,41 @@ +72 + +subsequent years until the deferred compensation is paid out. Participants can elect to receive lump sum distributions +or quarterly installments for periods up to ten years. Participants also can elect between lump sum distributions and +quarterly installments to be received by designated beneficiaries if the participant dies before distribution of deferred +compensation is completed. +Participants may not withdraw amounts from their accounts until they leave Kroger, except that Kroger has +discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency. +Participants who are “specified associates” under Section 409A of the Code, which includes the NEOs, may not +receive a post-termination distribution for at least six months following separation. If the associate dies prior to or +during the distribution period, the remainder of the account will be distributed to his or her designated beneficiary in +lump sum or quarterly installments, according to the participant’s prior election. +Potential Payments upon Termination or Change in Control +Kroger does not have employment agreements that provide for payments to the NEOs in connection with a +termination of employment or a change in control of Kroger. However, KEPP and award agreements for stock +options, restricted stock and performance units provide for certain payments and benefits to participants, including +the NEOs, in the event of a termination of employment or a change in control of Kroger, as defined in the applicable +plan or agreement. Our pension plans and nonqualified deferred compensa tion plan also provide for certain +payments and benefits to participants in the event of a termination of employment, as described above in the 202 3 +Pension Benefits section and the 2023 Nonqualified Deferred Compensation section, respectively. +The Kroger Co. Employee Protection Plan +KEPP applies to all management associates who are classified as exempt under the federal Fair Labor +Standards Act and to certain administrative or technical support personnel who are not covered by a collective +bargaining agreement, with at least one year of service, including the NEOs. KEPP provides severance benefits +when a participant’s employment is terminated actually or constructively within two years following a change in +control of Kroger, as defined in KEPP. The actual amount of the severance benef it is dependent on pay level +and years of service. Exempt associates, including the NEOs, are eligible for the following benefits: +• a lump sum severance payment equal to up to 24 months of the participant’s annual base salary and target +annual incentive potential; +• a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation; +• continued medical and dental benefits for up to 24 months and continued group term life insurance coverage +for up to six months; and +• up to $10,000 as reimbursement for eligible outplacement expenses. +In the event that any payments or benefits received or to be received by an eligible associate in connection with +a change in control or termination of employment (whether pursuant to KEPP or any other plan, arrangement or +agreement with Kroger or any person whose actions result in a change in control) would constitute parachute +payments within the meaning of Section 280G of the Code and would be subject to the excise tax under +Section 4999 of the Code, then such payments and benefits will either be (i) paid in full or (ii) reduced to the +minimum extent necessary to ensure that no portion of such payments or benefits will be subject to the excise tax, +whichever results in the eligible associate receiving the greatest aggregate amount on an after -tax basis. +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_75.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..00496b2ac6052bc070e8eed34be12bf44e890f1b --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,114 @@ +73 + +Long-Term Incentive Awards +The following table describes the treatment of long-term incentive awards following a termination of +employment or change in control of Kroger, as defined in the applicable agreement. In each case, the continued +vesting, exercisability or eligibility for the incentive awards will end if the participant provides services to a +competitor of Kroger. +Triggering Event Stock Options Restricted Stock Performance Units +Involuntary Termination Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary +Termination/Retirement +• Prior to minimum age and +five years of service(1) +Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary Termination/ +Retirement +• After minimum +age and five years of service(1) +Unvested options held greater +than one year continue vesting +on the original schedule. All +options are exercisable for +remainder of the original 10- +year term +Unvested shares held +greater than one year +continue vesting on the +original schedule +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Death Unvested options are +immediately vested. All options +are exercisable for the +remainder of the original 10- +year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results +through the end of the fiscal year in +which death occurs. Award will be +paid following the end of such fiscal +year +Disability Unvested options are +immediately vested. All options +are exercisable for remainder of +the original 10-year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Change in Control(3) +• For awards prior to 2019 +Unvested options are +immediately vested and +exercisable +Unvested shares +immediately vest +50% of the units granted at the +beginning of the performance period +earned immediately +Change in Control(3) +• For awards in March 2019 +and thereafter +Unvested options only vest and +become exercisable upon an +actual or constructive +termination of employment +within two years following a +change in control +Unvested shares only vest +upon an actual or +constructive termination of +employment within +two years following a +change in control +50% of the units granted at the +beginning of the performance period +earned upon an actual or +constructive termination of +employment within two years +following a change in control +(1) The minimum age requirement is age 62 for stock options and restricted stock and age 55 for +performance units. +(2) The prorated amount is equal to the number of weeks of active employment during the performance period +divided by the total number of weeks in the performance period. +(3) These benefits are payable upon an actual or constructive termination of employment within two years after a +change in control, as defined in the applicable agreements. +Quantification of Payments upon Termination or Change in Control +The following table provides information regarding certain potential payments that would have been made to +the NEOs if the triggering event occurred on the last day of the fiscal year, February 3, 2024, given compensation, +age and service levels as of that date and, where applicable, based on the closing market price per Kroger common +share on the last trading day of the fiscal year ($46.14 on February 2, 2024). Amounts actually received upon the +occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the +market price of Kroger common shares, and the officer’s age, length of service and compensation level. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_76.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..72deef11134a54369f028c7d6f68c1f4eab486d1 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,91 @@ +74 + + + +Name +Involuntary +Termination +Voluntary +Termination/ +Retirement Death Disability +Change +in Control +without +Termination +Change in +Control with +Termination +W. Rodney McMullen +Accrued and Banked +Vacation +$654,904 $654,904 $654,904 $654,904 $654,904 $654,904 +Severance – – – – – $8,400,000 +Continued Health +and Welfare +Benefits(1) +– – – – – $53,825 +Stock Options(2) $0 $2,862,013 $2,862,013 $2,862,013 $0 $2,862,013 +Restricted Stock(3) $0 $10,320,134 $10,320,134 $10,320,134 $0 $10,320,134 +Performance Units(4) $0 $4,018,713 $4,018,713 $4,018,713 $0 $5,375,149 +Executive Group Life +Insurance – – $2,000,000 – – – +Gary Millerchip +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,700,008 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,726 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,350,000 – – – +Stuart W. Aitken +Accrued and Banked +Vacation $11,539 $11,539 $11,539 $11,539 $11,539 $11,539 +Severance – – – – – $3,900,000 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,822 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,279,862 $3,279,862 $0 $3,279,862 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,500,000 + – – – +Yael Cosset +Accrued and Banked +Vacation $10,096 $10,096 $10,096 $10,096 $10,096 $10,096 +Severance – – – – – $3,650,016 + +Continued Health +and Welfare +Benefits(1) +– – – – – $34,081 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,312,500 – – – +Timothy A. Massa +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,500,016 +Continued Health +and Welfare +Benefits(1) +– – – – – +$53,286 +Stock Options(2) $0 $0 $559,069 $559,069 $0 $559,069 +Restricted Stock(3) $0 $0 $2,319,965 $2,319,965 $0 $2,319,965 +Performance Units(4) $0 $919,624 $919,624 $919,624 $0 $1,237,498 +Executive Group Life +Insurance – – $1,350,000 – – – + +(1) Represents the aggregate present value of continued participation in the Company’s medical, dental and +executive term life insurance plans, based on the premiums payable by the Company during the eligible period. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_77.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..94174d3819c7c7982fda02aa1988ce582a75dc64 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,91 @@ +75 +The eligible period for continued medical and dental benefits is based on the level and length of service, which +is 24 months for all NEOs. The eligible period for continued executive term life insurance coverage is +six months for the NEOs. The amounts reported may ultimately be lower if the NEO is no longer eligible to +receive benefits, which could occur upon obtaining other employment and becoming eligible for substantially +equivalent benefits through the new employer. +(2) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the intrinsic value +of the accelerated vesting of unvested stock options, calculated as the difference between the exercise price of +the stock option and the closing price per Kroger common share on February 3, 2024. A value of $0 is +attributed to stock options with an exercise price greater than the market price on the last day of the fiscal year. +In accordance with SEC rules, no amount is reported in the “Voluntary Termination/Retirement” column +because vesting is not accelerated, but the options may continue to vest on the original schedule if the +conditions described above are met. +(3) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the aggregate value +of the accelerated vesting of unvested restricted stock. In accordance with SEC rules, no amount is reported in +the “Voluntary Termination/Retirement” column because vesting is not accelerated, but the restricted stock +may continue to vest on the original schedule if the conditions described above are met. +(4) Amounts reported in the “Voluntary Termination/Retirement,” “Death” and “Disability” columns represent the +aggregate value of the performance units granted in 2022 and 2023, based on performance through the last day +of fiscal 2023 and prorated for the portion of the performance period completed. Amounts reported in the +change in control column represent the aggregate value of 50% of the maximum number of performance units +granted in 2022 and 2023. Awards under the 2021 Long-Term Incentive Plan were earned as of the last day of +2023 so each NEO age 55 or over was entitled to receive (regardless of the triggering event) the amount +actually earned, which is reported in the Stock Awards column of the 202 3 Option Exercises and Stock Vested +Table. +Pay Versus Performance +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item +402(v) of Regulation S-K, we are providing the following information about the relationship between executive +“compensation actually paid,” or “CAP,” and certain financial performance of the Company. For further +information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive +compensation with the Company’s performance, refer to the CD&A beginning on page 47. +PAY VERSUS PERFORMANCE TABLE* +(a) (b) (c) (d) (e) (f) (g) (h) +Year +Summary +Compensation +Table Total for +PEO +($)1 +Compensation +Actually Paid +to PEO +($)2 +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs +($)3 +Average +Compensation +Actually Paid +to Non-PEO +NEOs +($)4 +Value of Initial Fixed +$100 Investment Based +on5 Net +Income +($)6 +(in millions) +Adjusted +FIFO +Operating +Profit +($)7 +(in millions) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return +($) +2023 15,710,572 16,841,015 5,373,738 5,669,814 186.91 164.01 2,164 4,986 +2022 19,209,843 23,325,794 6,117,423 6,281,085 178.23 140.77 2,244 5,079 +2021 18,168,730 36,111,316 5,644,957 9,323,327 168.66 145.25 1,655 4,310 +2020 22,373,574 29,840,084 6,932,437 9,191,933 131.19 123.01 2,585 4,056 +*Totals in the above table might not equal the summation of the columns due to rounding amounts to the nearest dollar. +1. During fiscal 2020, 2021, 2022 and 2023 Mr. McMullen served as our Principal Executive Officer +(“PEO”). The dollar amounts reported in column (b) are the amounts of total compensation reported for +each corresponding year in the Total column of the Summary Compensation Table (“SCT”). +2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. +McMullen as computed in accordance with Item 402(v) of Regulation S -K. The amounts do not reflect the +actual amount of compensation earned by or paid to Mr. McMullen during the applicable year. In \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_78.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..18473d1522978c77cf392e2e0bbdfb9063e52e58 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,99 @@ +76 + +accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made +to Mr. McMullen’s total compensation for each year to determine the CAP: + +PEO SCT Total to CAP Reconciliation + +Year +Reported +Summary +Compensation +Table for PEO +($) +Reported +Summary +Compensation +Table Value of +Equity +Awards(a) +($) +Equity Award +Adjustments(b) +($) + Reported +Change in the +APV of +Pension +Benefits in +Summary +Compensation +Table (c) +($) +Plus: Pension +Benefit +Adjustments(b)(c) +($) +Compensation +Actually Paid to +PEO +($) +2023 15,710,572 12,500,670 13,631,113 16,841,015 + +a) The amounts included in this column are the amounts reported in “Stock Awards” and “Option +Awards” column of the SCT for fiscal 2023 and are subtracted from the Reported Summary +Compensation Table for PEO. +b) The equity award and pension benefit adjustments for fiscal 2023 were calculated in accordance +with the methodology required by Item 402(v) of Regulation S-K as follow: the equity award +adjustments for each applicable year include the addition (or subtraction, as applicable) of the +following: (i) the year-end fair value of any equity awards granted in fiscal 2023 that are +outstanding and unvested as of the end of the year; (ii) the amount equal to the change as of the +end of fiscal 2023 (from the end of the prior fiscal year) in the fair value of any awards granted in +prior years that are outstanding and unvested as of the end of fiscal 2023; (iii) for awards that are +granted and vest in fiscal 2023, the fair value as of the vesting date; (iv) for awards granted in +prior years that vest in fiscal 2023, the amount equal to the change as of the vesting date (from the +end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined +to fail to meet the applicable vesting conditions during fiscal 2023, a deduction for the amount +equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends +or other earnings paid on stock or option awards in the applicable year prior to the vesting date +that are not otherwise reflected in the fair value of such award or included in any other component +of total compensation for the applicable year. The valuation assumptions used to calculate fair +values did not materially differ from those disclosed at the time of grant. The amounts deducted +or added in calculating the equity award adjustments for the PEO are provided in the table below : +PEO Equity Award Adjustments +Year +Year End Fair Value +of Awards Granted in +the Year +($) +YoY Change in Fair +Value of Outstanding +& Unvested Awards +($) +Fair Value as of +Vesting Date of +Awards Granted +and Vested in the +Year +($) +Year over Year +Change in Fair Value +of Awards Granted +in Prior Years that +Vested in the Year +($) +Total Equity Award +Adjustments +($) +2023 13,146,559 (1,842,542) - 2,327,096 13,631,113 + +c) The amounts included in this column are the amounts reported in “Change in Pension and +Nonqualifed Deferred Compensation” of the SCT for fiscal 2023. Total Pension Benefit +Adjustments are equal to the Pension Service Costs incurred during the relevant period. No Prior +Service Costs were incurred as no modifications were made to the pension plan during the relevant +period. +3. The dollar amounts reported in column (d) represent the average of the amounts reported for our non -PEO +NEOs as a group in the Total column of the SCT in fiscal 2023. +4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to +the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S -K. The +dollar amounts do not reflect the actual average amount of compensation earned by or paid to these NEOs \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_79.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..24e593d0291a64f38d6f7ec33c1317179060c1ed --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,114 @@ +77 + +as a group during fiscal 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the +following adjustments were made to the average total compensation for these NEOs as a group for fiscal +2023 to determine the CAP using the same methodology as described in footnote 2: +Average Non-PEO NEOs Summary Compensation Table Total to CAP Reconciliation + +Year +Average +Reported +Summary +Compensation +Table for Non- +PEO NEOs +($) +Average +Reported +Summary +Compensation +Table Value of +Equity Awards +for non-PEO +NEOs +($) +Average Equity +Award +Adjustments(a) +($) +Average +Reported +Change in the +APV of +Pension +Benefits in +SCT(b) +($) +Plus: Average +Pension Benefit +Adjustments +($) +Average +Compensation +Actually Paid to +non-PEO NEOs +($) +2023 5,373,738 3,937,757 4,233,833 - - 5,669,814 + +(a) The amounts deducted or added in calculating the total average equity award adjustments are +provided in the table below: + +Equity Award Adjustments for Non-PEO NEOs +Year + +Average Year End +Fair Value of +Awards Granted +in the Year +($) + +Year over Year +Average Change in +Fair Value of +Outstanding & +Unvested Awards +($) +Average Fair Value +as of Vesting Date +of Awards Granted +and Vested in the +Year +($) +Year over Year +Average Change in +Fair Value of Awards +Granted in Prior +Years that Vested in +the Year +($) + + + + +Total Average +Equity Award +Adjustment +($) +2023 4,120,112 (543,557) - 657,278 4,233,833 + +(b) Total Pension Benefit Adjustments are equal to the Pension Service Costs incurred during the relevant +period. No Prior Service Costs were incurred as no modifications were made to the pension plan +during the relevant period. + +5. Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the +measurement period, assuming dividend reinvestment, and the difference between the Company’s share +price at the end and the beginning of the measurement period by (b) the Company’s share price at the +beginning of the measurement period. The peer group selected by the Company for purposes of the TSR +benchmarking for the pay versus performance disclosures is the same peer group the Company uses for its +performance graph in the Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The +Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), +Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., +Walgreens Boots Alliance Inc. and Walmart Inc. The cumulative TSR depicts a hypothetical $100 +investment in Kroger common shares on February 1, 2021, and shows the value of that investment over +time (assuming the reinvestment of dividends) for each calendar year. A hypothetical $100 investment in +the Peer Group using the same methodology is shown for comparison. +6. Net income is as reported in the Company’s audited financial statements for the applicable year in +accordance with U.S. GAAP. +7. Adjusted FIFO Operating Profit equals gross profit, excluding the LIFO charge, minus OG&A, minus rent, +and minus depreciation and amortization. For a reconciliation of non-GAAP information, see pages 29-36 +of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April +2, 2024. +Most Important Performance Measures +The three measures listed below represent the most important financial performance measures used by the Company +to link CAP to Company performance for the 2023 fiscal year: +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_8.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a5bc75074049b1646bf277577f2adad8da63e5 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_8.txt @@ -0,0 +1 @@ +[This page intentionally left blank] \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_80.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea267736b846d72ef3024da9dfe02405fd8d9fc3 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,58 @@ +78 + +• Adjusted FIFO Operating Profit +• ID sales, without fuel +• Adjusted net earnings per diluted share attributable to The Kroger Co. + +For a reconciliation of non-GAAP information, see pages 29-36 of our Annual Report on Form 10-K for the fiscal +year ended February 3, 2024, filed with the SEC on April 2, 2024. +COMPANY SELECTED METRIC – Adjusted FIFO Operating Profit + + +NET INCOME GRAPHICAL REPRESENTATION + + + + + $- + $1,000 + $2,000 + $3,000 + $4,000 + $5,000 + $6,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Adj. FIFO Operating Profit +CAP +CAP vs. Adj. FIFO Operating Profit +CEO CAP Non-CEO NEO CAP Adj. FIFO Operating Profit + $- + $500 + $1,000 + $1,500 + $2,000 + $2,500 + $3,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Net Income +CAP +CAP vs. Net Income +CEO CAP Non-CEO NEO CAP Net Income \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_81.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7e695f731f64b872d3986a5cdea77a4eb0deccb --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,63 @@ +79 + +KROGER TSR GRAPHICAL REPRESENTATION + + +CEO Pay Ratio +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and +Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total +compensation of our Chairman and CEO, Mr. McMullen, to the annual total compensation of our median associate. +As reported in the Summary Compensation Table, our CEO had annual total compensation for 202 3 of +$15,710,572. Using this Summary Compensation Table methodology, the annual total compensation of our median +associate for 2023 was $31,302. As a result, we estimate that the ratio of our CEO’s annual total compensation to +that of our median associate for fiscal 2023 was 502 to 1. Our median employee is a full-time associate in the +Central region. Over half of Kroger’s associates are part-time workers. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll +records and the methodology described below. The SEC rules for identifying the median compensated associate and +calculating the pay ratio based on that associate’s annual total compensation allow companies to adopt a variety of +methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their +compensation practices. As such, other companies may have different employment and compensation practices and +may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios report ed by other +companies and should not be used as a basis for comparison between companies. + +We identify the “median employee” from our employee population on the last day of our 12th fiscal period +(December 30, 2023), which included full-time, part-time, temporary, and seasonal employees who were employed +on that date. The consistently applied compensation measure we used was “base salary/wages paid,” which we +measured from the beginning of our payroll calendar year, January 1, 2023, through December 30, 2023; and as +reflected on 2023 W2 statements. For associates hired in 2023 or associates on le ave at the end of 2023, their +earnings were annualized based on their full-time equivalent percent and rate. We did not make any other +adjustments permissible by the SEC nor did we make any other material assumptions or estimates to identify our +median employee. There were no changes in our employee population or compensation arrangements that would +have significantly affected our pay ratio calculation. +We then determined the median associate’s annual total compensation using the Summary Compensation Table +methodology as detailed in Item 402(c)(2)(x) of Regulation S-K and compared it to the annual total compensation of +Mr. McMullen as detailed in the “Total” column of the Summary Compensation Table for 2023, to arrive at the pay +ratio disclosed above. Because our median associate in fiscal 2022 was not employed for all of fiscal 2023, we +identified a substitute median associate whose compensation is substantially similar as permitted under SEC rules on + $- + $20 + $40 + $60 + $80 + $100 + $120 + $140 + $160 + $180 + $200 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +TSR +CAP +CAP vs. TSR Performance +CEO CAP Non-CEO NEO CAP TSR Peer Group TSR +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_82.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..4af60b708794cf105a4946864ffe282fe20c2fa4 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,51 @@ +80 + +March 25, 2024 because we reasonably believed that continuing to use the prior median associate would have +significantly affected our CEO pay ratio disclosure and the CEO pay ratio would not reflect the actual ratio that was +used to calculate the pay ratio. +Compensation Policies as They Relate to Risk Management +As part of the Compensation Committee’s review of our compensation practices, the Compensation Committee +considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As +discussed in this Compensation Discussion and Analysis, our policies and practices for c ompensating associates are +designed to, among other things, attract and retain high quality and engaged associates. In this process, the +Compensation Committee also focuses on minimizing risk through the implementation of certain practices and +policies, such as the executive compensation recoupment policy, which is described above. Accordingly, we do not +believe that our compensation practices and policies create risks that are reasonably likely to have a material adverse +effect on Kroger. + +Item No. 2 – Advisory Vote to Approve Executive Compensation + +You are being asked to vote, on an advisory basis, to approve the compensation of our NEOs. +FOR The Board recommends a vote FOR the approval of compensation of our NEOs. + +The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we give our +shareholders the right to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed +earlier in this proxy statement in accordance with the SEC’s rules. +As discussed earlier in the CD&A, our compensation philosophy is to attract and retain the best management +talent and to motivate these associates to achieve our business and financial goals. Our incentive plans are designed +to reward the actions that lead to long-term value creation. To achieve our objectives, we seek to ensure that +compensation is competitive and that there is a direct link between pay and performance. To do so, we are guided by +the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. +The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote +relates to the compensation of our NEOs as described in this proxy statement. The vote is advisory. This means that +the vote is not binding on Kroger. The Compensation Committee of the Board is responsible for establishing +executive compensation. In so doing, the Compensation Committee will consider, along with all other relevant +factors, the results of this vote. +We ask our shareholders to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of +Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related +narrative discussion, is hereby APPROVED.” +The next advisory vote will occur at our 2025 Annual Meeting. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_83.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..104699c803a9d8469efe0ca1071efd17edb6c5bc --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,49 @@ +81 + +Item No. 3 – Ratification of the Appointment of Kroger’s Independent Auditor +You are being asked to ratify the appointment of Kroger’s independent auditor, PricewaterhouseCoopers +LLC. + +FOR The Board recommends a vote FOR the ratification of PricewaterhouseCoopers LLP as our +independent registered public accounting firm. +The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight +responsibilities regarding the Company’s financial reporting and accounting practices including the integrity of the +Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the +independent public accountants’ qualifications and independence; the performance of the Company’s internal audit +function and independent public accountants; and the preparation of the A udit Committee Report. The Audit +Committee performs this work pursuant to a written charter approved by the Board of Directors. The Audit +Committee charter most recently was revised during fiscal 2012 and is available on the Company’s website at +ir.kroger.com under Investors — Governance — Committee Composition. The Audit Committee has implemented +procedures to assist it during the course of each fiscal year in devoting the attention that is necessary and appropriate +to each of the matters assigned to it under the Audit Committee’s charter. The Audit Committee held 5 meetings +during fiscal year 2023. +Selection of Independent Auditor +The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, +retention, and oversight of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On +March 14, 2024, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for +the fiscal year ending February 1, 2025. PricewaterhouseCoopers LLP or its predecessor firm has been the +Company’s independent auditor since 1929. +In determining whether to reappoint the independent auditor, our Audit Committee: +• Reviews PricewaterhouseCoopers LLP’s independence and performance; +• Considers the tenure of the independent registered public accounting firm and safeguards around auditor +independence; +• Reviews, in advance, all non-audit services provided by PricewaterhouseCoopers LLP, specifically with +regard to the effect on the firm’s independence; +• Conducts an annual assessment of PricewaterhouseCoopers LLP’s performance, including an internal +survey of their service quality by members of management and the Audit Committee; +• Conducts regular executive sessions with PricewaterhouseCoopers LLP; +• Conducts regular executive sessions with the Vice President of Internal Audit; +• Considers PricewaterhouseCoopers LLP’s familiarity with our operations, businesses, accounting policies +and practices and internal control over financial reporting; +• Reviews candidates for the lead engagement partner in conjunction with the mandated rotation of the public +accountants’ lead engagement partner; +• Reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and +its peer firms; and +• Obtains and reviews a report from PricewaterhouseCoopers LLP describing all relationships between the +independent auditor and Kroger at least annually to assess the independence of the internal auditor. +As a result, the members of the Audit Committee believe that the continued retention of +PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of +our Company and its shareholders. +While shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor is +not required by Kroger’s Regulations or otherwise, the Board of Directors is submitting the selection of +PricewaterhouseCoopers LLP to shareholders for ratification, as it has in past years, as a good corporate governance \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_84.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f6f1aace35c86047d55485add2f891ff60317be --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,41 @@ +82 + +practice. If the shareholders fail to ratify the selection, the Audit Committee may, but is not required to, reconsider +whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the +appointment of a different auditor at any time during the year if it determines that such a change would be in the best +interests of our Company and our shareholders. +A representative of PricewaterhouseCoopers LLP is expected to participate in the meeting to respond to +appropriate questions and to make a statement if he or she desires to do so. +Audit and Non-Audit Fees +The following table presents the aggregate fees billed for professional services performed by +PricewaterhouseCoopers LLP for the annual audit and quarterly reviews of our consolidated financial statements for +fiscal 2023 and 2022, and for audit-related, tax and all other services performed in 2023 and 2022. + + Fiscal Year Ended + February 3, +2024 +($) +January 28, +2023 +($) +Audit Fees(1) 6,738,000 5,886,900 +Audit-Related Fees 1,394,000 982,000 +Tax Fees(2) 155,049 153,000 +All Other Fees(3) 970 5,850 +Total 8,288,019 7,027,750 + +(1) Includes annual audit and quarterly reviews of Kroger’s consolidated financial statements, the issuance +of comfort letters to underwriters, consents, and assistance with review of documents filed with the +SEC. +(2) Includes pre-approved assistance with tax compliance and assistance in connection with tax audits. +(3) Includes use of accounting research tool. +The Audit Committee requires that it approve in advance all audit and non -audit work performed by +PricewaterhouseCoopers LLP. Pursuant to the Audit Committee audit and non -audit service pre-approval policy, the +Committee will annually pre-approve certain defined services that are expected to be provided by the independent +auditors. If it becomes appropriate during the year to engage the independent accountant for additional services, the +Audit Committee must first approve the specific services before the in dependent accountant may perform the +additional work. +PricewaterhouseCoopers LLP has advised the Audit Committee that neither the firm, nor any member of the +firm, has any financial interest, direct or indirect, in any capacity in Kroger or its subsidiaries. +The Board of Directors Recommends a Vote For This Proposal. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_85.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..294938bedf5da5b0fbb35e143ce459c5c0ddb2c2 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,35 @@ +83 + +Audit Committee Report +Management of the Company is responsible for the preparation and presentation of the Company’s financial +statements, the Company’s accounting and financial reporting principles and internal controls, and procedures that +are designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws +and regulations. The independent public accountants are responsible for auditing the Company’s financial +statements and expressing opinions as to the financial statements’ conformi ty with generally accepted accounting +principles and the effectiveness of the Company’s internal control over financial reporting. +In performing its functions, the Audit Committee: +• Met separately with the Company’s internal auditor and PricewaterhouseCoopers LLP with and +without management present to discuss the results of the audits, their evaluation and +management’s assessment of the effectiveness of Kroger’s internal controls over financial +reporting and the overall quality of the Company’s financial reporting; +• Met separately with the Company’s Chief Financial Officer or the Company’s General Counsel +when needed; +• Met regularly in executive sessions; +• Reviewed and discussed with management the audited financial statements included in our Annual +Report; +• Discussed with PricewaterhouseCoopers LLP the matters required to be discussed under the +applicable requirements of the Public Company Accounting Oversight Board and the SEC; and +• Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the +applicable requirements of the Public Accounting Oversight Board regarding the independent +public accountant’s communication with the Audit Committee concerning independ ence and +discussed the matters related to their independence. +Based upon the review and discussions described in this report, the Audit Committee recommended to the +Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report +on Form 10-K for the year ended February 3, 2024, as filed with the SEC. +This report is submitted by the Audit Committee. +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_86.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..4844a5ece43a1bb2a0e9cfd8626807b571e50910 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,49 @@ +84 +Items 4 – 7 +SHAREHOLDER PROPOSALS +Included in this proxy statement are four separate shareholder proposals that have been submitted under SEC +rules by shareholders who notified the company of their intention to present the proposals for voting at the 202 4 +Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions about +Kroger that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s +responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole +responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and +shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written +request made to Corporate Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202 -1100. The +information on, or accessible through, Kroger’s websites or report links included in this proxy statement, including +the statements that follow, is not part of, or incorporated by reference into, this proxy statement. +AGAINST The Board recommends a vote AGAINST each of the following shareholder proposals, in each +case if properly presented at the meeting, for the reasons stated in Kroger’s statements in +opposition following each shareholder proposal. +Item No. 4 – Shareholder Proposal – Report on Public Health Costs from Sale of Tobacco Products +We have been advised that The Sisters of St. Francis of Philadelphia or an appointed representative, along with eight +co-filers, will present the following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“RESOLVED, shareholders ask that the board commission and disclose a report on the external public health +costs created by the sale of tobacco products by our company (the "Company") and the manner in which such +costs affect the vast majority of its shareholders who rely on overall market returns. +The negative health and productivity impacts from consumption of tobacco products impose $1.2 trillion in +social damage; tobacco's unpriced social burden amounts to almost 3 percent of global GDP annually.1 Yet , +in spite of the Company dedicating an entire division , Kroger Health, to addressing its customers' healthcare +needs2, as well as the overwhelming evidence that tobacco - a known carcinogen that impairs respiratory +function - significantly prejudices the health outcomes of smokers, the Company continues to sell tobacco +products in its stores. In 2019 the company discontinued the sale of e-cigarettes in response to news reports +of vaping-related illnesses and deaths. The science on cigarettes and other combustible tobacco products is +settled. They cause illness and death. +These public health costs, year after year, are devastating to economic growth and further compound the +financial devastation wrought by the COVID-19 pandemic. Yet Kroger does not disclose any methodology +to address the public health costs of its tobacco sales. Thus, shareholders have no guidance as to costs the +Company is externalizing and consequent economic harm. This information is essential to shareholders, the +majority of whom are beneficial owners with broadly diversified interests. +But Kroger undermines its commitments to promoting good health and ultimately the interests of its +diversified shareholders by not disclosing the social and environmental costs and risks imposed on +stakeholders, even when these costs and risks threaten society, the economy and the performance of other +companies. All stakeholders are unalterably harmed when companies impose costs on the economy that +lower GDP, which reduces equity value.3 While the Company may profit by ignoring costs it externalizes, +diversified shareholders will ultimately pay these costs, and they have a right to ask what they are. +The Company's disclosures do not address this issue, because they do not address the public health costs +that Kroger's tobacco sales impose on shareholders as diversified investors who must fund retirement, +education, public goods and other critical social needs. This is a separate social issue of great importance. A +report would help shareholders determine whether these externalized costs and the economic harm they may +create ultimately serve their interests.” +1 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm +2 Kroger Health – Business & Community Health Solutions +3 https://www.unempfi.org/fileadmin/documents/universal_ownership_full.pdf \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_87.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..83bbd80d069edda4279e27ddc962b061c736f4c3 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,45 @@ +85 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger takes the responsibility of selling tobacco products very seriously and has established policies and processes +to limit the sale of these items only to customers who are legally permitted to purchase them. We offer customers a +wide range of choices across all product categories to meet wide-ranging tastes and preferences, including food and +discretionary items. +The Company supports our customers’ freedom of choice and offers a variety of ways to improve health, +including tobacco cessation. +The Kroger family of companies is committed to ethical and responsible behavior in all parts of our business. Our +behavior is rooted in Our Purpose – to Feed the Human Spirit™ – and our promise to our customers. This includes +upholding Our Values, which have been the foundation of Kroger’s culture for decades. The Audit Committee and +Public Responsibilities Committee of the Board of Directors oversee progress in regulatory compliance and +pharmacy safety measures. +We recognize our responsibility as a business to support our communities and help families by making it easier for +them to live healthier lives. We also believe in our customers’ freedom of choice, and adult customers can choose to +purchase tobacco products understanding fully the potential health impacts. +The Company designs its approach and policies to comply with regulations governing the sale of tobacco +products. +Tobacco sales, like the sales of many products, are governed by regulations, which we strictly follow. The +Company’s Tobacco Sales Policy is designed to comply with these regulations and affirm our commitment to the +health and welfare of our nation’s youth by reducing adolescent access to tobacco. The policy outlines internal +business procedures and best practices to maintain compliance at retail stores. +The Company continually reviews its product assortment, including tobacco and tobacco cessation products. +Notably, recent studies show the percentage of U.S. adults who smoke cigarettes remains near record lows.1 Sales +for both tobacco products and tobacco cessation products at Kroger have similarly decreased in recent years. +The Company encourages health and healthier choices through our core grocery business, Kroger Health +strategy, and community engagement. +We aim to serve and improve health for millions of people across the country through our business operations, ESG +strategy, and Kroger Health’s convenient and accessible services. We encourage healthy food and lifestyle choices +to support our customers and communities, offering tools, resources and services that advance population health. We +inform our customers and associates about the importance of healthy choices, and we equip Kroger Health's retail +pharmacy and health clinic teams and telehealth counselors to support people making healthier choices, including +quitting tobacco. +Specifically related to the use of tobacco products, we: +• Offer smoking cessation coaching programs that are available to all, including coaching through telehealth +services; +• Offer affordable prescription and over-the-counter smoking cessation products that are available to all; and +• Encourage associates not to use tobacco through Company health plan incentives, coverage for +smoking cessation products, and employee assistance programs for smoking cessation. +Kroger continues to make a wide range of fresh, nutritious foods as well as health and wellness services more +affordable and convenient for millions of customers and for local communities across the U.S. As a trusted local +partner, we also provide essential support for our communities by offering a wide range of vaccinations that prevent +disease and improve population health. +1 https://news.gallup.com/poll/509720/cigarette-smoking-rate-steady-near-historical-low.aspx +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_88.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5440785382803f96535c5a856bde3890ab6af3f --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,38 @@ +86 +Additional public reporting on tobacco use is not in the best interests of our shareholders. +Assessing the external public health costs related to the Company’s sale of a single category of products is not +reasonable or practicable given the resources and expertise required to consider all externalities and related topics +outside of our control. In light of the above, we do not believe an additional report would add meaningfully to the +extensive body of research currently available on this subject and therefore do not believe such an additional report +is necessary. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 5 – Listing of Charitable Contributions of $10,000 or more +We have been advised that The Louis B & Diana R Eichhold Trust or an appointed representative will present the +following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“Whereas the Company's charitable contributions, properly managed, are likely to enhance the reputation of the +Company; +Whereas increased disclosure regarding appropriate charitable contributions can create good will for our Company; +Whereas making the benefits of our Company's philanthropic programs better known is likely to promote the +company's interests; +Whereas feedback from employees, shareholders, and customers could help guide the Company's future charitable +giving process. +Resolved: The Proponent requests that the Board of Directors consider listing on the Company website any +recipient of $10,000 or more of direct contributions, excluding employee matching gifts. +Supporting Statement +Absent a system of accountability and transparency, some charitable contributions may be made unwisely, +potentially harming the Company's reputation and shareholder value. Corporate philanthropic gifts should be given +as much exposure as possible, lest their intended impact on goodwill is diminished. For example, if we gave to the +American Cancer Society, thousands our stakeholders might potentially approve of our interest in challenging this +disease. Likewise, our support of Planned Parenthood could win the praise of millions of Americans who have had +an abortion at one of their facilities. Educational organizations like the Southern Poverty Law Center have seen an +increase in funding since they included several conservative Christian organizations on their list of hate groups. +Our stake holders and customers might be similarly enthused if we supported them. Be it the Girl Scouts, +American Heart Association, Boys and Girls Club of America, Red Cross, or countless possible recipients, our +support should be publicly noted. Those who might disagree with our decisions can play a valuable role also. Some +charities may be controversial. +Charitable contributions come from the fruit of our employee's labor and belong to our shareholders. Both groups +represent a wide diversity of opinions. More importantly, we market ourselves to the general public and should +avoid offending segments of this most critical group. It would be unfortunate if a charitable contribution resulted in +lower employee morale and shareholder interest, much less a loss of potential revenue. +Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more +beneficial choices.” \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_89.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7693681934ddf70ea71a74c447ce4fefca702d0 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,46 @@ +87 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long history of giving back meaningfully in the communities we serve. Charitable giving is central to +Our Purpose – to Feed the Human Spirit – and strategically aligned to our mission – Kroger’s Zero Hunger | Zero +Waste impact plan. This plan enables Kroger to pursue our goal to help create communities free of hunger and waste +across the country. Additionally, we provide annual public disclosures related to charitable giving areas of focus and +grant-making. +Every year, we direct charitable contributions at the national, regional, and local levels to advance positive impacts +for people and our planet. This giving includes funds, in-kind product donations, and retail store donations of +surplus fresh food that our associates recover for local food bank partners through our leading Zero Hunger | Zero +Waste Food Rescue program. For example, in 2023, 100% of our retail stores participated in the Food Rescue +program, donating more than 114 million pounds of fresh food to our communities. +Through corporate giving and the work of our two nonprofit foundations – The Kroger Co. Foundation and The +Kroger Co. Zero Hunger | Zero Waste Foundation – we direct more than $300 million annually to partners and +causes that align with our mission. Of this, more than 75% supports hunger relief programs to feed individuals and +families where we live and work. These totals include support from our associates and customers through in -store +fundraising programs at checkout that benefit the Zero Hunger | Zero Waste Foundation. The largest share of +corporate funds, in-kind product donations, and customer donations is directed to the Feeding America -affiliated +network of local food banks, pantries, and agencies in our communities. +Other national organizations receiving significant charitable funds from Kroger include No Kid Hungry, American +Red Cross, United Service Organizations (USO), American Heart Association, and World Wildlife Fund. Notably, +Kroger is the largest cumulative corporate donor to the USO in the organization’s history, showing our long- +standing support for the nation’s active-duty military service men and women and their families. At the regional and +local levels, we support other nonprofit organizations and causes that matter most to our associates and customers. +The Company provides substantial public reporting on nonprofit foundation grant -making. +Kroger provides detailed annual disclosures on the work of our two foundations. As registered charitable +organizations with 501(c)(3) status, a list of each foundation’s annual grants is publicly available through Form 990 - +PF filings. +The Kroger Co. Foundation, the Company’s private foundation established in 1987, focuses grant-making on +causes that support hunger relief; sustainability; disaster relief; diversity and inclusion; and education and youth +development. The Foundation’s 2023 Report includes grantee highlig hts and a view of funding levels across the +country. This report is available here: https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co- +Foundation-2022-Report.pdf. The information on, or accessible through, this website is not part of, or incorporated +by reference into this proxy statement. +In 2022, the Kroger Foundation directed $8 million in grants, of which 60% aligned with hunger relief and +sustainability causes. Specific grants and grant recipients are highlighted in the foundation annual report. +The Kroger Co. Zero Hunger | Zero Waste Foundation, a nonprofit public charity established in 2018, is +designed to advance collective action and innovation to build a better food system for the future. More about the +Zero Hunger | Zero Waste Foundation is available here: https://thekrogercozerohungerzerowastefoundation.com/. +The information on, or accessible through, this website is not part of, or incorporated by reference into this proxy +statement. +More details about the Foundation’s general grant-making and signature program, the Zero Hunger | Zero Waste +Innovation Fund, are disclosed in its 2023 annual report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/The-Kroger-Co-Zero-Hunger-Zero-Waste-Foundation-Report_2023.pdf. The information +on, or accessible through, this website is not part of, or incorporated by reference into this proxy statement. +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_9.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..32392e5656976d2db62098ad872b76fe5c7d47aa --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,39 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_90.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5e7886c594de775f84d0cb6887516abf35526b --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +In 2022, the Zero Hunger | Zero Waste Foundation directed $11.3 million in grants; of these, 96% aligned to hunger +relief and sustainability causes. Grants included $8.4 million in funds to improve food access and food security and +$2.3 million to advance more sustainable food systems. Grant highlights are included in the Zero Hunger | Zero +Waste Foundation report. +We follow established guidelines for charitable giving. +Kroger follows best practices and specific guidelines when reviewing grant requests. Our Donation Guidelines +provide direction on the types of organizations that Kroger supports and, importantly, make clear the types of +organizations to which donations will not be granted. We accept and consider donation requests from 501(c)(3) +registered nonprofit organizations through an online grant management platform. We use the Guidestar Charity +Check to confirm they meet all Internal Revenue Service requirements to receive grants and donations. The +Company’s Donation Guidelines are publicly available here: https://thekrogerco.versaic.com/login?Select-A- +Store=Enabled&ReturnTo=/default.aspx. The information on, or accessible through, this website is not part of, or +incorporated by reference into this proxy statement. +We do not make charitable donations to individuals, political campaigns, sectarian or religious organizations for +projects that serve only its own members or supporters, or organizations that discriminate based on race, color, sex, +pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, genetic information, or any +other characteristic protected by applicable law. +The Company has adequate public disclosures related to charitable giving areas of focus and annual grant- +making. +We believe the extensive information and other disclosures already provided in Kroger’s annual ESG report, The +Kroger Co. Foundation annual report, The Kroger Co. Zero Hunger | Zero Waste Foundation annual report, public +filings, and our website provide ample disclosures related to charitable giving. Additional reporting on charitable +giving at this time is an unnecessary and inefficient use of shareholder resources. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 6 – Shareholder Proposal – Living Wage Policy +We have been advised that Shareholder Commons, on behalf of LGIM America, or an appointed representative, +along with four co-filers, will present the following proposal for consideration during the 2024 Annual +Shareholders’ Meeting. +“ITEM 6: Set compensation policy that optimizes portfolio value for Company shareholders BE IT RESOLVED, +shareholders ask that the board and management exercise their discretion to establish Company wage policies that +are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings +necessary to meet a family’s basic needs, because Company compensation practices that fail to provide a living +wage are harmful to the economy and therefore to the returns of diversified shareholders.1 +Supporting Statement: +Kroger increased associates’ average hourly wage to $18/hour in 2023, suggesting its lowest paid workers earn still less. +The living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults)2. Kroger’s +CEO, meanwhile, makes 671 times more than the Company’s median employee. While Kroger’s workforce is 49.6 +percent female and 40.6 percent people of color, these groups compose only 31.7 percent and 26.3 percent of store +leaders3, indicating they make up a disproportionate number of employees not earning a living wage. +1 https://theshareholdercommons.com/case-studies/labor-and-inequality-case-study/ +2 https://livingwage.mit.edu/articles/103-new-data-posted-2023-living-wage-calculaor +3 https://thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_91.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e2d7944a37d54dbbe581f70c243a1e3aa5a6c9 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,48 @@ +89 +In response to a recent survey, 75 percent of Kroger workers said they were food insecure, 14 percent said they were +homeless, and 63 percent said they earned too little to cover basic expenses.4 +Such inequality and disparity harm the entire economy. For example, closing the living wage gap worldwide could +generate an additional $4.56 trillion every year through increased productivity and spending, 5 translating to a more +than 4 percent increase in annual GDP. A 2020 report found that had four ke y racial gaps for Black Americans— +wages, education, housing, and investment—been closed in 2000, $16 trillion could have been added to the U.S. +economy. Closing those gaps in 2020 could have added $5 trillion t o the U.S. economy over the ensuing five years.6 +By underpaying so many of its employees, Kroger may believe it will increase margins and thus financial +performance. But gain in Company profit that comes at the expense of society and the economy is a bad trad e for +Company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives. +The costs and risks created by low wages and inequality will directly reduce long- term diversified portfolio returns +because a drag on GDP directly reduces returns on diversified portfolios.7 +This proposal asks the Board to set a Company compensation policy of paying a living wage to prevent contributing +to inequality and racial/gender disparity. Kroger could achieve this Proposal’s objective by securing Living Wage +for US Employer certification.8 Additionally, MIT has an online living wage calculator, or Kroger can work within +frameworks promulgated by organizations such as IDH Sustainable Trade Initiative or The Living Wage Network. +Kroger should use such frameworks in a manner that allows shareholder s to gauge compliance and progress, while +providing the Company with discretion as to how to achieve the living-wage goal. +Please vote for: Set compensation policy that optimizes portfolio value for Company shareholders – +Proposal 6” +The Board of Directors Recommends a Vote Against the Proposal for the Following Reasons: +Kroger is proud to be an employer with a culture of opportunity and advancement that has created an environment +where people from any walk of life can come for a job and discover for a career. Kroger has provided an incredible +number of +people with first jobs, second chances, and lifelong careers and we take seriously our role as a leading +employer in the United States. +Proponents acknowledge Kroger’s progress in raising associate wages. +Kroger’s national average hourly rate is nearly $19 per hour and its average hourly rate inclusive of benefits like health +care and retirement is nearly $25 per hour. +In fact, Kroger has raised wages more than 33% the last five years, far outpacing inflation. The Company has invested +a total of $2.4 billion in incremental investments since 2018, which has increased our national average hourly rate of +pay from $13.66 to nearly $19, or nearly $25 per hour with comprehensive benefits. +In addition to Kroger’s historic investments in wages and benefits, the Company is committed to growing +tomorrow’s leaders through programs including free financial coaching and our education benefit, which offers +associates up to $21,000 in tuition reimbursements, available to both full and part time associates. +Kroger will continue investing in wages in 2024. +Kroger will continue making significant incremental investments in associates in 2024. These investments are +included in Kroger’s forward-looking financial model. These continued investments will further raise average hourly +rates, continue improving healthcare options, establish new training and development opportunities, and more. +The majority of Kroger’s workforce is covered under collective bargaining agreements, which facilitate pay equity +for frontline associates. Wages, healthcare and pensions are included in approximately 350 collective bargaining +agreements that cover approximately 64% of our associates. The negotiated pay structures within those agreements +4 https://www.mytimes.com/2022/02/12/business/kroger-grocery-stores-workers-pay.html +5 https//tacklinginequality.org/files/introduction.pdf +6 https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3ldy7vY59bOtN2lxVQM= +7 https://www.epi.org/publication/secular-stagnation/ +8 https://livingwageforus.org/becoming-certified/ \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_92.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d7794945075480ded5fd7658fb2ed3a86eb0d6a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,51 @@ +90 +facilitate standard and consistent pay progression based on tenure and experience. Pay parity is promoted within the +model because of the structured wage grids and inherent progression framework. Non -union hourly roles follow +similar wage progressions. +Kroger’s pay policies confirm there are no meaningful differences in pay for associates by race or gender. +Earlier this year, Kroger published a new Statement on Pay Equity to reflect findings from our annual pay analysis to +monitor the company’s performance and identify unintended discrepancies in compensation practices. In 2023 we +enhanced the methodology for pay analyses to align with evolving industry standards. Our review of associates’ total +compensation for calendar year 2023, including base pay, cash bonuses and equity, adjusting for factors such as +position, tenure, performance, geographic location and collective bargaining unit, confirms there are no meaningful +differences in pay on an adjusted basis for associates who self-identify as male, female or a person of color. +Kroger’s aim is to strike a balance between significantly increasing wages for our associates over time while +also keeping food affordable for our customers. +The Board’s fiduciary duty includes the obligation to maintain a financially sustainable and growing business over +time, which allows Kroger to create additional social and economic benefits, most notably the creation of more jobs +and growth opportunities, for more people in our communities. +Adopting a nascent, under -developed and overly -prescriptive approach to well -established pay policies, especially +one that fails to account for free -market dynamics, is unnecessary and potential harmful to the interests of Kroger’s +associates, customers, communities, and shareholders – all of whom benefit from the Company’s thoughtful approach +to wage policy and sustainable growth. +Considering the Company’ current transparency and disclosures on this topic, and its established framework that takes +into account geographical and market -based pay differences, ensures equal pay for equal work, and the fact that the +majority of our workfo rce is covered under collective bargaining agreements, we recommend a vote AGAINST this +motion. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 7 – Just Transition Report +We have been advised that Domini Impact Equity Fund or an appointed representative will present the following +proposal for consideration during the 2024 Annual Shareholders’ Meeting. +1 https://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_ent/documents/publication/wcms_432859.pdf; +https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--- publ/documents/publication/wcms_711919.pdf +2 https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf +3 https://insideclimatenews.org/news/31122023/california-farmworkers-dying-in-the-heat/ +4 https://www.bloomberg.com/news/articles/2021-08-12/farmworkers-overheat-on-frontlines-of-climate-change +5 https://www.farmworkerjustice.org/wp-content/uploads/2022/05/EJ-Symposium-Issue-Brief-Climate- Change_FINAL.pdf +6 https://polarisproject.org/wp- content/uploads/2021/06/Polaris_Labor_Exploitation_and_Trafficking_of_Agricultural_Workers_During_the_Pand +emic.pdf +“Whereas: +A “just transition” is increasingly recognized as an important component of climate action to address the needs, +priorities, and realities of society while mitigating climate change and fostering resilience. The International Labor +Organization (ILO) published just transition guidelines for governments and businesses with guidance on anticipating, +preparing, and adapting to the employment impacts of climate change,1 premised on respect for rights at work and +fundamental labor protections, including against forced labor. The World Benchmarking Alliance (WBA) developed a +methodology to assess companies on their contribution to a just transition.2 + +Kroger acknowledges in its 10K and CDP report that climate change presents physical and transition risks that may +impact the company’s ability to operate its own facilities and supply chain. The food and agriculture industry +contributes one third of global greenhouse gas emissions, and the agricultural supply chain is vulnerable to changing +patterns of drought, extreme heat, and precipitation, as well as climate migration. In 2030, the sector may account for +60 percent of global work hours lost to heat stress. Farmworkers face heightened climate related risks, including heat +related illness and death,3 exhaustion and heat stress,4 mental health stressors, increased pesticide exposure,5 as well as +other severe human rights violations including forced labor.6 \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_93.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..1804c449bd96c7f66eb836e2bc652062eb80cc8a --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,50 @@ +91 +Yet, Kroger’s disclosures overlook the climate-related risks to workers, such as impacts of heat stress on job +quality and productivity for workers that harvest and deliver the commodities and products to Kroger’s stores. +Failure to identify, evaluate, and adapt to these risks can lead to business disruptions, lack of supply chain +resilience, and legal and reputational risk. In 2023 a Kroger distribution center employee died on the job due to +heat-related causes.7 Despite Kroger’s existing responsible sourcing policies, it has been connected in 2023 and +2024 to major forced labor cases in the United States involving its suppliers, which resulted in convictions or +are currently being prosecuted.8 +9 +Worker-driven social responsibility models, including the Fair Food Program (FFP), + have been responsive to identifying the risks of climate change and developing appropriate and enforceable protections from these +risks and others facing farmworkers, without fear of retaliation.10 +Resolved: Shareholders request that the Board of Directors publish a just transition report, at reasonable cost +omitting proprietary information, disclosing how Kroger is assessing and addressing the impacts of climate +change and ensuring fundamental labor protections for workers in its agricultural supply chain, consistent with +the ILO’s just transition guidelines. +Supporting Statement: Shareholders recommend the report include, at Board discretion: +● A set of measurable, time-bound indicators, such as those recommended by the WBA, +● An evaluation of the risks facing its agricultural supply chain workers, and how, if at all Kroger is +addressing them, detailing how its efforts compare to other effective mechanisms such as the FFP, and +● Disclosure on the stakeholder engagement process used in developing its just transition report.” +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long-standing commitment to corporate responsibility in our own operations and global supply chain to +provide affordable food and other essential items for communities across the U.S. We put our associates, customers +and communities first in everything we do and lead with our Values. We welcome and include the perspectives of our +associates and other workers in our supply chain in the context of goal-setting, program development and +implementation, and progress reporting. +The Company already provides robust annual reporting on sustainability and social impact topics and +engages stakeholders to inform content. +People are at the heart of Kroger’s purpose-driven approach and shared-value ESG Strategy: Thriving Together. As +outlined in our ESG report, we aim to advance positive impacts across three strategic pillars – People, Planet, and +Systems. The centerpiece of our strategy is Kroger’s Zero Hunger | Zero Waste impact plan. It reflects our people- +first approach to complex food systems issues, including food access and food security, health and nutrition, waste +and circularity, responsible sourcing, climate resilience, and climate-related impacts from agricultural production, +including food loss and waste. +Kroger’s detailed annual ESG report and other public disclosures describe our strategy and management approach: +https://www.thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. Additional +topic-specific resources are available here: https://www.thekrogerco.com/esgreport/. The information on, or +accessible through, these websites are not part of, or incorporated by reference into this proxy statement. +Just Transition approaches are nascent and not an established reporting practice. +7 https://www.theguardian.com/us-news/2023/aug/28/kroger-worker-dies-heat-temperature +8 https://www.dol.gov/newsroom/releases/whd/whd20230202-2; https://www.levernews.com/how-krogersmerger- +push-leads-back-to-alleged-human-trafficker/ +9 https://www.cbp.gov/sites/default/files/assets/documents/2021- +Aug/CBP%202021%20VTW%20FAQs%20%28Forced%20Labor%29.pdf; https://blog.dol.gov/2022/01/13/exposingthe- +brutality-of-human-trafficking; https://www.ams.usda.gov/services/grants/flsp/faq +10 https://ciw-online.org/blog/2023/11/how-the-fair-food-programs-heat-protections-are-saving-lives-and-leadingthe- +way-toward-a-worker-driven-solution/; https://www.thepacker.com/news/social-responsibility/farmingunder- +big-red-sun-worker-advocates-push-heat-stress-protections +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_94.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ad07092265dcdafe2a88335675859131f24c977 --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,52 @@ +92 + +Feedback from our shareholders and subject matter experts about Kroger’s ESG strategy and public reporting is +overwhelmingly positive. Report contents are shaped by established materiality best practices; in 2023, we +completed an assessment based on the leading principles of double materiality. As a result, our latest report includes +a number of worker-focused topics, including human capital management; diversity and inclusion; labor relations +and freedom of association; and responsible sourcing and supply chain. +The World Benchmarking Alliance Just Transition Methodology was introduced in 2021, and few examples of such +reports have been published to date. It is one of many benchmarks and topic-specific reporting frameworks that have +multiplied in recent years above and beyond established standards. In recent years, Kroger expanded our climate- +related reporting to begin aligning with the Task Force on Climate-related Financial Disclosures (TCFD), which is +most commonly cited among stakeholders during engagement. +We will continue to assess our disclosures as best practices and standards evolve, particularly for complex, +interconnected systems issues affecting people and our planet. +We are focused on reviewing our current climate-related goals and roadmap against science-aligned +frameworks and future regulatory reporting requirements. +Kroger’s current climate goal is to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 30% by 2030 +against a 2018 baseline. We are making solid progress toward this goal, achieving a cumulative reduction of 15.2% +in 2022. We are reviewing this goal against the requirements of the Science Based Targets initiative to determine the +feasibility of increasing the level of ambition and setting a new Scope 3 emissions reduction goal. We will provide +an update on this work in our next ESG report. +We engage a wide range of people and perspectives in our climate strategy and roadmap development. We also +assess climate risk to support business and community resilience amid changing temperatures and weather patterns +and potential business disruptions. +Kroger’s approach to responsible sourcing includes programs to engage and respect the rights of farmworkers +in agricultural supply chains. +Our sourcing and sustainability workstreams already contemplate potential impacts to workers. We set and uphold +clear expectations for respecting human rights for workers in our own operations and global supply chain. The +Company’s Human Rights Policy outlines expectations for all suppliers to agree to and comply with our Vendor Code +of Conduct, including suppliers hiring farmworkers in agricultural supply chains. Recent agricultural worker-focused +achievements include: +• Developing a human rights due diligence framework to operationalize and embed accountability for supplier +oversight within the company’s business functions. +• Conducting human rights impact assessments (HRIA) in our supply chain and publishing comprehensive +reports. For example, we engaged a third party to conduct a HRIA focused on the production of mixed +greens in California and included detailed interviews with farmworkers and rightsholders. Based on the +workers’ feedback, we are in the process of developing heat exposure guidelines for farmworkers that +address the potential impact of climate-related temperature changes and severe weather events. The full +report on this HRIA is available here: https://www.thekrogerco.com/wp- +content/uploads/2023/06/Kroger_Mixed-Greens-HRIA-Report-June-FINAL-2023.pdf. The information on, +or accessible through, this website is not part of, or incorporated by reference into this proxy statement. +• Co-leading the development and rollout of the International Fresh Produce Association’s Ethical Charter and +Ethical Charter Implementation Program (ECIP) to strengthen management systems and responsible labor +practices among domestic produce and floral suppliers and their growers. In 2023, Kroger began onboarding +suppliers to the ECIP, with program oversight from The Sustainability Consortium and the Equitable Food +Initiative, which offers capacity-building resources to enable continuous improvement. +• Introducing a goal to promote more sustainable agricultural practices in our fresh produce supply chain by +requiring growers to use Integrated Pest Management practices, reducing both pesticide exposure for +farmworkers and nature-based impacts from food production. Kroger’s goal to Protect Pollinators and +Biodiversity is available here: https://www.thekrogerco.com/wp-content/uploads/2024/01/Kroger-Goal-to- +Protect-Pollinators-and-Biodiversity_Jan-2024_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into this proxy statement. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_95.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d7fb8cddfbb5b0fc254d1f8f7df4a6f83cfd9d --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,15 @@ +93 + +• Continuing Kroger’s long-standing work with Fair Trade USA to source Fair Trade Certified™ ingredients +for Our Brands products. In 2022, Kroger procured more than 20.4 million pounds of Fair Trade Certified +ingredients for Our Brands products like coffee, tea, baking ingredients, fruit-based snacks, coconut water +and milk, oils, and personal care – a 21% increase from the prior year. This resulted in $2.1 million in +Community Development Funds to benefit growers and their communities around the world. + +Because of Kroger’s robust disclosure practices, adoption of peer -validated disclosure frameworks, and well- +established responsible supply chain programs, additional reporting against a nascent and still -evolving approach is +both an unnecessary and inefficient use of shareholder resources. + +For the foregoing reasons, we urge you to vote AGAINST this proposal. + + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_96.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee4823fcf895037b7e960bf307b774bf6a09207e --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,55 @@ +94 + +Shareholder Proposals and Director Nominations — 2025 Annual Meeting +Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholder proposals intended +for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 202 5 should be +addressed to Kroger’s Secretary and must be received at our executive offices not later than January 15, 2025. These +proposals must comply with Rule 14a-8 and the SEC’s proxy rules. If a shareholder submits a proposal outside of +Rule 14a-8 for the 2025 annual meeting and such proposal is not delivered within the time frame specified in the +Regulations, Kroger’s proxy may confer discretionary authority on persons being appointed as proxies on behalf of +Kroger to vote on such proposal. +In addition, Kroger’s Regulations contain an advance notice of shareholder business and director nominations +requirement, which generally prescribes the procedures that a shareholder of Kroger must follow if the shareholder +intends, at an annual meeting, to nominate a person for election to Kroger’s Board of Directors or to propose other +business to be considered by shareholders. These procedures include, among other things, that the shareholder give +timely notice to Kroger’s Secretary of the nomination or other proposed business, that the notice contain specified +information, and that the shareholder comply with certain other requirements. In order to be timely, this notice must +be delivered in writing to Kroger’s Secretary, at our principal executive offic es, not later than 45 calendar days prior +to the date on which our proxy statement for the prior year’s annual meeting of shareholders was mailed to +shareholders. If a shareholder’s nomination or proposal is not in compliance with the procedures set forth in the +Regulations, we may disregard such nomination or proposal. Accordingly, if a shareholder intends, at the 202 5 +Annual Meeting, to nominate a person for election to the Board of Directors or to propose other business, the +shareholder must deliver a notice of such nomination or proposal to Kroger’s Secretary not later than March 31, +2025 and comply with the requirements of the Regulations. +Furthermore, in addition to the requirements of SEC Rule 14a-8 or our Regulations, as applicable, as described +above, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director +nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information required +by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional requirements +of Rule 14a-19(b). +Eligible shareholders may also submit director nominees for inclusion in our proxy statement for the 202 4 +annual meeting of shareholders. To be eligible, shareholders must have owned at least three percent of our common +shares for at least three years. Up to 20 shareholders will be able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Shareholder proposals, director nominations, including, if applicable pursuant to proxy access, and advance +notices must be addressed in writing, and addressed and delivered timely to: Corporate Secretary, The Kroger Co., +1014 Vine Street, Cincinnati, Ohio 45202-1100. +Questions and Answers about the Annual Meeting +Why are you holding a virtual meeting? +We believe a virtual meeting is the most effective approach for enabling the highest possible attendance. Based +on our experience with virtual meetings during the COVID-19 pandemic, we believe this facilitates shareholder +attendance and participation, and has allowed a greater number of questions from a broader group of shareholders to +be asked and answered at the Meeting than in an in-person format. It also reduces our costs and in a small way the +carbon footprint of our activities. Therefore, our 2024 Annual Meeting is being held on a virtual-only basis with no +physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in +the meeting, while providing substantially the same access and exchange with Management and the Board as an in- +person meeting. We believe that we are observing best practices for virtual shareholder meetings, including by +providing a support line for technical assistance and addressing as many shareholder questions as time allows. +Who can vote? +You can vote if, as of the close of business on April 30, 2024, the record date, you were a shareholder of record +of Kroger common shares. + +Who is asking for my vote, and who pays for this proxy solicitation? +Your proxy is being solicited by Kroger’s Board of Directors. Kroger is paying the cost of solicitation. We +have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies and we will pay them a +fee estimated not to exceed $18,500, plus reasonable expenses for the solicitation. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_97.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..237253af99cb4001f0cce567873c6683d0e0ea3e --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,50 @@ +95 + +We also will reimburse banks, brokers, nominees, and other fiduciaries for postage and reasonable expenses +incurred by them in forwarding the proxy material to beneficial owners of our common shares. +Proxies may be solicited personally, by telephone, electronically via the Internet, or by mail. +Who are the members of the Proxy Committee? +Anne Gates, W. Rodney McMullen, and Ronald L. Sargent, all Kroger Directors, are the members of the Proxy +Committee for our 2024 Annual Meeting. +What is the difference between a “shareholder of record” and a “beneficial shareholder” of shares held in +street name? +You are the “shareholder of record” for any Kroger common shares that you own directly in your name in an +account with Kroger’s stock transfer agent, EQ Shareowner Services. +You are a “beneficial shareholder” of shares held in street name if your Kroger common shares are held in an +account with a broker, bank, or other nominee as custodian on your behalf. The broker, bank, or other nominee is +considered the shareholder of record of these shares. As the beneficial owner, you have the right to instruct the +broker, bank, or other nominee on how to vote your Kroger common shares. +How do I vote my shares held in street name? +If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from +the holder of record. Your broker is required to vote your shares in accordance with your instructions. In most cases, +you may vote by telephone or over the internet as instructed. +How do I vote my proxy? +You can vote your proxy in one of the following ways: +1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. +2. By telephone, you can vote by telephone by following the instructions on your proxy card, voting +instruction form, or notice. +3. By mail, you can vote by mail by signing and dating your proxy card if you requested printed materials, +or your voting instruction form, and returning it in the postage-paid envelope provided with this proxy +statement. +4. By mobile device, by scanning the QR code on your proxy card, notice of internet availability of proxy +materials, or voting instruction form. +5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. +How can I participate and ask questions at the Annual Meeting? +We are committed to ensuring that our shareholders have substantially the same opportunities to participate in +the virtual Annual Meeting as they would at an in-person meeting. In order to submit a question at the Annual +Meeting, you will need your 16-digit control number that is printed on the Notice or proxy card that you received in +the mail, or via email if you have elected to receive material electronically. You may log in 15 minutes before the +start of the Annual Meeting and submit questions online. You will be able to submit questions during the Annual +Meeting as well. We encourage you to submit any question that is relevant to the business of the meeting. Questions +asked during the Annual Meeting will be read and addressed during the meeting. Shareho lders are encouraged to log +into the webcast at least 15 minutes prior to the start of the meeting to test their Internet connectivity. You may also +submit questions in advance of the meeting via the internet at www.proxyvote.com when you vote your shares. +What documentation must I provide to be admitted to the virtual Annual Meeting and how do I attend? +If your shares are registered in your name, you will need to provide your sixteen -digit control number included +on your Notice or your proxy card (if you receive a printed copy of the proxy materials) in order to be able to +participate in the meeting. If your shares are not registered in your name (if, for instance, your shares are held in +“street name” for you by your broker, bank or other institution), you must follow the instructions printed on your +Voting Instruction Form. In order to participate in the Annual Meeting, please log on to +www.virtualshareholdermeeting.com/KR2024 at least 15 minutes prior to the start of the Annual Meeting to provide +time to register and download the required software, if needed. The webcast replay will be available at \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_98.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b4214b84b3363d2afdeb9c52cb6a760f95d6dad --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,45 @@ +96 + +www.virtualshareholdermeeting.com/KR2024 until the 2025 Annual Meeting of Shareholders. If you access the +meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able +to vote or otherwise participate. +What if I have technical or other “IT” problems logging into or participating in the Annual Meeting webcast? +We have provided a toll-free technical support “help line” that can be accessed by any shareholder who is +having challenges logging into or participating in the virtual Annual Meeting. If you encounter any difficulties +accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that +will be posted on the virtual Annual Meeting login page. +What documentation must I provide to vote online at the Annual Meeting? +If you are a shareholder of record and provide your sixteen-digit control number when you access the meeting, +you may vote all shares registered in your name during the Annual Meeting webcast. If you are not a shareholder of +record as to any of your shares (i.e., instead of being registered in your name, all or a portion of your shares are +registered in “street name” and held by your broker, bank or other institution for your benefit), you must follow the +instructions printed on your Voting Instruction Form. +How do I submit a question at the Annual Meeting? +If you would like to submit a question during the Annual Meeting, once you have logged into the webcast at +www.virtualshareholdermeeting.com/KR2024, simply type your question in the “ask a question” box and click +“submit”. You may also submit questions in advance of the meeting via the internet at www.proxyvote.com when +you vote your shares. +When should I submit my question at the Annual Meeting? +Each year at the Annual Meeting, we hold a question-and-answer session following the formal business portion +of the meeting during which shareholders may submit questions to us. We anticipate having such a question-and- +answer session at the 2024 Annual Meeting. You can submit a question up to 15 minutes prior to the start of the +Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we +encourage you to submit your questions before or during the formal business portion of the meeting and our +prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to +address questions in an orderly manner. You may also submit questions in advance of the meeting via the internet at +www.proxyvote.com when you vote your shares. +Can I change or revoke my proxy? +The common shares represented by each proxy will be voted in the manner you specified unless your proxy is +revoked before it is exercised. You may change or revoke your proxy by providing written notice to Kroger’s +Secretary at 1014 Vine Street, Cincinnati, Ohio 45202, by executing and sending us a subsequent proxy, or by +voting your shares while logged in and participating in the 2024 Annual Meeting of Shareholders. +How many shares are outstanding? +As of the close of business on April 30, 2024, the record date, our outstanding voting securities consisted of +727,594,870 common shares. +How many votes per share? +Each common share outstanding on the record date will be entitled to one vote on each of the 11 director +nominees and one vote on each other proposal. Shareholders may not cumulate votes in the election of directors. +What voting instructions can I provide? +You may instruct the proxies to vote “For” or “Against” each proposal, or you may instruct the proxies to +“Abstain” from voting. + \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_99.txt b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..80f7232cbe7f7e6e93db3ab498ce4fee1cb0283f --- /dev/null +++ b/Kroger/Kroger_100Pages/Text_TextNeedles/Kroger_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,54 @@ +97 + +What happens if proxy cards or voting instruction forms are returned without instructions? +If you are a registered shareholder and you return your proxy card without instructions, the Proxy Committee +will vote in accordance with the recommendations of the Board. +If you hold shares in street name and do not provide your broker with specific voting instructions on proposals +1, 2, and 4 – 7, which are considered non-routine matters, your broker does not have the authority to vote on those +proposals. This is generally referred to as a “broker non-vote.” Proposal 3, ratification of auditors, is usually +considered a routine matter and, therefore, your broker may vote your shares according to your broker’s discretion. +The vote required, including the effect of broker non-votes and abstentions for each of the matters presented for +shareholder vote, is set forth below. +What are the voting requirements and voting recommendation for each of the proposals? +Proposals +Board +Recommendation +Voting Approval +Standard +Effect of +Abstention +Effect of +broker +non-vote +No. 1 Election of Directors FOR +Each Director +Nominee +recommended by +your Board +More votes “FOR” than +“AGAINST” since it is an +uncontested election +No Effect No Effect +No. 2 Advisory Vote to Approve +Executive Compensation +FOR Affirmative vote of the +majority of shares +participating in the +voting(1) +No Effect No Effect + +No. 3 Ratification of Independent +Auditors +FOR Affirmative vote of the +majority of shares +participating in the +voting1 +No Effect No Effect +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Affirmative vote of the +majority of shares +participating in the voting +No Effect No Effect +1Although this is an advisory vote, the Board will take into consideration the outcome of the vote based on this +standard. \ No newline at end of file diff --git a/Kroger/Kroger_100Pages/needles.csv b/Kroger/Kroger_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_100Pages/needles_info.csv b/Kroger/Kroger_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..3aa1523aca1fb4cb2d1d7b85861286994d76dba2 --- /dev/null +++ b/Kroger/Kroger_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,2,11,gray,white,0.517,0.274,times-roman,106 +The secret object #2 is a "phone".,6,10,yellow,black,0.136,0.915,helvetica,124 +The secret animal #2 is a "kangaroo".,12,8,brown,white,0.347,0.95,times-italic,114 +The secret kitchen appliance is a "rice cooker".,13,9,green,white,0.656,0.304,courier-oblique,68 +The secret vegetable is "broccoli".,19,11,red,white,0.672,0.336,times-bold,87 +The secret animal #5 is a "bear".,22,12,purple,white,0.913,0.897,courier-bold,83 +The secret food is a "hamburger".,26,11,blue,white,0.831,0.012,helvetica-bold,102 +The secret animal #3 is a "shark".,29,12,black,white,0.258,0.07,helvetica-boldoblique,110 +The secret drink is "tea".,36,12,white,black,0.01,0.53,courier,103 +The secret shape is a "triangle".,37,10,orange,black,0.642,0.409,times-bolditalic,114 +The secret currency is a "dollar".,44,10,purple,white,0.867,0.442,times-bold,117 +The secret object #4 is a "tree".,47,11,green,white,0.032,0.716,courier-oblique,134 +The secret fruit is a "banana".,51,10,white,black,0.894,0.356,helvetica,101 +The secret office supply is a "paperclip".,56,11,brown,white,0.78,0.433,times-bolditalic,61 +The secret flower is a "sunflower".,60,11,blue,white,0.076,0.561,helvetica-bold,122 +The secret object #3 is a "fork".,62,10,black,white,0.992,0.932,times-italic,141 +The secret tool is a "wrench".,65,12,red,white,0.973,0.656,courier,118 +The secret animal #1 is a "cat".,71,9,orange,black,0.452,0.542,times-roman,116 +The secret object #1 is a "table".,74,12,gray,white,0.435,0.351,courier-bold,69 +The secret landmark is the "Statue of Liberty".,79,11,yellow,black,0.555,0.542,helvetica-boldoblique,127 +The secret clothing is a "hat".,81,12,white,black,0.041,0.111,helvetica-boldoblique,110 +The secret animal #4 is a "frog".,87,10,green,white,0.586,0.888,times-italic,59 +The secret transportation is a "boat".,89,13,red,white,0.788,0.559,times-roman,89 +The secret sport is "tennis".,93,8,black,white,0.881,0.755,helvetica,85 +The secret object #5 is a "toothbrush".,100,8,yellow,black,0.82,0.311,times-bold,62 diff --git a/Kroger/Kroger_100Pages/prompt_questions.txt b/Kroger/Kroger_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret object #2 in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret animal #5 in the document? +What is the secret food in the document? +What is the secret animal #3 in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret object #4 in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret object #1 in the document? +What is the secret landmark in the document? +What is the secret clothing in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_1.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a7d816a9cc437d64c5b09a39dadd623727b297a --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,6 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_10.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..c534b4c3de0bd1ceddc9a04715851767e30e5c80 --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,45 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_2.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ecd52fa8b1809a119ae1530019baf646b8faf03 --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_3.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec604b4fa402d28346497a5a0098ce38dcab95ac --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,61 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_4.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..be6267f267b8040b79fbdf019c47d42c67a2af8c --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,61 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_5.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..285e84c21de834a2ec8cc732fefdcb57d1b7a4c9 --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,60 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_6.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..666b2f974659e57b05051a627f17e356fa28a054 --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_7.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ede48a2e474fb703d75dae7cb4b6ad7c2476c27 --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,90 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_8.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5812d8c863ff4a224fac51dc7630e5ef71cd4acc --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,2 @@ +[This page intentionally left blank] +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_9.txt b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..c51b7d70a537122548232179852fc4296843742d --- /dev/null +++ b/Kroger/Kroger_10Pages/Text_TextNeedles/Kroger_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,40 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_10Pages/needles.csv b/Kroger/Kroger_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..336d3b33e6c89e78e96b5ba5d6a9261ee51c1405 --- /dev/null +++ b/Kroger/Kroger_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret instrument is a "piano". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret food is a "hamburger". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". diff --git a/Kroger/Kroger_10Pages/needles_info.csv b/Kroger/Kroger_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..1c8f21326050d18e3ed9b9bb299faac18dc01d2c --- /dev/null +++ b/Kroger/Kroger_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret instrument is a "piano".,1,9,white,black,0.305,0.239,times-bold,59 +The secret kitchen appliance is a "rice cooker".,2,9,black,white,0.297,0.307,helvetica,84 +The secret vegetable is "broccoli".,3,13,yellow,black,0.462,0.623,courier,103 +The secret food is a "hamburger".,4,10,blue,white,0.043,0.903,helvetica-boldoblique,129 +The secret drink is "tea".,5,13,purple,white,0.247,0.554,times-roman,60 +The secret shape is a "triangle".,6,9,red,white,0.782,0.628,times-bolditalic,69 +The secret currency is a "dollar".,7,10,gray,white,0.081,0.586,courier-oblique,61 +The secret fruit is a "banana".,8,10,brown,white,0.4,0.292,times-italic,102 +The secret office supply is a "paperclip".,9,11,orange,black,0.181,0.371,helvetica-bold,81 +The secret flower is a "sunflower".,10,8,green,white,0.969,0.436,courier-bold,70 diff --git a/Kroger/Kroger_10Pages/prompt_questions.txt b/Kroger/Kroger_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b7e44d73833fd06ad308d0533b6d897bce54c82 --- /dev/null +++ b/Kroger/Kroger_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret instrument in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret food in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_1.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0c7af06f03b0e8307ae534fc6fa7e56e8a43baf --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,5 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_10.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..e308506491720f90e3474cd3d4c541a0e4ef46c3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,45 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_100.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..01c7877d60955e48c97d3ad1825b806d2a8bdaf1 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,26 @@ +98 + +Householding of Proxy Materials +We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders +of record who have the same address and last name will receive only one copy of the proxy materials unless one or +more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will +reduce our printing costs and postage fees. Householding will not in any way affect dividend check mailings. +If you are eligible for householding, but you and other shareholders of record with whom you share an address +currently receive multiple copies of our proxy materials or if you hold in more than one account, and in either case +you wish to receive only a single copy for your household or if you prefer to receive separate copies of our +documents in the future, please contact your bank or broker, or contact Kroger’s Secretary at 1014 Vine Street, +Cincinnati, Ohio 45202 or via telephone at 513-762-4000. +Beneficial shareholders can request information about householding from their banks, brokers or other holders +of record. +The management knows of no other matters that are to be presented at the meeting, but, if any should be +presented, the Proxy Committee expects to vote thereon according to its best judgment. +Available Information +The Company files Annual Reports on Form 10-K with the Securities and Exchange Commission. A copy of +the Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (except for certain exhibits thereto), +including our audited financial statements and financial statement schedules, may be obtained, free of charge, upon +written request by any shareholder to Kroger’s Secretary at 1014 Vine Street, Cincinnati, Ohio 45202 or via +telephone at 513-762-4000. Copies of all exhibits to the Annual Report on Form 10-K are available upon a similar +request, subject to reimbursing the Company for its expenses in supplying any exhibit. +By order of the Board of Directors, +Christine S. Wheatley, Secretary + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_101.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e9d4bb34ce4ab1bc24f0f706d8609ef836d3343 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,2 @@ +2023 ANNUAL REPORT +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_102.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..65997f39badd9fd0d2f45cd1ad19dde9f91b14d3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_102.txt @@ -0,0 +1 @@ +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_103.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4945cbe06510a871e4cafe39a135468b6ad1356 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,95 @@ + + + + +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 + +FORM 10-K +(Mark One) + +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + +For the fiscal year ended February 3, 2024. + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + +For the transition period from to + +Commission file number 1-303 + +THE KROGER CO. +(Exact name of registrant as specified in its charter) + +Ohio 31-0345740 +(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) + +1014 Vine Street, Cincinnati, OH 45202 +(Address of Principal Executive Offices) (Zip Code) + +Registrant’s telephone number, including area code (513) 762-4000 + +Securities registered pursuant to Section 12(b) of the Act: + +Title of each class Trading Symbol Name of each exchange on which registered +Common, $1.00 Par Value KR New York Stock Exchange + +Securities registered pursuant to Section 12(g) of the Act: + +NONE +(Title of class) + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +Yes ☒ No ☐ + +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +Yes ☐ No ☒ + +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding +12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. +Yes ☒ No ☐ + +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T +(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes ☒ No ☐ + +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth +company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange +Act. + + +Large accelerated filer ☒ Accelerated filer ☐ +Non-accelerated filer ☐ Smaller reporting company ☐ + Emerging growth company ☐ + +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial +accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ + +Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial +reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ + +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the +correction of an error to previously issued financial statements. +Yes ☐ No ☒ + +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the +registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +Yes ☐ No ☒ + +Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). +Yes ☐ No ☒ + +The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common +equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (August 12, 2023). $35.3 billion. + +The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 721,687,844, shares of Common Stock of $1 par value, as of March 27, +2024. +Documents Incorporated by Reference: + +Portions of Kroger’s definitive proxy statement for its 2024 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within 120 +days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report. + +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_104.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_105.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..0eb7b065ed60feb34b213fe3a14627adfc3a45fb --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,46 @@ + + +The Kroger Co. +Form 10-K +For the Fiscal Year Ended February 3, 2024 +Table of Contents + + + Page +Part I 2 +Item 1 Business 3 +Item 1A Risk Factors 11 +Item 1B Unresolved Staff Comments 19 +Item 1C Cybersecurity 20 +Item 2 Properties 21 +Item 3 Legal Proceedings 22 +Item 4 Mine Safety Disclosures 22 + +Part II 22 +Item 5 Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity +Securities +22 +Item 6 Reserved 24 +Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 +Item 7A Quantitative and Qualitative Disclosures About Market Risk 48 +Item 8 Financial Statements and Supplementary Data 51 +Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 +Item 9A Evaluation of Disclosure Controls and Procedures 99 +Item 9B Other Information 99 +Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 99 + +Part III 100 +Item 10 Directors, Executive Officers and Corporate Governance 100 +Item 11 Executive Compensation 100 +Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 100 +Item 13 Certain Relationships and Related Transactions, and Director Independence 101 +Item 14 Principal Accounting Fees and Services 101 + +Part IV 102 +Item 15 Exhibits, Financial Statement Schedules 102 +Item 16 Form 10-K Summary 104 + Signatures 105 + + + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_106.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..f43d293cc4c8baba59bea2b2db185605d52f5704 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,57 @@ + +2 +PART I + +FORWARD LOOKING STATEMENTS. + +This Annual Report on Form 10-K contains forward-looking statements about our future performance. These +statements are based on our assumptions and beliefs in light of the information currently available to us. These +statements are subject to a number of known and unknown risks, uncertainties and other important factors, including the +risks and other factors discussed in “Risk Factors” below, that could cause actual results and outcomes to differ +materially from any future results or outcomes expressed or implied by such forward looking statements. Such +statements are indicated by words such as “achieve,” “affect,” “anticipate,” “assumptions,” “believe,” “committed,” +“continue,” “could,” “deliver,” “effect,” “enable,” “estimate,” “expects,” “future,” “goal,” “growth,” “intended,” +“likely,” “may,” “model,” “objective,” “plan,” “position,” “program,” “range,” “result,” “strategy,” “strive,” “strong,” +“target,” “trend,” “will” and “would,” and similar words or phrases. Moreover, statements in the sections entitled Risk +Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and +elsewhere in this report regarding our expectations, projections, beliefs, intentions or strategies are forward-looking +statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. + +Various uncertainties and other factors could cause actual results to differ materially from those contained in the +forward-looking statements. These include: + +• The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state +of the financial markets and the effect that such condition has on our ability to issue commercial paper at +acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities, +could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual +obligation to lend to us, or in the event that global pandemics, natural disasters or weather conditions interfere +with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state +of the financial markets. + +• Our ability to achieve sales, earnings and incremental FIFO operating profit goals may be affected by: the risks +relating to or arising from our proposed nationwide opioid litigation settlement, including our ability to finalize +and effectuate the settlement, the scope and coverage of the ultimate settlement and the expected financial or +other effects that could result from the settlement; our proposed transaction with Albertsons, including, among +other things, our ability to consummate the proposed transaction and related divestiture plan, including on the +terms of the merger agreement and divestiture plan, on the anticipated timeline, with the required regulatory +approvals, and/or resolution of pending litigation challenging the merger; labor negotiations; potential work +stoppages; changes in the unemployment rate; pressures in labor; changes in government-funded benefit +programs; changes in the types and numbers of businesses that compete with us; pricing and promotional +activities of existing and new competitors, and the aggressiveness of that competition; our response to these +actions; the state of the economy, including interest rates, the current inflationary environment and future +potential inflationary, disinflationary and/or deflationary trends and such trends in certain commodities, +products and/or operating costs; the geopolitical environment including wars and conflicts; unstable political +situations and social unrest; changes in tariffs; the effect that fuel costs have on consumer spending; volatility of +fuel margins; manufacturing commodity costs; supply constraints; diesel fuel costs related to our logistics +operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing +in response to economic conditions; the uncertainty of economic growth or recession; stock repurchases; +changes in the regulatory environment in which we operates; our ability to retain pharmacy sales from third- +party payors; consolidation in the healthcare industry, including pharmacy benefit managers; our ability to +negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the +effect of public health crises or other significant catastrophic events; the potential costs and risks associated +with potential cyber-attacks or data security breaches; the success of our future growth plans; the ability to +execute our growth strategy and value creation model, including continued cost savings, growth of our +alternative profit businesses, and our ability to better serve our customers and to generate customer loyalty and +sustainable growth through our strategic pillars of fresh, Our Brands, personalization, and seamless; and the +successful integration of merged companies and new partnerships. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_107.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..55eb4ad73beb55b92daa03b66350fa708f9ec6f0 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,48 @@ + +3 +• Our ability to achieve these goals may also be affected by our ability to manage the factors identified above. +Our ability to execute our financial strategy may be affected by our ability to generate cash flow. + +• Our adjusted effective tax rate may differ from the expected rate due to changes in tax laws, the status of +pending items with various taxing authorities, and the deductibility of certain expenses. + +We cannot fully foresee the effects of changes in economic conditions on our business. + +Other factors and assumptions not identified above, including those discussed in Part 1, Item 1A of this Annual +Report, could also cause actual results to differ materially from those set forth in the forward-looking information. +Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by +forward-looking statements made by us or our representatives. We undertake no obligation to update the forward- +looking information contained in this filing. + +Our ability to complete our proposed transaction with Albertsons may be affected by various factors, including +those set forth in Part I, Item 1A of this Annual Report. Risk Factors included in this Annual Report on Form 10-K and +other factors as may be described in subsequent filings with the SEC. + +ITEM 1. BUSINESS. + +The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built +on the foundation of our retail grocery business, which includes the added convenience of our retail pharmacies and fuel +centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in +four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless. + +We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our +customers that generates alternative profit streams. These alternative profit streams would not exist without our core +retail business. + +Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our +stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that +produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include +procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our fiscal year +ends on the Saturday closest to January 31. All references to 2023, 2022 and 2021 are to the fiscal years ended February +3, 2024, January 28, 2023 and January 29, 2022, respectively, unless specifically indicated otherwise. + +We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional +information about the Company. Kroger’s website and any reports or other information made available by Kroger +through its website are not part of or incorporated by reference into this Annual Report on Form 10-K. We make +available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our +current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as +reasonably practicable after we have filed them with, or furnished them electronically to, the SEC. + +Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer +demographics. Our combination of assets includes the following: + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_108.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5e88d7fe3a20f1abe7281723836cfa4a286de45 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,58 @@ + +4 +Stores + +As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the +District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 +supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. Approximately 50% of our supermarkets were +operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate +under a variety of banners that have strong local ties and brand recognition. We connect with customers through our +expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales +are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at +each of our supermarket locations when it is feasible and it is expected to be profitable. Each fuel center typically +includes five to ten islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel. +Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo +stores”); multi-department stores; marketplace stores; or price impact warehouses. + +The combo store is the primary grocery store format. We believe this format is successful because the stores are +large enough to offer the specialty departments, including natural food and organic sections, pharmacies, general +merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce. + +Multi-department stores are significantly larger in size than combo stores. In addition to the departments offered at a +typical combo store, multi-department stores sell a wide selection of general merchandise items such as apparel, home +fashion and furnishings, outdoor living, electronics, automotive products and toys. + +Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and +health and beauty care departments as well as an expanded perishable offering and general merchandise area that +includes apparel, home goods and toys. + +Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low prices plus +promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy, baked goods and fresh +produce items provide strategic differentiation for price impact warehouse stores. The average size of a price impact +warehouse store is similar to that of a combo store. + +Seamless Digital Ecosystem + +We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, +including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, +pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital +solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail +store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These +channels allow us to serve customers anything, anytime and anywhere with zero compromise on selection, convenience, +and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are +also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. + +Merchandising and Manufacturing + +Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our +sales in 2023. Our supermarkets, on average, stock over 12,600 private label items. Our Brands products are primarily +produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary +foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our +private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet +the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Smart Way® and +Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition to +our three “tiers,” Our Brands offers customers a variety of natural and organic products with Simple Truth® and Simple +Truth Organic®. Both Simple Truth® and Simple Truth Organic® are free from a defined list of artificial ingredients +that some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA +certified organic. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_109.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..70cac0d913a058da41b092d327b597b418043593 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,50 @@ + +5 +Approximately 30% of Our Brands units and 43% of the grocery category Our Brands units sold in our +supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict +specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions +are based upon a comparison of market-based transfer prices versus open market purchases. As of February 3, 2024, we +owned 33 food production plants. These plants consisted of 14 dairies, nine deli or bakery plants, five grocery product +plants, two beverage plants, one meat plant and two cheese plants. + +Our Data + +We are evolving into a more diverse business. The traffic and data generated by our retail business, including +pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households +annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card. +Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized +experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit +businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision +Marketing – provides differentiated media capabilities for our consumer packaged goods partners and other industry +verticals. It is a key driver of our digital profitability and alternative profit. + +Proposed Merger with Albertsons + +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed +merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and +Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and +increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see Note +16 to the Consolidated Financial Statements. + +SEGMENTS + +We operate supermarkets, multi-department stores and fulfillment centers throughout the United States. Our retail +operations, which represent 97% of our consolidated sales, is our only reportable segment. We aggregate our operating +divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar +long-term financial performance. In addition, our operating divisions offer customers similar products, have similar +distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale +from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types +of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a +geographical basis so that the operating division management team can be responsive to local needs of the operating +division and can execute company strategic plans and initiatives throughout the locations in their operating division. This +geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of +organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating +decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and +total assets are shown in our Consolidated Financial Statements set forth in Item 8 below. + +SEASONALITY + +The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the +major holidays throughout the year. Additionally, certain significant events including inclement weather systems, +particularly winter storms, tend to affect our sales trends. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_11.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..977471825a636ead53e75464d4ba7084368778ff --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,11 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_110.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..a75a4d0eeded99dae82c2d7f272a6a5147c41e25 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,54 @@ + +6 +HUMAN CAPITAL MANAGEMENT + +Our People + +We want Kroger to be a place where our customers love to shop and associates love to work. This is why we aim to +create working environments where associates feel encouraged and supported to be their best selves every day. As of +February 3, 2024, Kroger employed nearly 414,000 full- and part-time employees. Our people are essential to our +success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the +communities we serve. We strive to create a culture of opportunity and take seriously our role as a leading employer in +the United States. Kroger has provided a large number of people with first jobs, new beginnings and lifelong careers. +We have long been guided by our values – Honesty, Integrity, Respect, Safety, Diversity and Inclusion. + +Attracting & Developing Our Talent + +To deliver on our customers’ experiences and remain competitive with union and non-union employers, we +continually try to improve how we attract and retain talent. In addition to competitive wages, quality benefits and a safe +work environment, we offer a broad range of employment opportunities for workers of all ages and aspirations. Many +retail roles offer opportunities to learn new skills, grow and advance careers. + +Associates at all levels of Kroger have access to training and education programs to build their skills and prepare for +the roles they want. In 2023, we spent approximately $210 million on training our associates through onboarding, +leadership development programs and programs designed to upskill associates across the Company. We continue to +invest in new platforms and applications to make learning more accessible to our associates. + +Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to +$3,500 annually — $21,000 over the course of employment — toward continuing education. These funds can be applied +to education programs like certifications, associate or graduate degrees. Approximately 7,000 associates, 94% of whom +are hourly, have taken advantage of our tuition reimbursement program in 2023. Kroger has invested approximately $54 +million in this program since it launched in 2018. + +Rewarding Our Associates + +As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent +across the organization to be able to continue delivering for our customers. We are investing in our associates by +expanding our industry-leading benefits, including continuing education, training and development and health and +wellness. During 2023, we increased associate wages resulting in an average hourly rate of nearly $19, and a rate of +nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the last five years. Over the last +five years, we have now invested more than $2.4 billion in incremental wage investments. We remain committed to +supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to +continue to keep products affordable for the communities we serve. We expect to make continued associate investments +in 2024. + +Promoting Diversity, Equity & Inclusion + +Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we +serve and foster a culture that inspires collaboration and feeds the human spirit. We have taken a very thoughtful and +purposeful approach to enact meaningful change and develop what we believe are the right actions to achieve true and +lasting equality. Our Framework for Action: Diversity, Equity & Inclusion plan reflects our desire to redefine, deepen, +and advance our commitment, mobilizing our people, passion, scale and resources. This ongoing commitment includes +the following framework pillars: Create a More Inclusive Culture; Develop Diverse Talent; Advance Diverse +Partnerships; Advance Equitable Communities; and Deeply Listen and Report Progress. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_111.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..4bf71b8cd7085a4fa840c8c7289d5069dafd0781 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,56 @@ + +7 +Creating a Safe Environment + +Our associates’ safety is a top priority. It is also one of our core values. We prioritize providing the right safety +training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through +our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the +number of injuries and accidents that happen in our workplace. We track health and safety metrics centrally for an +enterprise-wide view of issues, trends and opportunities and monitor associate injury performance including total +injuries, Occupational Safety and Health Administration (“OSHA”) injury rates, and lost-time injuries, as well as +customer injury metrics like slip-and-fall injuries. We also track the completion of required training for associates, and +we regularly share these metrics with leaders and relevant team members to inform management decisions. + +Supporting Labor Relations + +A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated +with one of several different international unions. There are approximately 350 such agreements, usually with terms of +three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that +cover approximately 65% of our associates. Our objective is to negotiate contracts that balance wage increases that are +competitive with union and non-union employers and provide affordable healthcare for associates with keeping groceries +affordable for the communities we serve. Our obligation is to do this in a way that maintains a financially sustainable +business. + +MANAGING CLIMATE IMPACTS + +Managing climate change impacts is an important part of Thriving Together, Kroger’s Environmental, Social & +Governance (“ESG”) strategy and has been a focus for our business for many years. With a large portfolio of +supermarkets, distribution warehouses and food production plants, as well as a complex supply chain, we recognize +Kroger’s effect on our climate. We continue to explore opportunities and take steps to reduce the effects of our +operations on the environment and to reduce the potential risk of a changing climate on our operations. This includes +enhancing our operational efficiency, increasing our usage of renewable energy and investing in new technologies. The +key elements of our climate strategy are included below. + +Governance + +Climate effects are managed by leadership with input from several departments across the business. The Public +Responsibilities Committee of the Board of Directors oversees our responsibilities as a corporate citizen and Kroger’s +practices related to environmental sustainability, including climate effects, along with other environmental and social +topics of material importance. Kroger discloses detailed energy and emissions data, as well as our approach to managing +climate-related topics, in our annual ESG Report, which can be found at www.thekrogerco.com/esgreport. + +Risk assessment + +To help identify and manage climate-related risks to our business, we conducted a quantitative climate risk +assessment to determine the likelihood that different physical climate risks, including drought, extreme heat and extreme +precipitation, would affect Kroger’s operations at representative facilities in different geographies and, in turn, +potentially increase operating costs for these facilities. As a result of our risk assessments, we do not currently anticipate +the modeled physical risks to adversely affect our financial condition, results of operations or cash flows for the +foreseeable future. We plan to continue these climate risk assessments moving forward. + +Kroger also acknowledges that current and emerging climate-related legislation could affect our business. As a +result of state and federal requirements regarding the phase down of hydrofluorocarbon (“HFC”) refrigerants, we +anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur significant costs to +the business. If legislation required an accelerated timeline regarding the phase down of HFC refrigerants, we could +incur higher costs. Any such legislation will affect all retailers using refrigerants in their operations. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_112.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbec50d23d53e2fee3aebf6fd1a3f488adbdbec3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,24 @@ + +8 +Climate adaptation + +To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to +our supply chain, we maintain more than 200 business continuity plans. We have installed technologies and processes to +ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain +operational. We also monitor energy availability and costs to help anticipate how changing climate patterns, like +increasing temperatures, could affect our energy-sourcing costs and activities. Our teams also monitor transition risks +due to climate change, including the effect possible new legislation may have on our business. + +Climate mitigation + +For many years, Kroger has implemented emission reduction projects, including energy efficiency improvements, +refrigerant leak detection and mitigation measures, renewable energy installations and procurement and fleet +efficiencies. In 2020, we set a goal to reduce absolute greenhouse gas (“GHG”) emissions from our operations (scope 1 +and 2 emissions) by 30% by 2030, against a 2018 baseline. The goal was developed using climate science and is aligned +with the Paris Agreement, specifically supporting a well-below 2°C climate scenario according to the absolute +contraction method. Kroger is reviewing its GHG reduction target against the requirements of the Science Based Targets +initiative. In 2023, we completed our first full Scope 3 emissions baseline. + +Additional discussion about our approach to managing climate effects is included in our annual ESG Report. The +information in our ESG Report is not part of or incorporated by reference into this Annual Report on Form 10-K. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_113.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bfa735e727b8420ad45764cdf4ecb6049312c68 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,53 @@ + +9 +INFORMATION ABOUT OUR EXECUTIVE OFFICERS + +The following is a list of the names and ages of the executive officers and the positions held by each such person. +Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the +discretion of the Board for the ensuing year until removed or replaced. + Name Age Recent Employment History + +Mary E. Adcock 48 Ms. Adcock was elected Senior Vice President effective May 1, 2019 and is +responsible for retail operations as well as the oversight of all Kroger retail divisions. +From June 2016 to April 2019, she served as Group Vice President of Retail +Operations. Prior to that, Ms. Adcock held leadership roles in Kroger’s Columbus +Division, including Vice President of Operations and Vice President of +Merchandising. Prior to that, Ms. Adcock served as Vice President of Natural Foods +Merchandising and as Vice President of Deli/Bakery Manufacturing and held several +leadership positions in the manufacturing department, including human resources +manager, general manager and division operations manager. Ms. Adcock joined +Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in +Bowling Green, Kentucky. + +Stuart W. Aitken 52 Mr. Aitken was named Senior Vice President and Chief Merchant and Marketing +Officer in August 2020. He was elected Senior Vice President in February 2019 and +served as Group Vice President from June 2015 to February 2019. He is responsible +for sales, pricing, promotional and category planning for fresh foods, center store and +general merchandise categories, as well as analytics & execution, e-commerce and +Digital Merchandising, Sourcing and Our Brands. Prior to joining Kroger, he served +as the chief executive officer of dunnhumby USA, LLC. Mr. Aitken has over 15 +years of marketing, academic and technical experience across a variety of industries, +and held various leadership roles with other companies, including Michaels Stores +and Safeway, Inc. + +Gabriel Arreaga 49 Mr. Arreaga was elected Senior Vice President of Supply Chain in December 2020. +He is responsible for the Company’s industry-leading Supply Chain organization, +Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers. +Prior to Kroger, Mr. Arreaga served as Senior Vice President of Supply Chains for +Mondelez, where he was responsible for all operations and functions from field to +consumer, internal and external factories, fulfillment centers, direct to store branches, +Logistics and product development. He was also Global Vice President of Operations +for Stanley Black and Decker and held numerous leadership roles at Unilever +including Vice President of Food and Beverage Operations. + +Yael Cosset 50 Mr. Cosset was elected Senior Vice President and Chief Information Officer in May +2019 and is responsible for leading Kroger’s digital strategy, focused on building +Kroger’s presence in the marketplace in digital channels, personalization and e- +commerce. In August 2020, he also assumed responsibility for Kroger’s alternative +profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦ LLC and +Kroger Personal Finance. Prior to that, Mr. Cosset served as Group Vice President +and Chief Digital Officer, and also as Chief Commercial Officer and Chief +Information Officer of 84.51° LLC. Prior to joining Kroger, Mr. Cosset served in +several leadership roles at dunnhumby USA, LLC, including Executive Vice +President of Consumer Markets and Global Chief Information Officer. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_114.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..d5bbd5f9bb397cf61fb6e61f2572b07ae3df7611 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,55 @@ + +10 +Carin L. Fike 55 Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to that, +she served as Assistant Treasurer and also as Director of Investor Relations. Ms. Fike +began her career with Kroger in 1999 as a manager in the Financial Reporting +department after working with PricewaterhouseCoopers in various roles, including +audit manager. + +Todd A. Foley 54 Mr. Foley was named Senior Vice President and Interim Chief Financial Officer in +March 2024. Prior to that, he served as Group Vice President, Interim Chief +Financial Officer and Corporate Controller from February 2024 to March 2024. Prior +to that, he served as Group Vice President and Corporate Controller from October +2021 to February 2024. From April 2017 to September 2021, Mr. Foley served as +Vice President and Corporate Controller. Before that, he held several leadership +roles, including Vice President and Treasurer, Assistant Corporate Controller, and +Controller of Kroger’s Cincinnati/Dayton division. Mr. Foley began his career with +Kroger in 2001 as an audit manager in the Internal Audit Department after working +for PricewaterhouseCoopers in various roles, including senior audit manager. + +Valerie L. Jabbar 55 Ms. Jabbar was elected Senior Vice President effective August 19, 2021 and is +responsible for the oversight of several Kroger retail divisions. From July 2020 to +August 2021, she served as Group Vice President of Center Store Merchandising, +and from September 2018 to June 2020, as Group Vice President of Merchandising. +Prior to that, she served as President of the Ralphs Division from July 2016 to +August 2018. Before that, Ms. Jabbar served as Vice President of Merchandising for +the Ralphs Division and as Vice President of Merchandising for the Mid-Atlantic +Division. She also held several leadership roles, including assistant store director, +category manager, Drug/GM coordinator, G.O. Seasonal manager, assistant director +of Drug/GM and director of Drug GM, and district manager in the Fry’s Division. +She joined the Company in 1987 as a clerk in the Fry’s Division. + +Kenneth C. Kimball 58 Mr. Kimball was elected Senior Vice President in March 2022 and is responsible for +the oversight of several Kroger retail divisions. From April 2016 to March 2022, he +served as President of the Smith’s Division. Prior to that, he held several leadership +roles with the Ralphs Division, including Vice President of Operations and Vice +President of Merchandising. Prior to that, he held leadership roles, including store +manager, district manager, and director in the Smith’s Division as well as Senior +Vice President of Sales and Merchandising and Group Vice President of Retail +Operations. Mr. Kimball joined the Company in 1984 as a clerk in the Smith’s +Division. + +Timothy A. Massa 57 Mr. Massa was elected Senior Vice President in June 2018 and serves as the +company’s Chief People Officer, leading all areas of Human Resources and Labor +Relations, including total rewards, labor relations, diversity, business unit human +resources, people operations, training and development, talent hiring, retention and +engagement, corporate affairs, and associate communications. He also leads the areas +of shared services and aviation. Prior to that, Mr. Massa served as Group Vice +President of Human Resources and Labor Relations from June 2014 to June 2018. +Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human +Resources and Talent Development. Prior to joining Kroger, Mr. Massa served in +various Human Resources leadership roles for 21 years at Procter & Gamble, most +recently serving as Global Human Resources Director of Customer Business +Development. + +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_115.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..d19ce2f30c149bd3b68d90405967cf959e63157b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,43 @@ + +11 +W. Rodney McMullen 63 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and +Chief Executive Officer effective January 1, 2014. Prior to that, he served as +President and Chief Operating Officer from August 2009 to December 2013. Prior to +that he held numerous leadership roles, including Vice Chairman, Executive Vice +President of Strategy, Planning and Finance, Executive Vice President and Chief +Financial Officer, Senior Vice President, Group Vice President and Chief Financial +Officer, Vice President, Control and Financial Services, and Vice President, Planning +and Capital Management. Mr. McMullen joined Kroger in 1978 as a part-time stock +clerk. + +Brian W. Nichols 51 Mr. Nichols was elected Vice President, Corporate Controller in March 2024 and is +responsible for oversight of Kroger’s Corporate Accounting and Corporate Tax +departments, as well as the Company’s Accounting Centers and Accounting +Modernization, Pension Investment, and Insurance and Claims teams. Prior to that, +he served as Vice President, Assistant Corporate Controller from April 2021 to +March 2024. From May 2018 to April 2021, Mr. Nichols served as Senior Director +and Assistant Corporate Controller. Prior to that, he held several leadership roles, +including Senior Manager of Corporate and External Financial Reporting and Senior +Financial Analyst of SEC Reporting. Mr. Nichols joined Kroger in 2000 as Assistant +Controller of the Central Division. + +Christine S. Wheatley 53 Ms. Wheatley was elected Senior Vice President, General Counsel, and Secretary in +May 2023. Prior to this, she served as Group Vice President, Secretary and General +Counsel from May 2014 to May 2023. She joined Kroger in February 2008 as +Corporate Counsel, and thereafter served as Senior Attorney, Senior Counsel, and +Vice President. Before joining Kroger, Ms. Wheatley was engaged in the private +practice of law for 11 years, most recently as a partner at Porter Wright Morris & +Arthur in Cincinnati. + +COMPETITIVE ENVIRONMENT + +For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive +Environment.” + +ITEM 1A. RISK FACTORS. + +There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The +following information should be read together with “Management’s Discussion and Analysis of Financial Condition and +Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our +goals or meet our expectations. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_116.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..0caa3eba2d1e174cb4587a5e267d855884c7bae3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,47 @@ + +12 +OUR PROPOSED TRANSACTION WITH ALBERTSONS CREATES INCREMENTAL BUSINESS, +REGULATORY AND REPUTATIONAL RISKS + +On October 13, 2022, we entered into a merger agreement with Albertsons Companies Inc. (“Albertsons”), which +sets forth the terms of our proposed transaction. In connection with the proposed transaction, Kroger and Albertsons +entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC for the combined sale of certain stores, +distribution centers, offices and private label brands. The proposed transaction with Albertsons and the divestiture plan +entails important risks, including, among others: the expected timing and likelihood of completion of the proposed +transaction and divestiture plan, including the timing, receipt and terms and conditions of any required governmental and +regulatory clearance of the proposed transaction and divestiture plan, and/or resolution of pending litigation challenging +the merger; the effect of the proposed divestiture plan; the occurrence of any event, change or other circumstances that +could give rise to the termination of the merger agreement or divestiture agreement; the outcome of any legal +proceedings that have been instituted and may in the future be instituted against the parties and others following +announcement of the merger agreement and proposed transaction or divestiture plan; the inability to consummate the +proposed transaction or divestiture plan due to the failure to satisfy other conditions to complete the proposed transaction +or divestiture plan; risks that the proposed transaction or divestiture plan disrupts our current plans and operations; the +ability to identify and recognize, including on the expected timeline, the anticipated total shareholder return (“TSR”), +revenue and EBITDA expectations; the amount of the costs, fees, expenses and charges related to the proposed +transaction or divestiture plan; the risk that transaction and/or integration costs are greater than expected, including as a +result of conditions regulators put on any approvals of the transaction; the potential effect of the announcement and/or +consummation of the proposed transaction or divestiture plan on relationships, including with associates, suppliers and +competitors; our ability to maintain an investment grade credit rating; the risk that management’s attention is diverted +from other matters; risks related to the potential effect of general economic, political and market factors, including +changes in the financial markets as a result of inflation or measures implemented to address inflation, and any epidemic, +pandemic or disease outbreaks, on Kroger, Albertsons or the proposed transaction or divestiture plan; the risk of adverse +effects on the market price of our or Albertsons’s securities or on Albertsons’s or our operating results for any reason; +the occurrence of any event, change or other circumstances that could give rise to the termination of the merger +agreement or divestiture agreement; and other risks described in our filings with the SEC. + +INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES + +In addition to the above, we enter into mergers, acquisitions and strategic alliances with expected benefits including, +among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow +for future growth. Achieving the anticipated or desired benefits may be subject to a number of significant challenges and +uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient +and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions +underlying expectations regarding potential synergies, capital requirements, and the integration process (including the +integration of internal controls into our business operations), unforeseen expenses and delays and competitive factors in +the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances +such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of +them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and +attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits +may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our +business, financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_117.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab5482acd1862bd288b007d6b5568b1b3331e6cb --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,48 @@ + +13 +COMPETITIVE ENVIRONMENT + +The operating environment for the food retailing industry continues to be characterized by the proliferation of local, +regional, and national retailers, including both retail and digital formats, and intense and ever-increasing competition +ranging from online retailers, mass merchant, club stores, regional chains, deep discounters, and dollar stores, as well as +ethnic, specialty and natural food stores. With the proliferation of grocery delivery – both by retailers and third-party +delivery service providers – customers have an even wider range of retailers from which to choose. Customers continue +to expect a great shopping experience both in-store and online. The industry continues to be shaped by e-commerce, +cooking at home and prepared foods to go and other customer needs and preferences. Customers want to be able to shop +on their own terms with zero compromise whether at brick and mortar stores or online, pick-up or delivery, depending +on their particular trip needs and other factors. If we do not appropriately or accurately anticipate customer preferences +or fail to quickly adapt to these ever-changing preferences, our sales and profitability could be adversely affected. If we +fail to meet the evolving needs of our customers, our ability to compete and our financial condition, results of operations +or cash flows could be adversely affected. + +We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless, +Personalization, Fresh, and Our Brands. Each of these strategies is designed to better serve our customers and to +generate customer loyalty and sustainable growth momentum. We believe our plans to continue to improve these four +strategic pillars will enable us to meet the wide-ranging needs and expectations of our customers. If we are unable to +continue to enhance the foregoing key elements of our connection with customers, or they fail to strengthen customer +loyalty, our ability to compete and our financial condition, results of operations or cash flows could be adversely +affected. Our ecosystem monetizes the traffic and data insights generated by our retail grocery business to create fast- +growing, asset-light and margin-rich revenue streams. Growth in loyal households, customer traffic and digitally +engaged customers allow us to grow profits and power the flywheel in our model. We may be unsuccessful in +implementing our alternative profit strategy, which could adversely affect our business growth and our financial +condition, results of operations or cash flows. The nature and extent to which our competitors respond to the evolving +and competitive industry by developing and implementing their competitive strategies could adversely affect our +profitability. + +In addition, evolving customer preferences and the advancement of online, delivery, ship to home and mobile +channels in our industry increase the competitive environment. We must anticipate and meet these evolving customer +preferences and continue to implement technology, software and processes to be able to conveniently and cost- +effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex +and may not meet customer preferences. If we are not successful in reducing or offsetting the cost of fulfilling orders +outside of our in-store channel with efficiencies, cost-savings, expense reductions, or alternative revenues, our financial +condition, results of operations or cash flows could be adversely affected. + +In addition, if we do not successfully develop and maintain a relevant digital experience for our customers, our +business, financial condition, results of operations or cash flows could be adversely affected. Digital retailing is rapidly +evolving, and we must keep pace with new developments by our competitors as well as the evolving needs and +preferences of our customers. We must compete by offering a convenient shopping experience for our customers +regardless of how they choose to shop with us, and by investing in providing and maintaining relevant customer-facing +apps and interfaces that have the features customers want that are also reliable and easy to use. The future success of the +digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities, +whether in store, in pickup-only locations or through customer fulfillment centers powered by Ocado. +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_118.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed4861fd12bc94b870d341dab2b66464e8e93436 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,59 @@ + +14 +PRODUCT SAFETY + +Customers count on Kroger to provide them with safe food and drugs and other merchandise. Concerns regarding +the safety of the products that we sell could cause shoppers to avoid purchasing certain products from us, or to seek +alternative sources of supply even if the basis for the concern is outside of our control. Any lost confidence on the part of +our customers would be difficult and costly to reestablish. We could be adversely affected by personal injury or product +liability claims, product recalls, or other health and safety issues, which occur from time to time. If we sell products that +cause illness or injury to customers, resulting from product contamination or spoilage, the presence of certain substances, +or damage caused in handling, storage or transportation, we could be exposed to claims or litigation. Any issue regarding +the safety of items, whether Our Brands items manufactured by us or for us or CPG products we sell, regardless of the +cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash +flows. + +EMPLOYEE MATTERS + +Nearly two-thirds of our associates are covered by collective bargaining agreements with unions, and our +relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could +have a material adverse effect on our financial condition, results of operations or cash flows. We are a party to +approximately 350 collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work +stoppages by the affected workers could occur (and have occurred in the past) if we are unable to negotiate new +contracts with labor unions. In addition, changes to national labor policy could affect labor relations with our associates +and relationships with unions. Further, if we are unable to control health care, pension and wage costs, or if we have +insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating +costs and an adverse effect on our financial condition, results of operations or cash flows. + +We have committed to paying fair wages and providing the benefits that were collectively bargained with the United +Food and Commercial Workers (“UFCW”) and other labor unions representing associates. Our ability to control labor +and benefit costs is subject to numerous internal and external factors, including regulatory changes, wage rates, and +healthcare and other insurance costs. Changes to wage regulations, including further increases in the minimum wage or +ordinances related to pay or working conditions enacted by local governments, could have an effect on our future +financial condition, results of operations or cash flows. Our ability to meet our labor needs, while controlling wages and +other costs, is subject to numerous external factors, including the available qualified workforce in each area where we +are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws. + +Our continued success depends on the ongoing contributions of our associates, including members of our senior +management and other key personnel. We must recruit, hire, develop and retain qualified associates with an increasingly +large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non- +retail businesses for these associates and invest significant resources in training and motivating them. Competition +among potential employers has resulted, and may in the future result, in increased associate costs and has from time to +time affected our ability to recruit and retain associates. We may not be able to attract or retain sufficient highly qualified +associates in the future, which could have a material adverse effect on our business, financial condition, results of +operations or cash flows. + +DATA AND TECHNOLOGY + +Our business is increasingly dependent on information technology systems that are complex and vital to continuing +operations, resulting in an expansion of our technological presence and corresponding risk exposure. If we were to +experience difficulties maintaining or operating existing systems or implementing new systems, we could incur +significant losses due to disruptions in our operations. As we modernize legacy systems, if we are unable to successfully +implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to +business interruption or reputation risk with our customers, suppliers or associates. + +Through our sales and marketing activities, we collect and store some personal information that our customers +provide to us. We also gather and retain information about our associates in the normal course of business. Under certain +circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or +otherwise in accordance with our privacy policy. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_119.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..308d721c67beb8b7212157e99b0bb707ff402765 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,57 @@ + +15 +Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as +we regularly defend against and respond to data security incidents. Cyber-attackers have targeted and accessed, and may +in the future again target and, if successful, access information stored in our or our vendors’ systems in order to +misappropriate confidential customer or business information. Due to ongoing geopolitical conflicts, there is an +increased possibility of cyberattacks that could either directly or indirectly affect our operations. Although we have +implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that +our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly +sophisticated cyber-attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a +contractor or other third party with whom we do business may in the future circumvent our security measures in order to +obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or +applications we may use may have inherent defects, vulnerabilities, or could be inadvertently or intentionally applied or +used in a way that could compromise our information security. + +Our cybersecurity program, continued investment in our information technology systems, and our processes to +evaluate and select vendors with reasonable information security controls may not effectively insulate us from potential +attacks, data breaches or disruptions to our business operations, which could result in a loss of customers or business +information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions, +regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse +effect on our business, financial condition, results of operations or cash flows and may not be covered by our insurance. +In addition, compliance with privacy and information security laws and standards may result in significant expense due +to increased investment in technology and the development of new operational processes and may require us to devote +significant management resources to address these issues. The costs of attempting to protect against the foregoing risks +and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’ +remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, +and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the +unauthorized dissemination of sensitive personal information or confidential information about us or our customers +could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or +expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory +enforcement actions, material fines and penalties, loss of customers and business relationships, litigation or other actions +which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations +or cash flows. + +Data governance failures can adversely affect our reputation and business. Our business depends on our customers’ +willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate +disclosure to our customers of our uses of their information, failures to honor new and evolving data privacy rights, +failing to keep our information technology systems and our customers’ sensitive information secure from significant +attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including +human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and +reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media, +litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, +penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or +injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations or cash +flows. Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge +we and our vendors face in maintaining the security of our information technology systems and proprietary information +and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that +we will detect them or that they can be sufficiently remediated. + +The use of data by our business and our business associates is highly regulated. Privacy and information-security +laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems +changes and the development of new processes. If we, our third-party service providers, or those with whom we share +information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our +business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance +Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection +Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to +additional legal risk or financial losses as a result of non-compliance. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_12.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c95c920bbd90a1af0e5321b32f919b6417e23e3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,4 @@ +10 + +Director Nominee Highlights + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_120.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..681c891262c31c3239fa09fa6da0daa0fdf06da3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,47 @@ + +16 +PAYMENT SYSTEMS + +We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and +Kroger Pay, a mobile payment solution. As we offer new payment options to our customers, we may be subject to +additional rules, regulations, compliance requirements, and higher fraud losses. For certain payment methods, we pay +interchange and other related acceptance fees, along with additional transaction processing fees. We rely on third parties +to provide payment transaction processing services for credit and debit cards. It could disrupt our business if these +companies become unwilling or unable to provide these services to us, including due to short term disruption of service. +We are also subject to evolving payment card association and network operating rules, including data security rules, +certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card +Industry Data Security Standards (“PCI DSS”), which contain compliance guidelines and standards with regard to our +security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If +our payment card terminals or internal systems are breached or compromised, we may be liable for card re-issuance +costs and other costs, subject to fines and higher transaction fees, and lose our ability to accept card payments from our +members, or if our third-party service providers’ systems are breached or compromised, our business, financial +condition, results of operations or cash flows could be adversely affected. + +INDEBTEDNESS + +Our indebtedness could reduce our ability to obtain additional financing for working capital, mergers and +acquisitions or other purposes and could make us vulnerable to future economic downturns as well as competitive +pressures. If debt markets do not permit us to refinance certain maturing debt, we may be required to dedicate a +substantial portion of our cash flow from operations to payments on our indebtedness. Changes in our credit ratings, or +in the interest rate environment, could have an adverse effect on our financing costs and structure. + +LEGAL PROCEEDINGS AND INSURANCE + +From time to time, we are a party to legal proceedings, including matters involving personnel and employment +issues, personal injury, contract disputes, regulatory claims and other proceedings. Other legal proceedings purport to be +brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial +loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, +where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the +outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in +our evaluations or predictions about the proceedings, could have an adverse effect on our financial condition, results of +operations or cash flows. Please also refer to the “Litigation” section in Note 12 to the Consolidated Financial +Statements. + +We use a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, +automobile and general liability, property, director and officers’ liability, cyber risk exposure and associate health care +benefits. Any actuarial projection of losses is subject to a high degree of variability. With respect to insured matters, we +are liable for retention amounts that vary by the nature of the claim, and some losses may not be covered by insurance. +Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of +claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes +in discount rates could all affect our financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_121.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..44d7866aab9388fcc2b2136c71425c2cd410bcc3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,59 @@ + +17 +MULTI-EMPLOYER PENSION OBLIGATIONS + +As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of +Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer +pension plans based on obligations arising under collective bargaining agreements with unions representing associates +covered by those agreements. We believe the present value of actuarially accrued liabilities in most of these multi- +employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to +most of these funds will increase over the next few years. A significant increase to those funding requirements could +adversely affect our financial condition, results of operations or cash flows. Despite the fact that the pension obligations +of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the +agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably, or +adjust their current views unfavorably, when determining their ratings on our debt securities. Any downgrading of our +debt ratings likely would adversely affect our cost of borrowing and access to capital. + +We also currently bear the investment risk of two multi-employer pension plans in which we participate. In addition, +we have been designated as the named fiduciary of these funds with sole investment authority of the assets of these +funds. If investment results fail to meet our expectations, we could be required to make additional contributions to fund a +portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of +operations or cash flows. + +FUEL + +We sell a significant amount of fuel in our 1,665 fuel centers, which could face increased regulation, including due +to climate change or other environmental concerns, and demand could be affected by concerns about the effect of +emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental +effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to pandemics and +other health crises, geopolitical conflicts and other matters that affect the cost and availability of fuel, and how our +customers will react to such factors, which could adversely affect our financial condition, results of operations or cash +flows. + +ECONOMIC CONDITIONS + +Our operating results could be materially affected by changes in overall economic conditions and other economic +factors that affect consumer confidence and spending, including discretionary spending. Future economic conditions +affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or +recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT, student loan +relief, or child care credits, the availability of credit, interest rates, inflation, disinflation or deflation, tax rates and other +matters could reduce consumer spending. Inflation could materially affect our operating results through increases to our +cost of goods, supply chain costs and labor costs. In addition, the economic factors listed above, or any other economic +factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and +other economic factors can increase our merchandise costs and operating, general and administrative expenses and +otherwise adversely affect our financial condition, results of operations or cash flows. Increased fuel prices also have an +effect on consumer spending and on our costs of producing and procuring products that we sell. A deterioration in +overall economic conditions, including the uncertainty caused by inflation rate volatility, could adversely affect our +business in many ways, including slowing sales growth, reducing overall sales and reducing gross margins. Geopolitical +and catastrophic events, such as wars and conflicts, civil unrest, acts of terrorism or other acts of violence, including +active shooter situations (which have occurred in the past at our locations), or the loss of merchandise as a result of +shrink or industry-wide theft and organized retail crime, or pandemics or other health crises, and other matters that +could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows. We +regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance +Corporation (“FDIC”) insurance limit and are therefore reliant on banks and other financial institutions to safeguard and +allow ready access to these assets. If banks or financial institutions enter receivership or become insolvent in the future +in response to financial conditions affecting the banking system and financial markets, our ability to access our existing +cash, cash equivalents and investments may be threatened. We are unable to predict how the global economy and +financial markets will perform. If the global economy and financial markets do not perform as we expect, it could +adversely affect our business, financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_122.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce859059ac33fb6f13cf05dc2b90a2a50f90f4ad --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,52 @@ + +18 +Our operating results could be adversely affected by any future disease outbreak, including pandemics, epidemics, +or similar widespread health concerns. We cannot predict with certainty the extent that our operations may be affected +by any effects of the foregoing on us or on our customers, suppliers, vendors, and other business partners, and each of +their financial conditions; however, any adverse effect on these parties could materially and adversely affect us. To the +extent that any health crisis affects the U.S. and global economy and our business, it may also heighten other risks +described in this section, including but not limited to those related to consumer behavior and expectations, competition, +implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor +availability and cost, litigation and operational risk as a result of regulatory requirements. + +LEGAL AND GOVERNMENT REGULATION + +We are subject to various laws, regulations, and administrative practices that affect our business, including laws and +regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti- +corruption, tax, accounting, and financial reporting or other matters. These and other rapidly changing laws, regulations, +policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory +agencies, create challenges for us, may alter the environment in which we do business and may increase the ongoing +costs of compliance, which could adversely affect our financial condition, results of operations and cash flows. If we are +unable to continue to meet these challenges and comply with all laws, regulations, policies and related interpretations, it +could negatively affect our reputation and our business results. Additionally, we are currently, and in the future may be, +subject to a number of inquiries, investigations, claims, proceeding, and requests for information from governmental +agencies or private parties, the adverse outcomes of which could harm our business. Failure to successfully manage these +new or pending regulatory and legal matters and resolve such matters without significant liability or damage to our +reputation may adversely affect our financial condition, results of operations and cash flows. Furthermore, if new or +pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also +materially affect our financial condition, results of operations or cash flows. + +In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”) +matters, including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste +production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of +matters that we are required to control, assess, and report and could negatively affect our reputation. Given our +commitment to our ESG strategy, we have established and publicly announced certain goals which we may refine or +even expand further in the future. The execution of this strategy to achieve these goals is subject to risks and +uncertainties, many of which may be outside of our control and prove to be more costly than we anticipate. These risks +and uncertainties include, but are not limited to, our ability to achieve our goals within the currently projected costs and +the expected timeframes; unforeseen operational and technological difficulties; the outcome of research efforts and +future technology developments; and the success of our collaborations with and reliance on third parties. Any failure, or +perceived failure, to achieve these goals or the setting or publication of certain targets could damage our reputation and +customer, investor and other stakeholder relationships, and may even result in regulatory enforcement action. Such +conditions could have an adverse effect on our business, financial condition, results of operations or cash flows. + +Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation +standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food, +drugs, and alcoholic beverages. We cannot predict future laws, regulations, interpretations, administrative orders, or +applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing +business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third +parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be +reformulated. These changes could result in additional record keeping, expanded documentation of the properties of +certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have +an adverse effect on our financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_123.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..93e9ee0d319713151770bc79012c150e52a040f6 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,48 @@ + +19 +WEATHER, NATURAL DISASTERS AND OTHER EVENTS + +A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that +are susceptible to hurricanes, tornadoes, floods, droughts, ice and snow storms and earthquakes. Weather conditions and +natural disasters have, and may again in the future, disrupt our operations at one or more of our facilities, interrupt the +delivery of products to our stores, substantially increase the cost of products, including supplies and materials and +substantially increase the cost of energy needed to operate our facilities or deliver products to our facilities. Moreover, +the effects of climate change, including those associated with extreme weather events, may affect our ability to procure +needed commodities at costs and in quantities that are optimal for us or at all. Adverse weather or natural disasters and +other matters that could reduce consumer spending, could materially affect our financial condition, results of operations +or cash flows. + +CLIMATE IMPACT + +The long-term effects of global climate change present both physical risks, such as extreme weather conditions or +rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and +unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities and +energy including utilities, which in turn may affect our ability to procure goods or services required for the operation of +our business at the quantities and levels we require. In addition, many of our operations and facilities are in locations that +may be affected by the physical risks of climate change, and we face the risk of losses incurred as a result of physical +damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by +such events. We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face +increased regulation and cost increases as a result of climate change or other environmental concerns. Transitioning to +alternative energy sources, such as renewable electricity or electric vehicles, and investments in new technologies, could +incur higher costs. Regulations limiting greenhouse gas emissions and energy inputs will also increase in coming years, +which may increase our costs associated with compliance, tracking, reporting, and sourcing. These events and their +effects could otherwise disrupt and adversely affect our operations and could have an adverse effect on our financial +condition, results of operations or cash flows. + +SUPPLY CHAIN + +Disruption in our global supply chain could negatively affect our business. The products we sell are sourced from a +wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find +qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner +could adversely affect our business. The loss or disruption of such supply arrangements for any reason, labor disputes, +loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, quality control +issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade +sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively +managed and remedied, have an adverse effect on our business, financial condition, results of operations or cash flows. + +ITEM 1B. UNRESOLVED STAFF COMMENTS. + +None. + + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_124.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8985e19caeda360a12b17e00adf19779d245fbb --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,55 @@ + +20 +ITEM 1C. CYBERSECURITY. + +RISK MANAGEMENT AND STRATEGY + +Securing Kroger’s business information, intellectual property, customer and employee data and technology systems +is essential for the continuity of our businesses, meeting applicable regulatory requirements and maintaining the trust of +our stakeholders. We have adopted enterprise cybersecurity risk mitigation and governance processes, which are set +forth in the Kroger Cybersecurity Risk Management program (“CRM”), the Kroger Third-Party Cybersecurity Risk +Management program (“TPCRM”), and the Kroger Cyber Incident Response Plan (“IR Plan”). Our approach is guided +by the principles of the CRM, which includes monitoring threats and vulnerabilities and assessing and monitoring related +controls, supporting the Corporate Information Security function, the Chief Information Security Officer (“CISO”) and +Chief Information Officer (“CIO”). Kroger’s cybersecurity policies, standards, processes, and practices are integrated +into our overarching risk management system in an effort to enhance our ability to safeguard our operations and +information, which includes quarterly cybersecurity reporting to the Board, delivered by senior leadership. + +Kroger Cyber Risk Management Program + +The CRM was developed in collaboration with third-party consultants and is aligned with the National Institute of +Standards and Technology (“NIST”), Risk Management Framework (“RMF”), Cybersecurity Framework (“CSF”) and +the International Organization for Standardization 27001 (“ISO 27001”). The program includes security and privacy, +risk-based controls, and incorporates lessons learned from cybersecurity incidents. Under Kroger’s CRM, cyber risks, +including cyber threats and cyber events/incidents, are assessed, treated, and monitored on a continuous basis. We +integrate lessons learned from incident response and cyber risk mitigation into our cyber risk management strategy, in an +effort to improve overall cybersecurity on an ongoing basis. Kroger's CRM program is spearheaded by specific +management positions, chosen for their expertise in the field as further discussed below. + +In line with cyber risk management best practices, we have collaborated with recognized third-party experts as +needed to align the CRM’s foundational processes, metrics, monitoring, and reporting with common frameworks such as +NIST and RMF. + +Third-Party Cyber Risk Management + +Recognizing the potential vulnerabilities posed by third-party relationships, Kroger has implemented a +comprehensive TPCRM program. The TPCRM program is designed to assess third-party cybersecurity risks by +employing third-party risk assessments, vendor tiering, and a dedicated team tasked with recommending holistic +improvements to strengthen Kroger’s cybersecurity posture, sourcing, and contracting processes. Kroger’s Information +Security Operations Center (“iSOC”) responds to known third-party incidents on a continuous basis. The iSOC is a part +of the Corporate Information Security (“CIS”) department and is responsible for detecting, responding to, and escalating +security incidents. We partner directly with business stakeholders and technology custodians to determine an appropriate +response to manage incident risk to minimize the effect to the business. This response process is a regular and critical +function of the iSOC and is defined in a separate appendix to the IR Plan. Any material risk identified from these +incidents is escalated and communicated using formal severity and impact criteria as defined in the IR Plan. + +Kroger Cyber Incident Response Plan + +The IR Plan documents the processes by which information security events are detected, identified, prioritized, and +analyzed. The Kroger iSOC, CISO, legal counsel, and corporate affairs stakeholders are then engaged depending on the +incident’s scope, business effect, and potential material risk. This cross-functional team is responsible for assessing an +appropriate response and mitigation pathway. Once security events are identified through the enterprise detection and +monitoring ecosystem, the IR Plan sets forth an incident prioritization/decision workflow to determine scope, business +effect, and potential material risk. This workflow is implemented through collaboration with the iSOC, CISO, legal +counsel, and corporate affairs stakeholders. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_125.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b5342cddc71cbb709372c661775b5bd31acec16 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,51 @@ + +21 +In addition to the processes outlined above, we have also implemented an information security training program for +employees that includes security awareness training related to cyber security risks, simulated phishing emails and regular +communication to the enterprise regarding cyber security risks. + +We experience cybersecurity threats and incidents from time to time. We are not aware of any material risks from +cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are +reasonably likely to materially affect us, including our business strategy, our financial condition, results of operations or +cash flows. There can be no assurance that cybersecurity threats will not have a material effect on us, including our +business strategy, our financial condition, results of operations or cash flows. Please see “Item 1A. Risk Factors” for +more information on our cybersecurity-related risks. + +GOVERNANCE + +Protection of our customers’ data is a fundamental priority for our Board and management team. Our risk +management team is integrated into our CIS function and is led by our CIO and CISO. The risk management team +reports to the CISO and has combined experience in information security, governance, and compliance, including +domains such as engineering, architecture, cybersecurity, and privacy. This team is responsible for defining the program, +cybersecurity governance, and gathering insights related to assessing, identifying, and managing cybersecurity threat +risks, their severity, and mitigations. + +Kroger’s CIO reports to the CEO and leads technology and digital capabilities for the Kroger Co., including the +overall cybersecurity strategy. Kroger’s CIO & Chief Digital Officer, has over 20 years of both leading and transforming +technology, digital growth, and e-commerce in the retail and food industry. Kroger’s interim CISO brings nearly 20 +years of experience developing and leading security and risk programs. His experience includes governance, information +security, and threat management. + +The Audit Committee of Kroger’s Board of Directors is charged with oversight of data privacy and cybersecurity +risks. Kroger’s CIO and CISO provide quarterly updates on cybersecurity risks and related mitigating actions to the +Audit Committee, meet with the full Board at least annually and inform the Audit Committee immediately if a +cybersecurity incident is deemed material. They report to the Audit Committee and the Board on compliance and +regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST +Cybersecurity Framework Scorecard. Additionally, the CIO and CISO discuss and present strategies to address +geopolitical threats that may affect operations as well as technological changes, such as AI and quantum computing. In +overseeing cybersecurity risks, the Audit Committee focuses on aggregated, thematic issues with a risk-based approach. +Oversight of cybersecurity risk incorporates strategy metrics, third-party assessments, and internal audit and controls. An +independent third party also regularly reports to the Audit Committee and the full Board on cybersecurity, and outside +counsel advises the Board on best practices for cybersecurity oversight by the Board, and the evolution of that oversight +over time. Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and +their effect. + +ITEM 2. PROPERTIES. + +As of February 3, 2024, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses +and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United +States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food +production equipment. The total cost of our owned assets and finance leases at February 3, 2024, was $56.7 billion while +the accumulated depreciation was $31.5 billion. + +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_126.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6ee60f2f3960943bf1f57d1eba702df7d584c8f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,42 @@ + +22 +We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in +leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with +options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased +property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include +escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent +expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the +lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. +Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For +additional information on lease obligations, see Note 9 to the Consolidated Financial Statements. + +ITEM 3. LEGAL PROCEEDINGS. + +Incorporated by reference herein is information regarding certain legal proceedings in which we are involved as set +forth under “Litigation” contained in Note 12 – “Commitments and Contingencies” in the notes to the Consolidated +Financial Statements in Item 8 of Part II of this Annual Report. + +ITEM 4. MINE SAFETY DISCLOSURES. + +Not applicable. + +PART II + +ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS +AND ISSUER PURCHASES OF EQUITY SECURITIES. + +Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 27, 2024, there +were 24,275 shareholders of record. + +During 2023, we paid two quarterly cash dividends of $0.26 per share and two quarterly cash dividends of $0.29 per +share. During 2022, we paid two quarterly cash dividends of $0.21 per share and two quarterly cash dividends of $0.26 +per share. On March 1, 2024, we paid a quarterly cash dividend of $0.29 per share. On March 14, 2024, we announced +that our Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on June 1, 2024, to +shareholders of record at the close of business on May 15, 2024. We currently expect to continue to pay comparable cash +dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including +approval by our Board. + +For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 +under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder +Matters.” + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_127.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..53684bea3020e855e9ff6c95c9a5ab27d49f6334 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,33 @@ + +23 +PERFORMANCE GRAPH + +Set forth below is a line graph comparing the five-year cumulative total shareholder return on our common shares, +based on the market price of the common shares and assuming reinvestment of dividends, with the cumulative total +return of companies in the Standard & Poor’s 500 Stock Index and a peer group composed of food and drug companies. + + + + + + Base INDEXED RETURNS + Period Years Ending +Company Name/Index 2018 2019 2020 2021 2022 2023 +The Kroger Co. 100 97.94 128.49 165.19 174.57 183.07 +S&P 500 Index 100 121.56 142.53 172.46 161.03 199.42 +Peer Group 100 120.67 148.43 175.27 169.86 197.90 + +Kroger’s fiscal year ends on the Saturday closest to January 31. + +Data supplied by Standard & Poor’s. + +The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an +express reference thereto. + +* Total assumes $100 invested on February 2, 2019, in The Kroger Co., S&P 500 Index, and the Peer Group, with +reinvestment of dividends. + +** The Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), +Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., +Walgreens Boots Alliance Inc. and Walmart Inc. + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_128.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6ee5259ffccd77f05b36bb0d996659191225697 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,44 @@ + +24 +The following table presents information on our purchases of our common shares during the fourth quarter of 2023: + +ISSUER PURCHASES OF EQUITY SECURITIES + + + Approximate Dollar + Value of Shares + Total Number of that May Yet Be + Shares Purchased Purchased Under + Total Number Average as Part of Publicly the Plans or + of Shares Price Paid Per Announced Plans Programs (4) +Period(1) Purchased (2) Share (2) or Programs (3) (in millions) +First period - four weeks +November 5, 2023 to December 2, 2023 7,093 $ 44.09 6,900 $ 1,000 +Second period - four weeks +December 3, 2023 to December 30, 2023 82,059 $ 44.75 64 ,200 $ 1,000 +Third period - five weeks +December 31, 2023 to February 3, 2024 96,000 $ 46.07 96,000 $ 1,000 +Total 185,152 $ 45.41 167,100 $ 1,000 + +(1) The fourth quarter of 2023 contained two 28-day periods and one 35-day period. +(2) Includes (i) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to +reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases +are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 +Repurchase Program”) and (ii) 18,052 shares that were surrendered to Kroger by participants under our long-term +incentive plans to pay for taxes on restricted stock awards. +(3) Represents shares repurchased under the 1999 Repurchase Program. +(4) On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares +via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to +comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2022 +Repurchase Program”). The amounts shown in this column reflect the amount remaining under the September 2022 +Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program +are dependent upon option exercise activity. The September 2022 Repurchase Program and the 1999 Repurchase +Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time. +No shares have been repurchased under the September 2022 authorization. During the third quarter of 2022, we +paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. + +ITEM 6. RESERVED. + +Not applicable. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_129.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..b43be1d58cdb89d344af6a0738d82f52766ce577 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,53 @@ + +25 +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS. + +The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be +read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set +forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our +Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part +II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K +for the year ended January 28, 2023, which provides additional information on comparisons of fiscal years 2022 and +2021. + +OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL +SHAREHOLDER RETURN + +Kroger’s proven value creation model is allowing us to deliver today and invest for the future. The foundation of our +value creation model is our omnichannel retail business, including fuel and health and wellness. By executing on our go- +to-market strategy built on the four pillars of Fresh, Our Brands, Personalization and Seamless, we are creating a +shopping experience that builds loyalty and grows sales. Our retail business generates traffic and data which accelerates +growth in our high operating margin alternative profit businesses, like Kroger Precision Marketing. In turn, the value +generated from these businesses enables us to reinvest back into our retail business. + +We are focused on enhancing our pillars and delivering an exceptional customer experience to accelerate this +flywheel effect. By expanding our store network and improving our digital capabilities, we expect to grow households +and increase sales. Kroger has evolved into a more diverse business, with a model that provides more ways than ever to +generate net earnings growth. + +This will be achieved by: + +• Growing identical sales without fuel. Our plan involves maximizing growth opportunities in our retail business +and is supported by continued strategic investments in our associates, greater value for our customers and our +seamless ecosystem to ensure we deliver a full, fresh and friendly experience for every customer, every time. +As more and more customers incorporate ecommerce into their permanent routines, we expect digital sales to +grow at a double-digit rate – a faster pace than other food at home sales – over time; and + +• Expanding operating margin through long-term initiatives in gross margin, growing alternative profit +businesses, and productivity and cost saving initiatives that are focused on simplifying processes and utilizing +technology to enhance the associate experience without affecting the customer experience. Together, these will +enable us to improve operating margin, while balancing strategic price investments for customers and wage and +benefit investments for associates. + +We expect to continue to generate strong free cash flow and are committed to being disciplined with capital +deployment in support of our value creation model and stated capital allocation priorities. Our first priority is to invest in +the business through attractive high return opportunities that drive long-term sustainable net earnings growth. We are +committed to maintaining our current investment grade debt rating and our net total debt to adjusted EBITDA ratio +target range of 2.30 to 2.50. We also expect to continue to grow our dividend over time and return excess cash to +shareholders via stock repurchases, subject to Board approval. During the third quarter of 2022, we paused our share +repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. + +We expect our value creation model will result in total shareholder return within our target range of 8% to 11% over +time, which does not contemplate the effect of the proposed merger with Albertsons. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_13.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..e311959013293b9bae5987d4b3dc06ac3ce4e602 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,30 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_130.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..959414352ce603b0ba1b988776c51678ae740f3c --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,55 @@ + +26 +2023 EXECUTIVE SUMMARY + +We achieved strong results in 2023, in line with our long-term growth model and built on three consecutive years of +growth, despite navigating a challenging operating environment. By maintaining our long-term commitment to lower +prices, through personalized promotions and rewards, we are increasing customer visits and growing loyal households +through the strength of our retail business, continuing our evolution into a more diverse business, and our value creation +model is providing us multiple ways to drive sustainable future growth. + +Our results provided another proof point of the strength and resilience of our value creation model, which supported +another year of strong free cash flow and adjusted net earnings per diluted share growth, excluding the 53rd week in +fiscal year 2023 (the “Extra Week”). This was the result of continued momentum across several margin expansion +initiatives, strong Our Brands performance, strong growth in alternative profit businesses, our ability to effectively +manage product cost through strong sourcing practices, lower supply chain costs and a lower year-over-year LIFO +charge. During the year, we continued to invest in wages and the associate experience as a way to support the delivery of +a full, fresh and friendly customer experience. In 2023, we increased associate wages resulting in an average hourly rate +of nearly $19, and a rate of nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the +last five years. + +The following table provides highlights of our financial performance: + +Financial Performance Data +($ in millions, except per share amounts) + + + + Fiscal Year + Percentage + 2023 Change 2022 +Sales $ 150,039 1.2 % $ 148,258 +Sales without fuel and the Extra Week $ 130,988 1.1 % $ 129,626 +Net earnings attributable to The Kroger Co. $ 2,164 (3.6)% $ 2,244 +Adjusted net earnings attributable to The Kroger Co. excluding the Extra Week $ 3,335 7.4 % $ 3,104 +Net earnings attributable to The Kroger Co. per diluted common share $ 2.96 (3.3)% $ 3.06 +Adjusted net earnings attributable to The Kroger Co. per diluted common share +excluding the Extra Week $ 4.56 7.8 % $ 4.23 +Operating profit $ 3,096 (25.0)% $ 4,126 +Adjusted FIFO operating profit excluding the Extra Week $ 4,799 (5.5)% $ 5,079 +Dividends paid $ 796 16.7 % $ 682 +Dividends paid per common share $ 1.10 17.0 % $ 0.94 +Identical sales excluding fuel(1) 0.9 % N/A 5.6 % +FIFO gross margin rate, excluding fuel and the Extra Week, bps increase +(decrease)(1) 0.18 N/A (0.09) +OG&A rate, excluding fuel, Adjusted Items and the Extra Week, bps increase +(decrease)(1) 0.21 N/A (0.19) +(Decrease)/increase in total debt, including obligations under finance leases +compared to prior fiscal year end $ (1,152) N/A $ 14 +Share repurchases $ 62 N/A $ 993 + +(1) Identical sales without fuel would have grown 2.3% in fiscal 2023 if not for the reduction in pharmacy sales from +the previously communicated termination of our agreement with Express Scripts effective December 31, 2022. In +fiscal 2023, the terminated agreement had a positive effect on the FIFO gross margin rate, excluding fuel and the +Extra Week, and a negative effect on the OG&A rate, excluding fuel, the Extra Week and the 2023 and 2022 +Adjusted Items, as defined below. The overall net effect on adjusted FIFO operating profit was slightly positive. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_131.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..863ca77dfb273be99c80a2b699d1411143a4fb82 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,50 @@ + +27 +OVERVIEW + +Notable items for 2023 are: + +Shareholder Return + +• Achieved net earnings attributable to The Kroger Co. per diluted common share of $2.96, which represents a +3.3% decrease compared to 2022. The 2023 results include losses per diluted common share of $1.60 related to +our opioid settlement charges. + +• Net earnings include $179 million, $144 million net of tax, due to the Extra Week. The Extra Week in 2023 +contributed $0.20 to our net earnings per diluted common share result for 2023. + +• Achieved adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the Extra +Week of $4.56, which represents an 8% increase compared to 2022. Including the Extra Week, adjusted net +earnings per diluted common share increased 13% compared to 2022. + +• Achieved operating profit of $3.1 billion, which represents a 25% decrease compared to 2022. The 2023 results +reflect charges of $1.5 billion related to our opioid settlement charges. + +• Achieved adjusted FIFO operating profit excluding the Extra Week of $4.8 billion, which represents a 6% +decrease compared to 2022. Including the Extra Week, adjusted FIFO operating profit decreased 2% compared +to 2022. + +• Generated cash flows from operations of $6.8 billion, which represents a 51% increase compared to 2022. + +• Returned $0.8 billion to shareholders through dividend payments. + +Other Financial Results + +• Identical sales, excluding fuel, increased 0.9%. Identical sales, excluding fuel, would have grown 2.3% in 2023 +if not for the reduction in pharmacy sales from our termination of our agreement with Express Scripts effective +December 31, 2022. This terminated agreement had no material effect on profitability. + +• Digital sales grew to $12 billion in annual sales. Digital sales include products ordered online and picked up at +our stores and our Delivery and Ship solutions. Excluding the Extra Week, digital sales increased 12%, which +was led by strength in our Delivery solutions, which grew by 25%. Delivery solutions growth was driven by our +Boost membership program and expansion of our Kroger Delivery network. Our Delivery solutions include +orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado and +orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through +our owned platforms that are dispatched using mail service or third-party courier. + +• Our LIFO charge for 2023 was $113 million, compared to $626 million in 2022. The decrease in LIFO charge +was due to lower product cost inflation year-over-year. + +• Alternative profit streams contributed $1.3 billion of operating profit in 2023. + +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_132.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1cbc61d70e47c92f8658ecccc45badd29377e4b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,49 @@ + +28 +Significant Events + +• During the second quarter of 2023, we recognized opioid settlement charges of $1.4 billion, $1.1 billion net of +tax, related to the nationwide opioid settlement framework to settle substantially all opioid lawsuits and claims +against Kroger. We have agreed to make settlement payments related to the nationwide settlement framework +of approximately $1.2 billion in equal installments over 11 years, and $177 million in equal installments over +six years. During the first quarter of 2023, we recognized opioid settlement charges of $62 million, $49 million +net of tax, related to all pending and future opioid litigation claims with the State of West Virginia, which are +payable over 10 years. For additional information about our opioid settlement charges in 2023, see Note 12 to +the Consolidated Financial Statements. + +• On September 8, 2023, Kroger and Albertsons announced they have entered a definitive agreement with C&S +Wholesale Grocers, LLC for the combined sale of 413 stores, eight distribution centers, two offices and five +private label brands for approximately $1.9 billion cash, in connection with the proposed merger, subject to +customary adjustments. The financial terms of this divestiture plan are in line with what we expected and allow +us to reaffirm the shareholder value creation opportunity the proposed merger creates. For additional +information about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements. + +OUR BUSINESS + +The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built +on the foundation of our food retail business, which includes the added convenience of our retail pharmacies and fuel +centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in +four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless. + +We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our +customers that generate alternative profit streams. These alternative profit streams would not exist without our core retail +business. + +Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our +stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that +produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include +procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail +operations, which represent 97% of our consolidated sales, is our only reportable segment. + +Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer +demographics. Our combination of assets include the following: + +Stores + +As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the +District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 +supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. We connect with customers through our +expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales +are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at +each of our supermarket locations when it is feasible and it is expected to be profitable. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_133.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..aee8839f6f3a6db27c643b776a8dc7f71187d3ef --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,60 @@ + +29 +Seamless Digital Ecosystem + +We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, +including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, +pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital +solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail +store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These +channels allow us to serve customers anything, anytime, and anywhere with zero compromise on selection, convenience, +and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are +also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. + +Merchandising and Manufacturing + +Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our +sales in 2023. We own 33 food production plants, primarily bakeries and dairies, which supply approximately 30% of +Our Brands units and 43% of the grocery category Our Brands units sold in our supermarkets; the remaining Our +Brands items are produced to our strict specifications by outside manufacturers. + +Our Data + +We are evolving into a more diverse business. The traffic and data generated by our retail business, including +pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households +annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card. +Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized +experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit +businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision +Marketing – provides best in class media capabilities for our consumer packaged goods partners and other industry +verticals. It is a key driver of our digital profitability and alternative profit. + +Proposed Merger with Albertsons + +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed +merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and +Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and +increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see Note +16 to the Consolidated Financial Statements. + +USE OF NON-GAAP FINANCIAL MEASURES + +The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with +generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including First-In, First-Out +(“FIFO”) gross margin, FIFO operating profit, adjusted FIFO operating profit, adjusted net earnings and adjusted net +earnings per diluted share because management believes these metrics are useful to investors and analysts. These non- +GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and +net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in +isolation or considered as a substitute for our financial results as reported in accordance with GAAP. + +We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less +merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out +(“LIFO”) charge. Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure +used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it +measures the merchandising and operational effectiveness of our go-to-market strategy. + +We calculate FIFO operating profit as operating profit excluding the LIFO charge. FIFO operating profit is an +important measure used by management, and management believes FIFO operating profit is a useful metric to investors +and analysts because it measures the operational effectiveness of our financial model. + +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_134.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..1693f6e202cffddd1cfb07f051b057afc39c0ad9 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,42 @@ + +30 +The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are +important measures used by management to compare the performance of core operating results between periods. We +believe adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit are useful +metrics to investors and analysts because they present more accurate year-over-year comparisons of our net earnings, net +earnings per diluted share and FIFO operating profit because adjusted items are not the result of our normal operations. +Net earnings for 2023 include $179 million, $144 million net of tax, due to the Extra Week. In addition, net earnings for +2023 include the following, which we define as the “2023 Adjusted Items:” + +• Charges to operating, general and administrative expenses (“OG&A”) of $316 million, $268 million net of tax, +for merger related costs and $1.5 billion, $1.2 billion net of tax, for opioid settlement charges (the “2023 +OG&A Adjusted Items”). + +• A gain in other income (expense) of $151 million, $116 million net of tax, for the unrealized gain on +investments (the “2023 Other Income (Expense) Adjusted Items”). + +Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:” + +• Charges to operating, general and administrative expenses (“OG&A”) of $25 million, $19 million net of tax, for +obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million +net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for +merger related costs, $85 million, $67 million net of tax, for opioid settlement charges and $164 million for +goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”). + +• Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on +investments (the “2022 Other Income (Expense) Adjusted Items”). + +Net earnings for 2021 include the following, which we define as the “2021 Adjusted Items:” + +• Charges to OG&A of $449 million, $344 million net of tax, for obligations related to withdrawal liabilities for a +certain multi-employer pension fund, $66 million, $50 million net of tax, for the revaluation of Home Chef +contingent consideration and $136 million, $104 million net of tax, for transformation costs (the “2021 OG&A +Adjusted Items”). + +• Losses in other income (expense) of $87 million, $68 million net of tax, related to company-sponsored pension +plan settlements and $821 million, $628 million net of tax, for the unrealized loss on investments (the “2021 +Other Income (Expense) Adjusted Items”). + +• A reduction to income tax expense of $47 million primarily due to the completion of income tax audit +examinations covering multiple years. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_135.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f0410575bb7cd16926e4396d83f61778d762173 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,58 @@ + +31 +The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings +attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common +share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2023, 2022 and +2021 Adjusted Items: + +Net Earnings per Diluted Share excluding the Adjusted Items +($ in millions, except per share amounts) + + + 2023 2022 2021 +Net earnings attributable to The Kroger Co. $ 2,164 $ 2,244 $ 1,655 + +(Income) expense adjustments +Adjustment for pension plan withdrawal liabilities(1)(2) — 19 344 +Adjustment for company-sponsored pension plan settlement charges(1)(3) — — 68 +Adjustment for (gain) loss on investments(1)(4) (116) 561 628 +Adjustment for Home Chef contingent consideration(1)(5) — 15 50 +Adjustment for transformation costs(1)(6) — — 104 +Adjustment for merger related costs(1)(7) 268 34 — +Adjustment for opioid settlement charges(1)(8) 1,163 67 — +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(1)(9) — 164 — +Adjustment for income tax audit examinations(1) — — (47) +Total Adjusted Items 1,315 860 1,147 + +Net earnings attributable to The Kroger Co. excluding the Adjusted Items $ 3,479 $ 3,104 $ 2,802 + +Extra Week adjustment(1)(10) (144) — — + +Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra +Week adjustment $ 3,335 $ 3,104 $ 2,802 + +Net earnings attributable to The Kroger Co. per diluted common share $ 2.96 $ 3.06 $ 2.17 + +(Income) expense adjustments +Adjustment for pension plan withdrawal liabilities(11) — 0.03 0.45 +Adjustment for company-sponsored pension plan settlement charges(11) — — 0.09 +Adjustment for (gain) loss on investments(11) (0.17) 0.76 0.83 +Adjustment for Home Chef contingent consideration(11) — 0.02 0.07 +Adjustment for transformation costs(11) — — 0.14 +Adjustment for merger related costs(11) 0.37 0.05 — +Adjustment for opioid settlement charges(11) 1.60 0.09 — +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(11) — 0.22 — +Adjustment for income tax audit examinations(11) — — (0.07) +Total Adjusted Items 1.80 1.17 1.51 + +Net earnings attributable to The Kroger Co. per diluted common share excluding the +Adjusted Items $ 4.76 $ 4.23 $ 3.68 + +Extra Week adjustment(11) (0.20) — — + +Net earnings attributable to The Kroger Co. per diluted common share excluding the +Adjusted Items and the Extra Week adjustment $ 4.56 $ 4.23 $ 3.68 + +Average numbers of common shares used in diluted calculation 725 727 754 + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_136.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e0bf7ba97763e9f259bdfa18e71e9b894cafdc6 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,33 @@ + +32 +Net Earnings per Diluted Share excluding the Adjusted Items (continued) +($ in millions, except per share amounts) + +(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax +rates. +(2) The pre-tax adjustment for pension plan withdrawal liabilities was $25 in 2022 and $449 in 2021. +(3) The pre-tax adjustment for company-sponsored pension plan settlement charges was $87. +(4) The pre-tax adjustment for (gain) loss on investments was $(151) in 2023, $728 in 2022 and $821 in 2021. +(5) The pre-tax adjustment for Home Chef contingent consideration was $20 in 2022 and $66 in 2021. +(6) The pre-tax adjustment for transformation costs was $136. Transformation costs primarily include costs related to +store and business closure costs and third-party professional consulting fees associated with business transformation +and cost saving initiatives. +(7) The pre-tax adjustment for merger related costs was $316 in 2023 and $44 in 2022. Merger related costs primarily +include third-party professional fees and credit facility fees associated with the proposed merger with Albertsons. +(8) The pre-tax adjustment for opioid settlement charges was $1,475 in 2023 and $85 in 2022. +(9) The pre-tax and after-tax adjustments for goodwill and fixed asset impairment charges related to Vitacost.com was +$164. +(10) The pre-tax Extra Week adjustment was $(179). +(11) The amount presented represents the net earnings per diluted common share effect of each adjustment. + +Key Performance Indicators + +We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales, +identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net +earnings per diluted share and return on invested capital. We use these financial metrics and related computations to +evaluate our operational effectiveness and our results of operations from period to period and to plan for near and long- +term operating and strategic decisions. These key performance indicators should not be reviewed in isolation or +considered as a substitute for our financial results as reported in accordance with GAAP. These measures, which are +described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance +indicators used by other companies. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_137.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..394fcd3dd49e532b96fcb64cdaf45f895d0fc868 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,59 @@ + +33 +RESULTS OF OPERATIONS + +Sales + +Total Sales +($ in millions) + + + 2023 Percentage Percentage + 2023 Adjusted(1) Change (2) 2022 Change (3) 2021 +Total sales to retail customers without +fuel(4) $ 132,284 $ 129,868 0.9 % $ 128,664 5.2 % $ 122,293 +Supermarket fuel sales 16,621 16,340 (12.3)% 18,632 26.9 % 14,678 +Other sales(5) 1,134 1,120 16.4 % 962 4.9 % 917 +Total sales $ 150,039 $ 147,328 (0.6)% $ 148,258 7.5 % $ 137,888 + +(1) The 2023 adjusted column represents the items presented in the 2023 column adjusted to remove the Extra Week. +(2) This column represents the percentage change in 2023 adjusted sales compared to 2022. +(3) This column represents the percentage change in 2022 compared to 2021. +(4) Digital sales are included in the “Total sales to retail customers without fuel” line above. Digital sales include +products ordered online and picked up at our stores and our Delivery and Ship solutions. Our Delivery solutions +include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado +and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through +our owned platforms that are dispatched using mail service or third-party courier. Digital sales increased +approximately 12% in 2023 excluding the Extra Week, increased approximately 4% in 2022 and decreased +approximately 3% in 2021. Digital sales growth for 2023 and 2022 was led by strength in our Delivery solutions, +which grew by 25% in 2023 excluding the Extra Week and 25% in 2022. Delivery solutions growth was driven by +our Boost membership program and expansion of our Kroger Delivery network. +(5) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media +revenue. The increase in 2023, compared to 2022, and the increase in 2022, compared to 2021, is primarily due to +an increase in data analytic services and third-party media revenue. + +Total 2023 adjusted sales represent total sales for 2023 excluding the Extra Week. Total 2023 adjusted sales +decreased in 2023, compared to 2022, by 0.6%. The decrease was primarily due to the decrease in supermarket fuel +sales, partially offset by the increase in total sales to retail customers without fuel. Total sales, excluding fuel, adjusted +for the Extra Week, increased 1.1% in 2023, compared to 2022, which was primarily due to our identical sales increase, +excluding fuel, of 0.9%. Identical sales, excluding fuel, in 2023, compared to 2022, increased primarily due to an +increase in the number of loyal households shopping with us and an increase in basket value due to retail inflation, +partially offset by a reduction in the number of items in basket and the termination of our agreement with Express +Scripts effective December 31, 2022. Identical sales, excluding fuel, would have grown 2.3% in 2023 if not for the +approximately $1.8 billion reduction in pharmacy sales from the termination of our agreement with Express Scripts +effective December 31, 2022. Total adjusted fuel sales decreased 12.3% in 2023, compared to 2022, primarily due to a +decrease in the average retail fuel price of 11.1% and a decrease in fuel gallons sold of 1.5%. The decrease in the +average retail fuel price was caused by a decrease in the product cost of fuel. + +Total sales increased in 2022, compared to 2021, by 7.5%. The increase was primarily due to increases in +supermarket fuel sales and total sales to retail customers without fuel. Total sales, excluding fuel, increased 5.2% in +2022, compared to 2021, which was primarily due to our identical sales increase, excluding fuel, of 5.6%, partially offset +by discontinued patient therapies at Kroger Specialty Pharmacy. Identical sales, excluding fuel, for 2022, compared to +2021, increased primarily due to an increase in the number of households shopping with us and an increase in basket +value due to retail inflation, partially offset by a reduction in the number of items in basket and the termination of our +agreement with Express Scripts. Identical sales without fuel would have grown 5.8% in 2022 if not for the reduction in +pharmacy sales from our termination of our agreement with Express Scripts effective December 31, 2022. Total +supermarket fuel sales increased 26.9% in 2022, compared to 2021, primarily due to an increase in the average retail fuel +price of 28.5%, partially offset by a decrease in fuel gallons sold of 1.2%, which was less than the national average +decline. The increase in the average retail fuel price was caused by an increase in the product cost of fuel. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_138.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e51ae00002ed23e1a9692a306411e047a53b913 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,55 @@ + +34 +We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at +identical supermarket locations, Kroger Specialty Pharmacy businesses and Delivery and Ship solutions. We define a +supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define +Kroger Specialty Pharmacy businesses as identical when physical locations have been in operation continuously for five +full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of +transfer or termination. We define Kroger Delivery identical sales powered by Ocado based on geography. We include +Kroger Delivery sales powered by Ocado as identical if the delivery occurs in an existing Kroger supermarket +geography. If the Kroger Delivery sales powered by Ocado occur in a new geography, these sales are included as +identical when deliveries have occurred to the new geography for five full quarters. Although identical sales is a +relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by +our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It +is important to understand the methods used by other companies to calculate identical sales before comparing our +identical sales to those of other such companies. Our identical sales, excluding fuel, results are summarized in the +following table. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage +changes for 2023 and 2022. + +Identical Sales +($ in millions) + + + 2023 2022(1) +Excluding fuel $ 131,748 $ 130,562 +Excluding fuel 0.9 % 5.6 % + +(1) Identical sales, excluding fuel, for 2022 were adjusted to a comparable 53 week basis by including week 1 of fiscal +2023 in our 2022 identical sales, excluding fuel, base. However, for the purpose of determining the percentage +change in identical sales, excluding fuel, from 2021 to 2022, 2022 identical sales, excluding fuel, were not adjusted +to include the sales from week 1 of 2023. + +Gross Margin, LIFO and FIFO Gross Margin + +We define gross margin as sales minus merchandise costs, including advertising, warehousing, and transportation. +Rent expense, depreciation and amortization expense, and interest expense are not included in gross margin. + +Our gross margin rates, as a percentage of sales, were 22.24% in 2023 and 21.43% in 2022. This increase in rate +was achieved while also investing in price to maintain a competitive price position and deliver greater value for our +customers. The increase in rate in 2023, compared to 2022, resulted primarily from a decreased LIFO charge, an increase +in our fuel gross margin, strong Our Brands performance, our ability to effectively manage product cost through strong +sourcing practices, lower transportation costs, as a percentage of sales, and the effect of our terminated agreement with +Express Scripts, partially offset by higher shrink, as a percentage of sales, and increased promotional price investment. + +Our LIFO charge was $113 million in 2023 and $626 million in 2022. The decrease in our LIFO charge was +attributable to lower product cost inflation for 2023 compared to 2022. + +Our FIFO gross margin rate, which excludes the LIFO charge, was 22.31% in 2023, compared to 21.86% in 2022. +Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of +fuel sales compared to non-fuel sales. Excluding the effect of fuel and the Extra Week, our FIFO gross margin rate +increased 18 basis points in 2023, compared to 2022. This increase in rate was achieved while also investing in price to +maintain a competitive price position and deliver greater value for our customers. This increase resulted primarily from +strong Our Brands performance, our ability to effectively manage product cost through strong sourcing practices, lower +transportation costs, as a percentage of sales, and the effect of our terminated agreement with Express Scripts, partially +offset by increased promotional price investment and higher shrink, as a percentage of sales. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_139.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..aaf4f07f426ff687b11fd93b7f677e7d5421b06a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,49 @@ + +35 +Operating, General and Administrative Expenses + +OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan +costs, utilities, and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not +included in OG&A. + +OG&A expenses, as a percentage of sales, were 17.50% in 2023 and 16.09% in 2022. The increase in 2023, +compared to 2022, resulted primarily from planned investments in associates, costs related to strategic investments that +are expected to drive future growth and the effect of our terminated agreement with Express Scripts and the 2023 OG&A +Adjusted Items, partially offset by the 2022 OG&A Adjusted Items, broad-based cost savings initiatives that drive +administrative efficiencies, store productivity and sourcing cost reductions and lower incentive plan costs. + +Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of +sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the Extra Week, the 2023 OG&A Adjusted +Items, the 2022 OG&A Adjusted Items, our OG&A rate increased 21 basis points in 2023, compared to 2022. This +increase resulted primarily from planned investments in associates, costs related to strategic investments that are +expected to drive future growth and the effect of our terminated agreement with Express Scripts, partially offset by +broad-based cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions +and lower incentive plan costs. + +Rent Expense + +Rent expense remained relatively consistent, as a percentage of sales, for 2023 compared to 2022. + +Depreciation and Amortization Expense + +Depreciation and amortization expense increased, as a percentage of sales, in 2023, compared to 2022, primarily due +to depreciation of equipment recorded under finance leases related to our Kroger Delivery customer fulfillment center +location openings and additional depreciation associated with higher capital investments, partially offset by the Extra +Week. + +Operating Profit and FIFO Operating Profit + +Operating profit was $3.1 billion, or 2.06% of sales, for 2023, compared to $4.1 billion, or 2.78% of sales, for 2022. +Operating profit, as a percentage of sales, decreased 72 basis points in 2023, compared to 2022, due to increased OG&A +and depreciation and amortization expenses, as a percentage of sales, and a decrease in fuel operating profit, partially +offset by a higher FIFO gross margin rate, a decreased LIFO charge and the Extra Week. + +FIFO operating profit was $3.2 billion, or 2.14% of sales, for 2023, compared to $4.8 billion, or 3.21% of sales, for +2022. FIFO operating profit, as a percentage of sales, excluding the 2023 and 2022 Adjusted Items and the Extra Week, +decreased 15 basis points in 2023, compared to 2022, due to increased OG&A and depreciation and amortization +expenses, as a percentage of sales and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin +rate. + +Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are +discussed earlier in this section. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_14.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dc961c272b10b6ee60b24a7fcb887bfae75a53d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,85 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_140.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..8363d055e773f04fb38996f4f0bad80edaa6a5c5 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,51 @@ + +36 +The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO +operating profit, excluding the 2023 and 2022 Adjusted Items: + +Operating Profit excluding the Adjusted Items +($ in millions) + + + 2023 2022 +Operating profit $ 3,096 $ 4,126 +LIFO charge 113 626 + +FIFO Operating profit 3,209 4,752 + +Adjustment for pension plan withdrawal liabilities — 25 +Adjustment for Home Chef contingent consideration — 20 +Adjustment for merger related costs(1) 316 44 +Adjustment for opioid settlement charges(2) 1,475 85 +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com — 164 +Other (14) (11) + +2023 and 2022 Adjusted items 1,777 327 + +Adjusted FIFO operating profit excluding the adjusted items above $ 4,986 $ 5,079 + +Extra Week adjustment (187) — + +Adjusted FIFO operating profit excluding the adjusted items above and the Extra Week $ 4,799 $ 5,079 + +(1) Merger related costs primarily include third-party professional fees and credit facility fees associated with the +proposed merger with Albertsons. +(2) Opioid settlement charges include settlements with the nationwide opioid settlement framework and the States of +West Virginia and New Mexico. + +Interest Expense + +Interest expense totaled $441 million in 2023 and $535 million in 2022. The decrease in interest expense in 2023, +compared to 2022, was primarily due to decreased average total outstanding debt throughout 2023, compared to 2022, +including both the current and long-term portions of obligations under finance leases and increased interest income +earned on our cash and temporary cash investments due to rising interest rates and higher cash and temporary cash +investment balances throughout 2023, compared to 2022, partially offset by the Extra Week. + +Income Taxes + +Our effective income tax rate was 23.5% in 2023 and 22.5% in 2022. The 2023 tax rate differed from the federal +statutory rate due to the effect of state income taxes and non-deductible portion of opioid settlement charges, partially +offset by the benefit from share-based payments and the utilization of tax credits. The 2022 tax rate differed from the +federal statutory rate due to the effect of state income taxes and non-deductible goodwill impairment charges related to +Vitacost.com, partially offset by the benefits from share-based payments and the utilization of tax credits. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_141.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8b01a02c3ca965249113f439d27a16b415a8eaa --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,33 @@ + +37 +Net Earnings and Net Earnings Per Diluted Share + +Our net earnings are based on the factors discussed in the Results of Operations section. + +Net earnings of $2.96 per diluted share for 2023 represented a decrease of 3.3% compared to net earnings of $3.06 +per diluted share for 2022. Excluding the 2023 and 2022 Adjusted Items and the Extra Week, adjusted net earnings of +$4.56 per diluted share for 2023 represented an increase of 7.8% compared to adjusted net earnings of $4.23 per diluted +share for 2022. The increase in adjusted net earnings per diluted share resulted primarily from a decreased LIFO charge +and lower interest expense, partially offset by decreased fuel earnings, higher income tax expense and decreased FIFO +operating profit, excluding fuel. + +RETURN ON INVESTED CAPITAL + +We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four +quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain +items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S. +GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of +our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus +(i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages and +(iv) the average other current liabilities, excluding accrued income taxes. Averages are calculated for ROIC by adding +the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and +dividing by two. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or +considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure +used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to +investors and analysts because it measures how effectively we are deploying our assets. + +Although ROIC is a relatively standard financial term, numerous methods exist for calculating a company’s ROIC. +As a result, the method used by our management to calculate ROIC may differ from methods other companies use to +calculate their ROIC. We urge you to understand the methods used by other companies to calculate their ROIC before +comparing our ROIC to that of such other companies. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_142.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c2614aa08fd271d1a2d879c698f170ae2890de9 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,39 @@ + +38 +The following table provides a calculation of ROIC for 2023 and 2022 on a 52 week basis ($ in millions): + + + Fiscal Year Ended + February 3, January 28, + 2024 2023 +Return on Invested Capital +Numerator +Operating profit on a 53 week basis in fiscal year 2023 $ 3,096 $ 4,126 +Extra Week operating profit adjustment (187) — +LIFO charge 113 626 +Depreciation and amortization 3,125 2,965 +Rent on a 53 week basis in fiscal year 2023 891 839 +Extra Week rent adjustment (17) — +Adjustment for Home Chef contingent consideration — 20 +Adjustment for pension plan withdrawal liabilities — 25 +Adjustment for goodwill and fixed asset impairment charges related to +Vitacost.com — 164 +Adjustment for merger related costs 316 44 +Adjustment for opioid settlement charges 1,475 85 +Adjusted ROIC operating profit $ 8,812 $ 8,894 + +Denominator +Average total assets $ 50,064 $ 49,355 +Average taxes receivable(1) (197) (137) +Average LIFO reserve 2,253 1,883 +Average accumulated depreciation and amortization(2) 30,573 27,843 +Average accounts payable (10,280) (10,016) +Average accrued salaries and wages (1,535) (1,741) +Average other current liabilities (3,414) (3,435) +Average invested capital $ 67,464 $ 63,752 +Return on Invested Capital 13.06 % 13.95 % + +(1) Taxes receivable were $163 as of February 3, 2024, $231 as of January 28, 2023 and $42 as of January 29, 2022. +(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and +amortization for definite-lived intangible assets. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_143.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..7e3a8a2105828e92ada2551e7aea8db0e3029738 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,50 @@ + +39 +CRITICAL ACCOUNTING ESTIMATES + +We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating +results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting +policies are summarized in Note 1 to the Consolidated Financial Statements. + +The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions +that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets +and liabilities. We base our estimates on historical experience and other factors we believe to be reasonable under the +circumstances, the results of which form the basis for making judgments about the carrying values of assets and +liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. + +We believe the following accounting estimates are the most critical in the preparation of our financial statements +because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently +uncertain. + +Impairments of Long-Lived Assets + +We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain +triggering events have occurred. These events include current period losses combined with a history of losses or a +projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, +we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow +information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify +impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair +value. Fair value is determined based on market values or discounted future cash flows. We record impairment when the +carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust the +value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar +assets and current economic conditions. We recognize impairment for the excess of the carrying value over the estimated +fair market value, reduced by estimated direct costs of disposal. We recorded asset impairments in the normal course of +business totaling $69 million in 2023 and $68 million in 2022. We record costs to reduce the carrying value of long-lived +assets in the Consolidated Statements of Operations as OG&A expense. + +The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our +cash flow projections look several years into the future and include assumptions on variables such as inflation, the +economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived +assets for impairment at a different level, could produce significantly different results. + +Business Combinations + +We account for business combinations using the acquisition method of accounting. All the assets acquired, liabilities +assumed and amounts attributable to noncontrolling interests are recorded at their respective fair values at the date of +acquisition once we obtain control of an entity. The determination of fair values of identifiable assets and liabilities +involves estimates and the use of valuation techniques when market value is not readily available. We use various +techniques to determine fair value in such instances, including the income approach. Significant estimates used in +determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates, discount +rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as +goodwill. See Note 2 for further information about goodwill. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_144.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..351a122a72213cbb6d2da9c7da27684e0e3fb028 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,57 @@ + +40 +Goodwill + +Our goodwill totaled $2.9 billion as of February 3, 2024. We review goodwill for impairment in the fourth quarter +of each year and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions +and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is +determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the +carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows +on management’s knowledge of the current operating environment and expectations for the future. We recognize +goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount +of goodwill allocated to the reporting unit. + +In 2022, we recorded a goodwill impairment charge for Vitacost.com totaling $160 million. The talent and +capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and +growing our digital business to more than $10 billion in annual sales. As our digital strategy has evolved, our primary +focus looking forward will be to effectively utilize our Pickup and Delivery capabilities. This reprioritization resulted in +reduced long-term profitability expectations and a decline in the market value for one underlying channel of business +and led to the impairment charge. Vitacost.com will continue to operate as an online platform providing great value +natural, organic, and eco-friendly products for customers. + +The annual evaluation of goodwill performed in 2023, 2022 and 2021 did not result in impairment for any of our +reporting units other than Vitacost.com described above. Based on current and future expected cash flows, we believe +additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would +not indicate a potential for impairment of our goodwill balance. + +The 2023 fair value of our Kroger Specialty Pharmacy (“KSP”) reporting unit was estimated using multiple +valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable +mergers and acquisition model (market approaches), with each method weighted in the calculation. The income +approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions +and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is +utilized to derive estimated fair values based on selected market multiples. Our KSP reporting unit has a goodwill +balance of $243 million. + +For additional information relating to our results of the goodwill impairment reviews performed during 2023, 2022 +and 2021, see Note 2 to the Consolidated Financial Statements. + +The impairment review requires the extensive use of management judgment and financial estimates. Application of +alternative estimates and assumptions could produce significantly different results. The cash flow projections embedded +in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the +market, the economy, market competition and our ability to successfully integrate recently acquired businesses. + +Multi-Employer Pension Plans + +We contribute to various multi-employer pension plans based on obligations arising from collective bargaining +agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to +contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal +number by employers and unions. The trustees typically are responsible for determining the level of benefits to be +provided to participants as well as for such matters as the investment of the assets and the administration of the plans. + +We recognize expense in connection with these plans as contributions are funded or when commitments are +probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $635 +million in 2023, $620 million in 2022 and $1.1 billion in 2021. The decrease in 2023 and 2022, compared to 2021 is due +to the contractual payments we made in 2021 related to our commitments established for the restructuring of certain +multi-employer pension plan agreements. + +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_145.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0f869100f5bd1f5143ca3797670f7b576908175 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,54 @@ + +41 +We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it +relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an +opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the +restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and +become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do +not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically +considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW +Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have +sole investment authority over these assets. Significant effects of these restructuring agreements recorded in our +Consolidated Financial Statements are: + +• In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal +liabilities for certain multi-employer pension funds. + +• In 2021, we incurred a $449 million charge, $344 million net of tax, for obligations related to withdrawal +liabilities for a certain multi-employer pension fund. + +As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could +incur withdrawal liabilities for certain funds. + +Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities +in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our +contributions to most of these funds will increase over the next few years. We have attempted to estimate the amount by +which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2023. Because we are +only one of a number of employers contributing to these plans, we also have attempted to estimate the ratio of our +contributions to the total of all contributions to these plans in a year as a way of assessing our “share” of the +underfunding. Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer. + +As of December 31, 2023, we estimate our share of the underfunding of multi-employer pension plans to which we +contribute was approximately $2.5 billion, $1.9 billion net of tax, which remained consistent with the estimated amount +of underfunding as of December 31, 2022. Our estimate is based on the most current information available to us +including actuarial evaluations and other data (that include the estimates of others), and such information may be +outdated or otherwise unreliable. + +We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability +of ours. Rather, we believe the underfunding is likely to have important consequences. In the event we were to exit +certain markets or otherwise cease making contributions to these plans, we could trigger a substantial withdrawal +liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be +reasonably estimated, in accordance with GAAP. + +The amount of underfunding described above is an estimate and could change based on contract negotiations, +returns on the assets held in the multi-employer pension plans, benefit payments or future restructuring agreements. The +amount could decline, and our future expense would be favorably affected, if the values of the assets held in the trust +significantly increase or if further changes occur through collective bargaining, trustee action or favorable legislation. On +the other hand, our share of the underfunding could increase, and our future expense could be adversely affected if the +asset values decline, if employers currently contributing to these funds cease participation or if changes occur through +collective bargaining, trustee action or adverse legislation. We continue to evaluate our potential exposure to under- +funded multi-employer pension plans. Although these liabilities are not a direct obligation or liability of ours, any +commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an +estimate can be made. + +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_146.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec15a08eec7d7bd040f12f9f94967a1b55682da0 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,54 @@ + +42 +The American Rescue Plan Act ("ARP Act"), which was signed into law on March 11, 2021, established a special +financial assistance program for financially troubled multi-employer pension plans. Under the ARP Act, eligible multi- +employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty +Corporation to pay pension benefits through the plan year ending 2051. At the end of 2023, we expect certain multi- +employer pension plans in which we participate, for which our estimated share of underfunding is approximately $1.1 +billion, $850 million net of tax, to apply for funding in 2024, which may reduce a portion of our share of unfunded +multi-employer pension plan liabilities. + +See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these +multi-employer pension plans. + +NEW ACCOUNTING STANDARDS + +Refer to Note 17 to the Consolidated Financial Statements for recently issued accounting standards not yet adopted +as of February 3, 2024. + +LIQUIDITY AND CAPITAL RESOURCES + +Cash Flow Information + +The following table summarizes our net increase (decrease) in cash and temporary cash investments for 2023 and +2022: + + + Fiscal Year + + 2023 2022 +Net cash provided by (used in) +Operating activities $ 6,788 $ 4,498 +Investing activities (3,750) (3,015) +Financing activities (2,170) (2,289) +Net increase (decrease) in cash and temporary cash investments $ 868 $ (806) + +Net cash provided by operating activities + +We generated $6.8 billion of cash from operations in 2023, compared to $4.5 billion in 2022. Net earnings including +noncontrolling interests, adjusted for non-cash items, generated approximately $6.0 billion of operating cash flow in +2023 compared to $7.7 billion in 2022. The change in operating assets and liabilities, including working capital, was +$808 million in 2023 compared to $(3.2) billion in 2022. The change in operating assets and liabilities, including +working capital, was primarily due to the following: + +• Cash flows for FIFO inventory were more favorable for 2023, compared to 2022, primarily due to a smaller +effect of inflation in the current year on inventory balances and maintaining inventory at optimal levels through +improved inventory management planning; + +• An increase in long-term liabilities at the end of 2023, compared to the end of 2022, primarily due to an +increase in the noncurrent portion of our accrued opioid settlement charges; + +• Cash flows for accounts payable were more favorable in 2023, compared to 2022, due to increased accounts +payable at the end of 2023, compared to the end of 2022, primarily due to timing of payments and +management’s focus on working capital improvements; + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_147.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a8ae0b32510314428bfd5e028dec05a786d887a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,55 @@ + +43 +• A decrease in income taxes receivable at the end of 2023, compared to the end of 2022, primarily due to +applying our overpayment in 2022 to our estimated tax payments for 2023; and + +• Cash flows for accounts receivable were more favorable in 2023, compared to 2022, due to decreased pharmacy +receivables at the end of 2023, compared to the end of 2022, primarily due to timing of cash receipts and the +termination of our agreement with Express Scripts. + +Net cash used by investing activities + +Investing activities used cash of $3.8 billion in 2023, compared to $3.0 billion in 2022. The amount of cash used by +investing activities increased in 2023, compared to 2022, primarily due to increased payments for property and +equipment in 2023. + +Net cash used by financing activities + +We used $2.2 billion of cash for financing activities in 2023, compared to $2.3 billion in 2022. The amount of cash +used for financing activities decreased in 2023, compared to 2022, primarily due to decreased treasury stock purchases, +partially offset by increased payments on long-term debt including obligations under finance leases. + +Capital Investments + +Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased +facilities, totaled $3.6 billion in 2023 and $3.3 billion in 2022. Capital investments for the purchase of leased facilities +totaled $21 million in 2022. We did not purchase any leased facilities in 2023. Our capital priorities align directly with +our value creation model and our target to consistently grow net earnings. Our capital program includes initiatives to +enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through +technology developments. Capital investments increased in 2023, compared to 2022, due to increasing our store capital +investments compared to prior years. These investments are expected to drive sales growth and improve operating +efficiency by removing cost and waste from our business. + +The table below shows our supermarket storing activity and our total supermarket square footage for 2023, 2022 and +2021: + +Supermarket Storing Activity + + + 2023 2022 2021 +Beginning of year 2,719 2,726 2,742 +Opened 5 3 4 +Opened (relocation) 2 1 4 +Closed (operational) (1) (10) (20) +Closed (relocation) (3) (1) (4) +End of year 2,722 2,719 2,726 + +Total supermarket square footage (in millions) 180 179 179 + +Debt Management + +Total debt, including both the current and long-term portions of obligations under finance leases, decreased $1.2 +billion to $12.2 billion as of year-end 2023 compared to 2022. This decrease resulted primarily from the payment of +$600 million of senior notes bearing an interest rate of 3.85% and the payment of $500 million of senior notes bearing an +interest rate of 4.00%. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_148.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9eb63aeae4968f201ad9537c5f23aa6d06e5425 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,46 @@ + +44 +Common Share Repurchase Programs + +We maintain share repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as +amended (the “Exchange Act”) and allow for the orderly repurchase of our common shares, from time to time. The +share repurchase programs do not have an expiration date but may be suspended or terminated by our Board of Directors +at any time. We made open market purchases of our common shares totaling $821 million in 2022. During the third +quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the proposed merger with +Albertsons. + +In addition, we also repurchase common shares under a program announced on December 6, 1999 to repurchase +common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which +repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith +(“1999 Repurchase Program”). This program is solely funded by proceeds from stock option exercises, and the tax +benefit from these exercises. We repurchased approximately $62 million in 2023 and $172 million in 2022 of our +common shares under the 1999 Repurchase Program. + +On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares +via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply +with Rule 10b5-1 under the Exchange Act (the “September 2022 Repurchase Program”). No shares have been +repurchased under the September 2022 authorization. During the third quarter of 2022, we paused our share repurchase +program to prioritize de-leveraging following the proposed merger with Albertsons. As of February 3, 2024, there was +$1.0 billion remaining under the September 2022 Repurchase Program. + +Dividends + +The following table provides dividend information for 2023 and 2022 ($ in millions, except per share amounts): + + + 2023 2022 +Cash dividends paid $ 796 $ 682 +Cash dividends paid per common share $ 1.10 $ 0.94 + +Liquidity Needs + +We held cash and temporary cash investments of $1.9 billion, as of the end of 2023, which reflects our elevated +operating performance over the last few years and paused share repurchase program. We actively manage our cash and +temporary cash investments in order to internally fund operating activities, support and invest in our core businesses, +make scheduled interest and principal payments on our borrowings and return cash to shareholders through cash +dividend payments and share repurchases. Our current levels of cash, borrowing capacity and balance sheet leverage +provide us with the operational flexibility to adjust to changes in economic and market conditions. We remain +committed to our dividend, and growing our dividend over time, subject to board approval, as well as share repurchase +programs and we will evaluate the optimal use of any excess free cash flow, consistent with our capital allocation +strategy. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_149.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0623f227f22d5cccd1d3051b835c5059c113f3a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,58 @@ + +45 +The table below summarizes our short-term and long-term material cash requirements, based on year of maturity or +settlement, as of February 3, 2024 (in millions of dollars): + + + 2024 2025 2026 2027 2028 Thereafter Total +Contractual Obligations(1)(2) +Long-term debt(3) $ 25 $ 92 $ 1,305 $ 611 $ 642 $ 7,512 $ 10,187 +Interest on long-term debt(4) 450 446 418 387 375 4,163 6,239 +Finance lease obligations 243 240 240 242 238 1,359 2,562 +Operating lease obligations 961 898 838 784 722 5,738 9,941 +Self-insurance liability(5) 281 159 108 68 40 105 761 +Construction commitments(6) 1,374 — — — — — 1,374 +Opioid settlement +commitments(7) 296 154 143 143 143 568 1,447 +Purchase obligations(8) 827 391 360 307 267 1,752 3,904 +Total $ 4,457 $ 2,380 $ 3,412 $ 2,542 $ 2,427 $ 21,197 $ 36,415 + +(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which +totaled approximately $65 million in 2023. For additional information about these obligations, see Note 14 to the +Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension +plans, which totaled $635 million in 2023. For additional information about these multi-employer pension plans, see +Note 15 to the Consolidated Financial Statements. +(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a +reasonable estimate of the timing of future tax settlements cannot be determined. +(3) As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our credit facility. +(4) Amounts include contractual interest payments using the interest rate as of February 3, 2024 and stated fixed and +swapped interest rates, if applicable, for all other debt instruments. +(5) The amounts included for self-insurance liability related to workers’ compensation claims have been stated on a +present value basis. +(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected +in “Accounts payable” in our Consolidated Balance Sheets. +(7) Amounts include scheduled opioid settlement commitments related to the nationwide opioid settlement framework +and the State of West Virginia. For additional information about our opioid settlement charges, see Note 12 to the +Consolidated Financial Statements. +(8) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of +business, such as several contracts to purchase raw materials utilized in our food production plants and several +contracts to purchase energy to be used in our stores and food production plants. Our obligations also include +management fees for facilities operated by third parties and outside service contracts. Any upfront vendor +allowances or incentives associated with outstanding purchase commitments are recorded as either current or long- +term liabilities in our Consolidated Balance Sheets. We included our future commitments for customer fulfillment +centers for which we have placed an order as of February 3, 2024. We did not include our commitments associated +with additional customer fulfillment centers that have not yet been ordered. We expect our future commitments for +customer fulfillment centers will continue to grow as we place orders for additional customer fulfillment centers. + +We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand +as of February 3, 2024, cash flows from our operating activities and other sources of liquidity, including borrowings +under our commercial paper program and bank credit facility. Our short-term and long-term liquidity needs include +anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments +and scheduled principal payments of debt and commercial paper, servicing our lease obligations, self-insurance +liabilities, capital investments, scheduled opioid settlement payments and other purchase obligations. We may also +require additional capital in the future to fund organic growth opportunities, additional customer fulfillment centers, joint +ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In +addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and +because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants +to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_15.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cf96fa592a026eb5c9ddb68d3b16d60e012776a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,31 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_150.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f92707fc6bd3d5187371a74b0ba5f55b4d55060 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,56 @@ + +46 +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. We expect to +meet our liquidity needs for the proposed merger with cash and temporary cash investments on hand as of the merger +closing date, cash flows from our operating activities and other sources of liquidity, including borrowings under our +commercial paper program, senior notes issuances, bank credit facility and other sources of financing. In connection +with the proposed merger, we entered into a commitment letter for a bridge term loan facility and executed a term loan +credit agreement. For additional information about the proposed merger with Albertsons, see Note 16 to the +Consolidated Financial Statements. + +For additional information about our debt activity in 2023, see Note 5 to the Consolidated Financial Statements. + +Factors Affecting Liquidity + +We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At +February 3, 2024, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit +facility and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to +borrow under our current commercial paper program could be adversely affected for a period of time and increase our +interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds +under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline, +we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500 +million on a daily basis. Factors that could affect our credit rating include changes in our operating performance and +financial position, the state of the economy, conditions in the food retail industry and changes in our business model. +Further information on the risks and uncertainties that can affect our business can be found in the “Risk Factors” section +set forth in Item 1A of Part I of this Annual Report on Form 10-K. Although our ability to borrow under the credit +facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility +could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that +has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced +long-term senior unsecured debt issued by Kroger. As of March 27, 2024, we had no commercial paper borrowings +outstanding. + +Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain +our financial covenant would impair our ability to borrow under the credit facility. This financial covenant is described +below: + +• Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.10 to 1 +as of February 3, 2024. If this ratio were to exceed 3.50 to 1, we would be in default of our revolving credit +facility and our ability to borrow under the facility would be impaired. + +Our credit facility is more fully described in Note 5 to the Consolidated Financial Statements. We were in +compliance with our financial covenant at February 3, 2024. + +As of February 3, 2024, we maintained a $2.75 billion (with the ability to increase by $1.25 billion), unsecured +revolving credit facility that, unless extended, terminates on July 6, 2026. Outstanding borrowings under the credit +facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit +facility. As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our revolving credit +facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of +February 3, 2024. + +In connection with the proposed merger with Albertsons, on October 13, 2022, we entered into a commitment letter +with certain lenders pursuant to which the lenders have committed to provide a 364-day $17.4 billion senior unsecured +bridge term loan facility. The commitments are intended to be drawn to finance the proposed merger with Albertsons +only to the extent we do not arrange for alternative financing prior to closing. As alternative financing for the proposed +merger is secured, the commitments with respect to the bridge term loan facility under the commitment letter will be +reduced. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_16.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..27230a9e5cdae0e7a4ac3c3f539199a473c2384f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,54 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_17.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..6dcfd2fa23c4cc9c9e6b6ff1a667da4bc50f0f37 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,43 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_18.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..5202c6fc81091eb13c491e16bd7755e5b3072400 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_19.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea4932bece5c352482c805a09d4024f046e46ffa --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,48 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_2.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_20.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a869a85dc1168de632937464371498311a50f03 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,50 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_21.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..71c0b458282222bbd745d0819d424e9ea5d3547d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,8 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_22.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6d013aaf7bc5f381384cd5a591daa0b1aa884a1 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,9 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_23.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..4971bfa624dfe1f307c141478545e2da2f508024 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,74 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_24.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..9003669563d5a34e56c53b6e25b47133955f27eb --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,60 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_25.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..502a7ddaf381a05cbc0a7c5c4ddf6737f483c3a2 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,45 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_26.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc4bccc7ec99b2e10807543d5dcae31123c35213 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,53 @@ +24 + + +Elaine L. Chao +Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017 +until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor +from January 2001 until January 2009, and was the first woman of Asian +American & Pacific Islander heritage to serve in a President’s cabinet in history. +Previously, Ms. Chao was President and CEO of United Way of America, +Director of the Peace Corps, and a banker with Citicorp and BankAmerica +Capital Markets Group. She earned her M.B.A. from Harvard Business School +and has served on a number of Fortune 500 boards. She currently serves on the +Board of Directors of ChargePoint Holdings, Inc., which is a new economy +technology company in the mobile sector focusing on sustainable and +environmentally friendly transportation. In the past five years, she also served as +a director of Embark Technology, Inc. and Hyliion Holdings Corp. Recognized +for her extensive record of accomplishments and public service, she is also the +recipient of 38 honorary doctorate degrees. In her capacity as a director on +numerous public boards while out of government, she has advocated for +innovation and business transformations. She has also been a director on many +private and nonprofit boards, including Harvard Business School Board of +Dean’s Advisors and Global Advisory Board, Los Angeles Organizing +Committee for the Olympic and Paralympic Games 2028, and a trustee of the +Kennedy Center for the Performing Arts. +Ms. Chao brings to the Board extensive experience in the public, private , and +non-profit sectors. In her two cabinet positions, she led high-profile +organizations, navigating complex regulatory and public policy environments, +and she provides the Board with valuable insight on strategy, logistics, +transportation, and workforce issues. Under her leadership, the Department of +Labor set up a record number of health and safety partnerships with labor +unions. While she was Director of the Peace Corps, she launched the first Peace +Corps programs in the newly independent Baltic states and the former republics +of the former Soviet Union, including Ukraine. This experience leading social +impact at scale is of value to the Board in her role as an independent director +and member of the Public Responsibilities Committee. Ms. Chao’s leadership +and governance expertise gained from her government service, nonprofits, and +public company boards is of value to the Board. +Age +71 + Director Since +2021 +Committees: +Corporate Governance +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_27.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..b172b37a5e8c3bef1002795205a64a9c9d41d4df --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +25 + + +Anne Gates +Ms. Gates was President of MGA Entertainment, Inc., a privately-held +developer, manufacturer, and marketer of toy and entertainment products for +children, from 2014 until her retirement in 2017. Ms. Gates held roles of +increasing responsibility with The Walt Disney Company from 1992 -2012. Her +roles included Chief Financial Officer for Disney Consumer Products (DCP) +and Managing Director, DCP, Europe, and emerging markets. She is currently a +director of Tapestry, Inc., where she serves as Chair of the Governance +Committee, serves on the Audit Committee, and is on the Tapestry Foundation +Board. She is also a director of Raymond James Financial, Inc., where she is the +Chair of the Corporate Governance ESG Committee. She is also a member of +the Boards of the Salzburg Global Seminar, PBS SoCal, Save the Children, and +the Packard Foundation, one of the largest global foundations focused on +environmental and other key ESG issues. +Ms. Gates has over 25 years of experience in the retail and consumer products +industry. She brings to Kroger financial expertise gained while serving as +President of MGA and CFO of a division of The Walt Disney Company. +Ms. Gates has a broad business background in finance, marketing, strategy, and +business development, including international business. As the chair of the +Corporate Governance and ESG Committee at Raymond James Financial, Inc., +she oversees their code of ethics, Board composition, including diversity, +environmental policies and programs, sustainability targets and ESG reporting +which are aligned with SASB, shareholder proposals, and shareholder +engagements efforts, including social justice, community relations, and +charitable giving. Ms. Gates is also Chair of the Tapestry Governance +Committee, which also includes oversight of ESG responsibilities. These +experiences are of particular value to the Board in her role as an independent +director and member of the Corporate Governance Committee. Her financial +leadership and consumer products expertise is of particular value to the Board. +Ms. Gates has been designated an Audit Committee financial expert and serves +as Chair of the Audit Committee. +Age +64 + Director Since +2015 +Committees: +Audit1 +Corporate Governance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_28.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe6bf1aea53ff50da7437a5167e7cdd6c64449ee --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,78 @@ +26 + + +Karen M. Hoguet +Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from +October 1997 until July 2018 when she became a strategic advisor to the Chief +Executive Officer until her retirement in 2019. Previously, she served on the +boards of Nielsen Holdings plc, The Chubb Corporation, and Cincinnati Bell as +the chairman of the Audit Committee and a member of the Finance Committee, +member of the Audit and Finance Committee, and the Audit Committee, +respectively. She also serves on the board of UCHealth. +Ms. Hoguet has over 35 years of broad financial and operational leadership +experience within the omnichannel retail sector. She has a proven track record +of success in driving transformations, delivering strong financial performance, +and forming strong relationships with investors and industry analysts. She has +extensive knowledge across all areas of finance, including financial planning, +investor relations, M&A, accounting, treasury and tax, as well as strategic +planning, credit card services and real estate. Ms. Hoguet played a critical role +in the successful turnaround of Federated Department Stores, from bankruptcy +to an industry leading omnichannel retailer, which was accomplished through +acquisitions, divestiture and other strategic changes including building an +omnichannel model and developing a new strategic approach to real estate. Her +long tenure as a senior executive of a publicly traded company with financial, +audit, strategy, and risk oversight experience is of value to the Board as is her +public company experience, both as a long serving executive, and as a board +member. In addition, her strong business acumen, understanding of diverse +cross-functional issues, and ability to identify potential risks and opportunities +are also of value to the Board. Ms. Hoguet has been designated an Audit +Committee financial expert and serves as Chair of the Finance Committee. +Age +67 + Director Since +2019 +Committees: +Audit +Finance1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +ESG + + +W. Rodney McMullen +Mr. McMullen was elected Chairman of the Board in January 2015 and Chief +Executive Officer of Kroger in January 2014. He served as Kroger’s President +and Chief Operating Officer from August 2009 to December 2013. Prior to that, +Mr. McMullen was elected to various roles at Kroger including Vice Chairman +in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999, +Senior Vice President in 1997, Group Vice President and Chief Financial +Officer in June 1995, and Vice President, Planning and Capital Management in +1989. He is a director of VF Corporation. In the past five years, he also served +as a director of Cincinnati Financial Corporation. +Mr. McMullen has broad experience in the supermarket business, having spent +his career spanning over 40 years with Kroger. He has a strong background in +finance, operations, and strategic partnerships, having served in a variety of +roles with Kroger, including as our CFO, COO, and Vice Chairman. His +previous service as chair of Cincinnati Financial Corporation’s Compensation +Committee and on its Executive and Investment Committees, as well as his +service on the Audit and Governance and Corporate Responsibilities +Committees of VF Corporation, adds depth to his extensive retail experience. +Age +63 + Director Since +2003 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_29.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1177bd292deac3d601633ba7eb160decd8b8ff6 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,91 @@ +27 + + +Clyde R. Moore +Mr. Moore was Chairman and Chief Executive Officer of First Service +Networks, a national provider of facility and maintenance repair services, from +2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore +was President and CEO of Thomas & Betts, a global manufacturer of electric +connectors and components, and President and COO of FL Industries, Inc., an +electrical component manufacturing company. Mr. Moore is currently President +and CEO of Gliocas LLC, a management consulting firm serving small +businesses and non-profits. Mr. Moore was a leader in the founding of the +Industry Data Exchange Association (IDEA), which standardized product +identification data for the electrical industry, allowing the industry to make the +successful transition to digital commerce. Mr. Moore was Chairman of the +National Electric Manufacturers Association and served on the Executive +Committee of the Board of Governors. He served on the advisory board of +Mayer Electrical Supply for over 20 years, including time as lead director, until +the sale of the company in late 2021. +Mr. Moore has over 30 years of general management experience in public and +private companies. He has extensive experience as a corporate leader overseeing +all aspects of a facilities management firm and numerous manufacturing +companies. Mr. Moore’s expertise broadens the scope of the Board’s experience +to provide oversight to Kroger’s facilities, digital, and manufacturing +businesses, and he has a wealth of Fortune 500 experience in implementing +technology transformations. Additionally, his expertise and leadership as Chair +of the Compensation Committee is of particular value to the Board. Mr. Moore +presided over the Compensation Committee during the company’s introduction +of its Framework for Action: Diversity, Equity, & Inclusion plan, and led the +inclusion of talent development into the Committee’s name and charter. +Age +70 + Director Since +1997 +Committees: +Compensation & Talent +Development1 +Corporate Governance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ronald L. Sargent +Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a +business products retailer, where he was employed from 1989 until his +retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with +Kroger in various positions. He is a director of Five Below, Inc. and Wells +Fargo & Company. Previously, he served as a director of The Home Depot, Inc. +and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors +of the Boys & Girls Clubs of America, the board of directors of City of Hope, +and the board of trustees of Northeastern University. He is also chairman of the +board of directors of the John F. Kennedy Library Foundation. +Mr. Sargent has over 35 years of retail experience, first with Kroger and then +with increasing levels of responsibility and leadership at Staples, Inc. His efforts +helped carve out a new market niche for the international retailer. In his role as +Chair of the Wells Fargo Human Resources Committee, he oversees human +capital management, including diversity, equity, and inclusion, human capital +risk, and culture and ethics. In his role as a member of the Five Below +Nominating and Corporate Governance Committee, he oversees social and +environmental governance, including corporate citizenship. These committee +experiences are of value to the Board in his role as a member of the Public +Responsibilities Committee and Lead Director of the Board. His understanding +of retail operations, consumer insights, and e-commerce are also of value to the +Board. Mr. Sargent has been designated an Audit Committee financial expert +and serves as Chair of the Corporate Governance Committee and Lead Director +of the Board. Mr. Sargent’s strong insights into corporate governance and his +executive leadership experience serve as the basis for his leadership role as Lead +Director. +Age +68 + Director Since +2006 +Committees: +Audit +Corporate Governance1 +Public Responsibilities +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_3.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fba412c5522670857e7def297ea2da9842326054 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,60 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_30.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..b07a20749ea2615f13b50524f20a0449e9d336ef --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,55 @@ +28 + + +J. Amanda Sourry Knox (Amanda Sourry) +Ms. Sourry was President of North America for Unilever, a personal care, foods, +refreshment, and home care consumer products company, from 2018 until her +retirement in December 2019. She held leadership roles of increasing +responsibility during her more than 30 years at Unilever, both in the U.S. and +Europe, including president of global foods, executive vice president of global +hair care, and executive vice president of the firm’s UK and Ireland business. +From 2015 to 2017, she served as President of their Global Foods Category. +Ms. Sourry currently serves on the board for PVH Corp., where she chairs the +Compensation Committee and serves on the Nominating, Governance & +Management Development Committee. She is also a non-executive director of +OFI, a provider of on-trend, natural and plant-based products, focused on +delivering sustainable and innovative solutions to consumers across the world, +and a member of their Remuneration and Talent Committee, the Audit and Risk +Committee, and the Sustainability Committee. She is also a supervisory director +of Trivium Packaging B.V., a sustainable packaging company. +Ms. Sourry has over thirty years of experience in the CPG and retail industry. +As a member of PVH Corp.’s Nominating, Governance, & Management +Development Committee, her experience with monitoring issues of corporate +conduct and culture, and providing oversight of diversity, equity and inclusion +policies and programs as it relates to management development, talent +assessment, and succession planning programs and processes is of particular +value to her role as a member of the Compensation & Talent Development +Committee and the Board. She brings to the Board her extensive global +marketing and business experience in consumer-packaged goods as well as +customer development, including overseeing Unilever’s digital efforts. +Ms. Sourry was actively involved in Unilever’s global diversity, gender balance, +and sustainable living initiatives which is of value to the Board and to the +Compensation & Talent Development Committee. She also has a track record of +driving sustainable, profitable growth across scale operating companies and +global categories across both developed and emerging markets. Ms. Sourry’s +history in profit and loss responsibility and oversight, people and ESG +leadership, and capabilities development is of value to the Board. +Age +60 + Director Since +2021 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_31.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ec0b0dcaa284f7a1e98b7c878defb20127d8002 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,87 @@ +29 + + +Mark S. Sutton +Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a +leading global producer of renewable fiber-based packaging, pulp, and paper +products. Prior to becoming CEO in 2014, he served as President and Chief +Operating Officer with responsibility for running International Paper’s global +business. Mr. Sutton joined International Paper in 1984 as an Electrical +Engineer. He held roles of increasing responsibility throughout his career, +including Mill Manager, Vice President of Corrugated Packaging Operations +across Europe, the Middle East and Africa, Vice President of Corporate +Strategic Planning, and Senior Vice President of several business units, +including global supply chain. Mr. Sutton is a member of The Business Council, +serves on the American Forest & Paper Association board of directors, and on +the Business Roundtable. He also serves on the board of directors of Memphis +Tomorrow. +Mr. Sutton has over 30 years of leadership experience with increasing levels of +responsibility and leadership at International Paper. At International Paper, he +oversees their robust ESG disclosures which are aligned with GRI, and their +Vision 2030, which sets forth ambitious forest stewardship targets and plans to +transition to renewable solutions and sustainable operations. He also oversees +International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He +brings to the Board the critical thinking that comes with an electrical +engineering background as well as his experience leading a global company +with labor unions. His strong strategic planning background, manufacturing and +supply chain experience, and his ESG leadership are of value to the Board. +Age +62 + Director Since +2017 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ashok Vemuri +Mr. Vemuri was Chief Executive Officer and a Director of Conduent +Incorporated, a global digital interactions company, from its inception as a +result of the spin-off from Xerox Corporation in January 2017 to 2019. He +previously served as Chief Executive Officer of Xerox Business Services, LLC +and as an Executive Vice President of Xerox Corporation from July 2016 to +December 2016. Prior to that, he was President, Chief Executive Officer, and a +member of the Board of Directors of IGATE Corporation, a New Jersey-based +global technology and services company now part of Capgemini, from 2013 to +2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a +multinational consulting and technology services company, in a variety of +leadership and business development roles and served on the board of Infosys +from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the +investment banking industry at Deutsche Bank and Bank of America. In the past +five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a +member of the Board of Directors of Opal Fuels and is chair of the Audit +Committee. +Mr. Vemuri brings to the Board a proven track record of leading technology +services companies through growth and corporate transformations. His +experience as CEO of global technology companies as well as his experience +with cyber security and risk oversight are of value to the Board as he brings a +unique operational, financial, and client experience perspective. Additionally, +Mr. Vemuri served on our Public Responsibilities Committee which gives him +additional perspectives on risk oversight that he brings to the Audit Committee. +Mr. Vemuri has been designated an Audit Committee financial expert. +Age +56 + Director Since +2019 +Committees: +Audit +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG + + +YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote +“FOR ALL” of Kroger’s director nominees. +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_32.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..a87f2621e3cbb14b60e124cc8f015021204da82d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,54 @@ +30 + +Information Concerning the Board of Directors +Board Leadership Structure and Independent Lead Director +Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight. +The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to +evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance +Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as +appropriate. We believe that Kroger is well-served by this flexible leadership structure. +In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership +includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among +the independent directors. The Lead Director works with the Chairman to share governance responsi bilities, +facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of +roles, consistent with current best practices, including: +• reviewing and approving Board meeting agendas, materials, and schedules to confirm that the +appropriate topics are reviewed, with sufficient information provided to directors on each topic and +appropriate time is allocated to each; +• serving as the principal liaison between the Chairman, management, and the independent directors; +• presiding at the executive sessions of independent directors and at all other meetings of the Board at +which the Chairman is not present; +• calling meetings of independent directors at any time; and +• serving as the Board’s representative for any consultation and direct communication, following a request, +with major shareholders. +The independent Lead Director carries out these responsibilities in numerous ways, including by: +• facilitating communication and collegiality among the Board members; +• soliciting direct feedback from independent directors; +• overseeing the succession planning process, including meeting with a wide range of associates including +corporate and division management associates; +• meeting with the CEO frequently to discuss strategy; +• serving as a sounding board and advisor to the CEO; and +• leading annual CEO evaluation process. + +Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance +Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the +Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018. +Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his: +• independence; +• deep strategic and operational understanding of Kroger obtained while serving as a Kroger director; +• insight into corporate governance; +• experience as the CEO of an international ecommerce and brick and mortar retailer; +• experience on the Boards of other large publicly traded companies; and +• engagement and commitment to carrying out the role and responsibilities of the Lead Director. +With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether +it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this +judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership +structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate +in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong +Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong +background in finance, operations, and strategic collaborations is particularly important to the Board given Kroger’s +current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the +Company are also especially critical in the midst of the rapidly evolving retail and di gital landscape. The Board +believes that the structure of the Chairman and independent Lead Director position should continue to be considered +as part of the succession planning process. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_33.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb3dcb2d2f40ee373eff521a45fe9595c7d6d8c7 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,47 @@ +31 + +Annual Board Evaluation Process +The Board and each of its Committees conduct an annual evaluation to determine whether the Board is +functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board +assesses whether the current leadership structure and function continues to be appropriate for Kroger and its +shareholders, including in consideration of director succession planning. +Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations +are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong +corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees +an annual evaluation process led by either the Lead Independent Director or an independent third party. +Each director completes a detailed annual evaluation of the Board and the Committees on which he or she +serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year, +the annual evaluation was conducted by the Lead Director. +Topics covered include, among others: +• The effectiveness of the Board and Board Committees and the active participation of all directors +• The Board and Committees’ skills and experience and whether additional skills or experience are needed +• The effectiveness of Board and Committee meetings, including the frequency of the meetings +• Board interaction with management, including the level of access to management, and the responsiveness +of management +• The effectiveness of the Board’s evaluation of management performance +• Additional subject matters the Board would like to see presented at their meetings or Committee meetings +• Board’s governance procedures +• The culture of the Board to promote participation in a meaningful and constructive way +The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and +changes to the Board’s and its Committees’ practices are implemented as appropriate. +Over the past several years, this evaluation process has contributed to various enhancements in the way the +Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its +members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and +provide adequate time for director discussion and input. +Board Succession Planning and Refreshment Mechanisms +Board succession planning is an ongoing, year-round process. The Corporate Governance Committee +recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying +attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and +Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall +Board and Committee effectiveness, as well as the future needs of the Board and it s Committees in light of Kroger’s +current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in +the future including as a result of our Board retirement policy, under which directors retire at the annual meeting +following their 72nd birthday. +Outside Board Service +No director who is an officer of the Company may serve as a director of another company without the approval +of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director +of another company if in so doing such service would interfere with the director’s ability to properly perform his or +her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance +Committee. Currently, our CEO serves on one other public company board. None of our current directors serve on +more than three total public company Boards, including Kroger’s Board. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_34.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a911b22b76fbbb21b7646ffe2145bc4a3876a604 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,25 @@ +32 + +Board Diversity +Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually +qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and +independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our +Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional +knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this +blend of qualifications, attributes, and tenure enables highly effective Board leadership. +The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements +in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential +nominees to our Board, the Corporate Governance Committee considers director candidates who would help the +Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate, +including by considering their geographic locations to align directors’ physical locations with Kroger’s operating +areas where possible. In connection with the use of a third-party search firm to identify candidates for Board +positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list +qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self -identify as +racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and +Mr. Vemuri self-identify as Asian. Five of our 11 directors are women. +The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and +ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the +Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and +Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of +different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively +oversees the Company’s strategy and management. The charts below show the diversity of our director nominees: diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_35.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0fce219d07f01ecd0aa0a8f669499dc61de2329 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,75 @@ +33 + +Director Onboarding and Engagement +All directors are expected to invest the time and energy required to gain an in -depth understanding of our +business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans +for each new director. We arrange meetings for each new director with appropriate officers and associates in order to +familiarize him or her with the Company’s strategic plans, financial s tatements, and key policies and practices. We +also provide training on fiduciary obligations of board members and corporate governance topics, as well as +committee-specific onboarding. From time to time, the Company will provide Board members with presentations +from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of +the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings +are periodically held at a location away from our home office in a geography in which we operate. In connection +with these Board meetings, our directors learn more about the local business environment through meetings with our +regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities, +and/or customer fulfillment centers. +Committees of the Board of Directors +To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of +company oversight, the Board has established five standing Committees: Audit, Compensation and Talent +Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are +composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee +has the responsibilities set forth in its respective charter, each of which has bee n approved by the Board. The current +charter of each Board Committee is available on our website at ir.kroger.com under Investors  — Governance — +Corporate Governance Guidelines. +The current membership, 2023 meetings, and responsibilities of each Committee are summarized below : + +Name of Committee, Number of +Meetings, and Current Members Primary Committee Responsibilities +Audit Committee +Meetings in 2023: 5 +Members: +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + + + +• Oversees the Company’s financial reporting and accounting +matters, including review of the Company’s financial +statements and the audit thereof, the Company’s financial +reporting and accounting process, and the Company’s +systems of internal control over financial reporting +• Selects, evaluates, and oversees the compensation and work +of the independent registered public accounting firm and +reviews its performance, qualifications, and independence +• Oversees and evaluates the Company’s internal audit +function, including review of its audit plan, policies and +procedures, and significant findings +• Oversees enterprise risk assessment and risk management, +including review of cybersecurity risks and regular reports +received from management and independent third parties +• Reviews significant legal and regulatory matters +• Reviews and monitors the Company’s operational and third- +party compliance programs and updates thereto +• Reviews Ethics Hotline reports and discusses material +matters +• Reviews and approves related party transactions +• Conducts executive sessions with independent registered +public accounting firm and Vice President, Internal Audit at +each meeting +• Conducts executive sessions with the Senior Vice President, +General Counsel, and Secretary, Vice President and Chief +Ethics & Compliance Officer, and Senior Vice President and +Chief Financial Officer individually at least once per year + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_36.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee334dbd93d8c64af2a87bb09d1ee824a9e96b9e --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,87 @@ +34 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Compensation Committee +Meetings in 2023: 4 +Members: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark S. Sutton + + + + +• Recommends for approval by the independent directors the +compensation of the CEO and approves the compensation of +senior officers +• Administers the Company’s executive compensation policies +and programs, including determining grants of equity awards +under the plans +• Reviews annual incentive plans and long-term incentive plan +metrics and plan design +• Reviews emerging legislation and governance issues and +retail compensation trends +• Reviews the Company’s executive compensation peer group +• Reviews CEO pay analysis +• Reviews Human Capital Management, including Diversity, +Equity, & Inclusion +• Has sole authority to retain and direct the Committee’s +compensation consultant +• Assists the full Board with senior management succession +planning +• Conducts executive sessions with the Senior Vice President +and Chief People Officer and independent compensation +consultant + + + + + + + + + + +Corporate Governance Committee +Meetings in 2023: 2 +Members: +Ronald L. Sargent, Chair +Elaine L. Chao +Anne Gates +Clyde R. Moore + + + + +• Oversees the Company’s corporate governance policies and +procedures +• Develops criteria for selecting and retaining directors, +including identifying and recommending qualified +candidates to be director nominees +• Designates membership and Chairs of Board Committees +• Oversees and administers Board evaluation process +• Reviews the Board’s performance +• Establishes and reviews the practices and procedures by +which the Board performs its functions +• Reviews director independence, financial literacy, and +designation of financial expertise +• Administers director nomination process +• Interviews and nominates candidates for director election +• Reviews compliance with share ownership guidelines +• Reviews and participates in shareholder engagement +• Reviews and establishes independent director compensation +• Oversees the annual CEO evaluation process conducted by +the full Board + + + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_37.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..0721b4a6c0290fa31b969137a60a20cd6b18482d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,90 @@ +35 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Finance Committee +Meetings in 2023: 4 +Members: +Karen M. Hoguet, Chair +Nora A. Aufreiter +Amanda Sourry +Mark Sutton +Ashok Vemuri + + + + +• Oversees the Company’s financial affairs and management +of the Company’s financial resources +• Reviews the Company’s annual and long-term financial +plans, capital spending plans, capital allocation strategy, and +use of cash +• Approves and recommends for approval to the Board certain +capital expenditures +• Reviews the Company’s dividend policy and share buybacks +• Reviews strategic transactions, capital structure, including +potential issuance of debt or equity securities, credit +agreements, and other financing transactions +• Monitors the investment management of assets held in +pension and profit-sharing plans administered by the +Company +• Oversees the Company’s policies and procedures on +hedging, swaps, risk management, and other derivative +transactions +• Oversees the Company’s engagement and relationships with, +and standing in, the financial community + + + + + + + +Public Responsibilities Committee +Meetings in 2023: 3 +Members: +Nora A. Aufreiter, Chair +Kevin M. Brown +Elaine L. Chao +Ronald L. Sargent + + + + +• Reviews the practices of the Company affecting its +responsibility as a corporate citizen +• Examines and reviews the Company’s practices related to +environmental sustainability, and social impact, including +but not limited to +✓ climate impacts +✓ packaging +✓ food and operational waste +✓ food access +✓ responsible sourcing +✓ supplier diversity +✓ people safety, food safety, and pharmacy safety +• Examines and reviews the Company’s Sustainability and +Social Impact strategy +• Reviews the Company’s community engagement and +philanthropy +• Reviews the Company’s advocacy and public policy +• Reviews the Company’s communications and Corporate +Brand stewardship +• Assesses the Company’s effort in evaluating and responding +to changing public expectations and public issues that affect +the business + + + + + + + + + + + + + + + +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_38.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f48f1e7e36fd30cad3d7356b933e9cdb29339d7 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,33 @@ +36 + +Shareholder Engagement +Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a +priority for both our Board and management team. We have a longstanding history of engaging with our +shareholders through our investor relations program and our year-round governance outreach program, including +participation for our independent directors. In 2023, under the direction of the Board, we requested engagement +meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16 +shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once). +Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time. + +We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important +to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed +Board discussions and decisions, including but not limited to: +Business Strategy +• Kroger’s growth strategy, priorities, and value drivers +• Our strong value creation model and recent performance +ESG Practices & Disclosures +• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic +management approach, and long-term sustainability and social impact goals +• Board oversight of ESG strategy and updated Committee responsibilities +• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting +frameworks +• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry -leading platform for collective +action and systems change to end hunger in our communities and eliminate waste across our Company +Human Capital Management +• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities +we serve +• Our focus on our associates’ well-being, including increasing our average hourly associate wage, +comprehensive benefits, and opportunities for internal progression and leadership development training +• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies +• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_39.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d654b51474a5c55ea74de8e92c9d6b6fd81817c --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,49 @@ +37 + +Compensation Structure +• Overview of compensation program design and alignment of pay and performance +• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG +metrics +• The balance of equity and cash compensation, as well as fixed versus at risk compensation +Board and Board Oversight +• Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of +board skills and experience with Kroger’s current and long-term business strategies +• Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management +• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double +materiality, and discussions with environmentally and socially conscious investors and NGOs helped +inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the +opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices. +Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving +Together, and how our Board oversees this strategy, including our goals and initiatives. These +conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared +with our full Board. +Board’s Response to Shareholder Proposals +Accountability to our shareholders continues to be an important component of our success. We actively engage +with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate +Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate +Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the +voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our +shareholders. +In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay +Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay- +Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into +this proxy statement. +Director Nominee Selection Process +The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for +election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for +Board membership through its own efforts and through recommendations from other directors and shareholders. In +addition, the Corporate Governance Committee retains an independent, third -party search firm to assist in +identifying and recruiting director candidates who meet the criteria established by the Corporate Governance +Committee. +These criteria are: +• demonstrated ability in fields considered to be of value to the Board, including business management, +retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education, +science, law, and government; +• experience in high growth companies and nominees whose business experience can help the Company +innovate and derive new value from existing assets; +• highest standards of personal character and conduct; +• willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable, +including regular attendance and participation at Board and Committee meetings, and preparation for all +meetings, including review of all meeting materials provided in advance of the meeting; and +• ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our +customers, including regional and geographic differences. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_4.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d3945853a200410c0c2df449b0e9347c854080b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,60 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_40.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..3292c344510e77d9cddb8ab08795534276b2429b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +38 + +The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity” +above, and the specific experience and abilities of director candidates in light of our current business, strategy , and +structure, and the current or expected needs of the Board in its identification and recruitment of director candidates. +The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of +potential Board members does not vary based on whether a candidate is recommended by our directors, a third -party +search firm, or shareholders. + +Candidates Nominated by Shareholders +The Corporate Governance Committee will consider shareholder recommendations for director nominees for +election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 202 5 +annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in +accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age, +business address, and residence address of such person, the principal occupation or employment of such person, the +number of Kroger common shares owned of record or beneficially by such person and any other information relating +to the person that would be required to be included in a proxy statement relating to the election of directors. The +Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate +Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in +evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director +Nominee Selection Process.” +Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of +director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information +required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional +requirements of Rule 14a-19(b). +Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the +2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common +shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Corporate Governance Guidelines +The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of +the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance — +Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a +written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are +summarized below. + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_41.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..81bc299eda75283ca02ddc9417344a26bc3e7e0a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,51 @@ +39 + +Independence +The Board has determined that all of the current independent directors and nominees have no material +relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed +Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE +listing standards. The Board made its determination based on information furnished to the Company by each of the +directors regarding their relationships with Kroger and its management, and other relevant information. The Board +considered, among other things, that +• the value of any business transactions between Kroger and entities with which the directors are affiliated +falls below the thresholds identified by the NYSE listing standards, and +• no directors had any material relationships with Kroger other than serving on our Board. + +The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is +Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The +Board determined that these transactions do no impair independence as they are in the ordinary course of business +on the same terms offered to similar purchases and do not exceed applicable independence thresholds. +Audit Committee Independence and Expertise +The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri, +independent directors, each of whom is a member of the Audit Committee, are “ Audit Committee financial experts” +as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the +Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in +accordance with Rule 10A-3 of the Securities Exchange Act of 1934. +Code of Ethics +The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and +directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics +is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics. +Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s +Secretary at our executive offices. +Communications with the Board +The Board has established two separate mechanisms for shareholders and interested parties to communicate +with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger +assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website +(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice +President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit +Committee as deemed appropriate. +Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s +Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or +companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems +appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for +further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems +appropriate, which may include referral to the full Corporate Governance Committee or the entire Board. +Executive Officer Succession Planning +The Guidelines provide that the Compensation Committee will review Company policies and programs for +talent development and evaluation of executive officers, and will review management succession planning. In +connection with the use of a third-party search firm to identify external candidates for executive officer positions, +including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third -party +search firm to include in its initial list qualified female and racially/ethnically diverse candidates. +Attendance +The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least +75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_42.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7a3951bbc4ebcc02e174fe34e42251fe33637b8 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +40 + +the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members +attended last year’s virtual annual meeting. +Independent Compensation Consultants +The Compensation Committee directly engages a compensation consultant to advise the Compensation +Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn +Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn +Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and +policies. +In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee. +Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 202 3 +for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons, +salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved +Korn Ferry performing these additional services. After taking into consideration th e NYSE’s independence +standards and the SEC rules, the Compensation Committee determined that Korn Ferry was independent, and their +work has not raised any conflict of interest. +The Compensation Committee may engage an additional compensation consultant from time to time as it +deems advisable. +Compensation Committee Interlocks and Insider Participation +No member of the Compensation Committee was an officer or associate of Kroger during fiscal 202 3, and no +member of the Compensation Committee is a former officer of Kroger or was a party to any related person +transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of +our executive officers served on the board of directors or on the compensation committee of any other entity that has +or had executive officers serving as a member of Kroger’s Board of Di rectors or Compensation Committee of the +Board. +The Board’s Role in Risk Oversight +While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible +for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the +material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may +engage advisors and experts from time to time to provide advice and counsel on risk -related matters. +We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the +various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger. +We also believe that our risk oversight structure complements our current Board leadership structure, as it allows +our independent directors, through the five fully independent Board Committees, and in executive sessions of +independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s +identification of risk and implementation of effective risk management policies and controls. +The Board receives presentations throughout the year from various department and business unit leaders that +include discussion of significant risks, including newly identified and evolving high priority risks. When new risks +are identified, management conducts, and either the full Board or the appropriate Board committee reviews and +discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain, +associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss +the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures +of material risks. +At each Board meeting, the CEO addresses matters of particular importance or concern, including any +significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated +sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term +strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their +potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of +particular concern, including significant areas of risk, that warrant further discussion or consideration outside the +presence of Kroger employees. At the committee level, reports are given by management subject matter experts to +each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each +meeting, including any areas of risk discussed by the Committee. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_43.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..41ad83bba9d212c73bf38d36d10ecbd2fe6bc71f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,56 @@ +41 + +The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial +exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness +of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of +risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit +Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with +management its policies with respect to risk assessment and risk management. + +Cybersecurity Governance + +Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on +our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with +oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our +Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on +cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually, +and inform the Committee immediately if a cybersecurity incident is deemed material. They report to t he Audit +Committee and the Board on compliance and regulatory issues, provide updates concerning continuously -evolving +threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and +CISO discuss and present strategies to address geopolitical threats that may impact operations as well as +technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee +focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates +strategy metrics, third party assessments, and internal audit and controls. An independen t third party also regularly +reports to the Audit Committee and the full Board on cybersecurity, and outside counsel a dvises the Board on best +practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also +reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact . We experience +cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity +threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably +likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially +affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a +material effect on us in the future. +For more information please see Item 1C. Cybersecurity in the Company’s Form 10 -K for the year ended February +3, 2024, filed with the SEC on April 2, 2024. +Board Oversight of ESG Topics +We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and +reduce our impacts on the environment while continuing to create positive economic value over the long -term. +Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of +environmental, social, and governance topics. Key ESG topics our Board Committees oversee are as follows: + +Audit • Legal & Regulatory +• Ethics +• Operational and Third-Party Compliance +• Data Privacy & Cyber Security +• Financial Integrity +Compensation & Talent +Development +• Human Capital Management +• Talent Development +• Executive Compensation +• Diversity, Equity & Inclusion +Corporate Governance • Board recruitment/diversity +• Board succession +• Shareholder engagement program +• Shareholder advisory votes & shareholder proposals +• Independent director compensation +Finance • Capital spending to ensure consistency with strategy and goals \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_44.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e761057ebf4f3bb169034e3566d220c509b5cc3e --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,36 @@ +42 + +Public Responsibilities • Environmental Sustainability +✓ Climate Impacts +✓ Resource Conservation +✓ Food Waste (Zero Waste) +• Social Impact +✓ Food Access and Affordability (Zero Hunger) +✓ Health & Nutrition +✓ Philanthropy +✓ Responsible Supply Chain & Sourcing +➢ Human Rights +➢ Animal Welfare +• Safety +✓ Food +✓ People +✓ Pharmacy +• Advocacy & Public Policy +✓ Government Relations +✓ Political action (KroPAC) +• Communications & Brand Stewardship +✓ Associate & External Communications +• Stakeholder Relations + +Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was +established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our +progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit +https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or +incorporated by reference into, this proxy statement. +In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity +and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations +function – with human resources professionals in place across our lines of business and retail divisions – leads our +Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals, +and identifies potential opportunities for improvement. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_45.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f9c484526b13eb1dd47ddaa844853b41639bf2d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,45 @@ +43 + +Director Compensation +2023 Director Compensation +The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does +not receive compensation for his Board service. +Name +Fees Earned or Paid in +Cash Stock Awards(1) +Change in Pension +Value and Nonqualified +Deferred +Compensation(2) Total +Nora A. Aufreiter $122,839 $198,528 $0 $321,367 +Kevin M. Brown $112,626 $198,528 $0 $311,154 +Elaine L. Chao $104,627 $198,528 $0 $303,155 +Anne Gates $140,215 $198,528 $0 $338,743 +Karen M. Hoguet $133,007 $198,528 $0 $331,535 +Clyde R. Moore $124,964 $198,528 — $323,492 +Ronald L. Sargent $172,610 $198,528 $5,762 $376,900 +Amanda Sourry $104,627 $198,528 $0 $303,155 +Mark S. Sutton $104,627 $198,528 $0 $303,155 +Ashok Vemuri $114,794 $198,528 $0 $313,322 + + +(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual +incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each +independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528. +(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation. +For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation +Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value +of his accumulated benefit under the pension plan for independent directors. This change in value of +accumulated pension benefits is not included in the Director Compensation Table be cause the value decreased. +Pension values may fluctuate significantly from year to year depending on a number of factors, including age, +average annual earnings, and the assumptions used to determine the present value, such as the discount rate. +The decrease in the actuarial present value of his accumulated pension benefit for 202 3 is primarily due to the +increase in the discount rate as well as the change in value due to aging , partially offset by the mortality +assumption change. +Annual Compensation +Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an +additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional +annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and +the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent +director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately +$200,000. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_46.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f270848ef6748c39b659f33daee52ef8ca0e1f68 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,30 @@ +44 +The Board has determined that compensation of independent directors must be competitive on an ongoing basis +to attract and retain directors who meet the qualifications for service on the Board. Independent director +compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee +deems appropriate. +Pension Plan +Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the +average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this +benefit. Benefits begin at the later of actual retirement or age 65. +Nonqualified Deferred Compensation +We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of +their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares. +Cash Deferrals +Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either +or both of the following two alternative methods of determining benefits: +• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to +represent Kroger’s cost of ten-year debt; and/or +• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price +of Kroger common shares. +In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant +at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in +quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the +event that deferred compensation is not completely paid out upon the death of the participant. +Incentive Share Deferrals +Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares. +Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months +after the participant’s separation of service. +Director Stock Ownership Guidelines +Independent directors are required to own shares equivalent to five times their annual base cash retainer. For +more details on the Stock Ownership Guidelines, see page 62. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_47.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5cc584df0eafe87f843a5875b1b50ff04cb21b51 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,43 @@ +45 +Beneficial Ownership of Common Stock +The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s +directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on +727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned +include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well +as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial +owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned +by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The +Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202. +Name +Amount and Nature of +Beneficial Ownership(1) +Options Exercisable on +or before June 29, 2024 – +included in column (a) +Stuart W. Aitken(2) 548,627 328,086 +Nora A. Aufreiter(3) 53,016 — +Kevin M. Brown 15,228 — +Elaine L. Chao(3) 12,438 +Yael Cosset 510,663 316,043 +Anne Gates(3) 47,728 — +Karen M. Hoguet(4) 23,776 — +Timothy A. Massa 536,035 305,174 +W. Rodney McMullen 6,551,175 2,801,970 +Gary Millerchip 106,693 11,646 +Clyde R. Moore 122,147 — +Ronald L. Sargent(3) 186,560 — +Amanda Sourry 15,228 — +Mark S. Sutton(3) 42,847 — +Ashok Vemuri 29,124 — +Directors and executive officers as a group (23 persons, including +those named above) +10,177,799 4,429,738 +(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as +a group beneficially owned 1.4% of Kroger common shares. +(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these +shares. +(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for +independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703; +Mr. Sargent, 61,649; Mr. Sutton, 7,080. +(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these +shares. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_48.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..9abf27c3199184ebf3f113ad1ca3427a01ded52b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,41 @@ +46 + +The following table sets forth information regarding the beneficial owners of more than five percent of Kroger +common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC. + +Name Address +Amount and Nature of +Ownership Percentage of Class +BlackRock, Inc. 50 Hudson Yards +New York, NY 10001 59,194,278(1) 8.2% +The Vanguard Group 100 Vanguard Blvd. +Malvern, PA 19355 81,623,904(2) 11.35% + +(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 202 3, as reported on Amendment No. 16 +to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to +53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares. +(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment +No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to +854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of +2,814,856 common shares. + +Related Person Transactions +The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or +continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related +Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive +officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect +material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit +Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the +aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other +company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at +regular committee meetings. +The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with, +the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance +with its business judgment. No director may participate in any review, approval, or ratification of any transaction if +he or she, or an immediate family member, has a direct or indirect material interest in the transaction. +Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for +management to follow in its ongoing dealings with the related person and the Audit Committee will review and +assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person +Transaction remains appropriate. + +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_49.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1b79ff0b67dd531df4f5715c549df981884a37 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,52 @@ +47 + +Compensation Discussion and Analysis +This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our +executive compensation program as well as how and why the Compensation Committee and our Board of Directors +make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”). +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_5.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ceeff1d873052bbd256bdf23ebd8b49e037cca3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,59 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_50.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b6c00885bc1762a472dc9fc4a7dcb6809248110 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +48 + +Our Named Executive Officers for Fiscal 2023 +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +Fiscal 2023 Financial and Strategic Performance Highlights +Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we +executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022. +Our associates are customer-focused, delivering the products customers want, when and how they want them, with +zero compromise on quality, convenience, and selection. +In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales +without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers +a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery +solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our +customers more deeply engaged with personalized coupons and fuel rewards. +Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, +comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than +$2.4 billion in incremental wage investments. +Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than +$1 billion to balance these investments without compromising food affordability for our customers across our +communities. +As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 202 3, we donated nearly +455 million meals to feed families across America. +Our proven go-to-market strategy enables us to successfully navigate many operating environments. We +believe that by delivering value for our customers, investing in our associates and serving our communities, we will +continue to achieve attractive and sustainable total returns for our shareholders. +2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement +At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91% +of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding +governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding +shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding +shares accepted our invitation to share feedback. Some investors we con tacted either did not respond or confirmed +that a discussion was not needed at that time. +Conversations in these meetings included discussions about our NEOs’ compensation program, with our +shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay +program. The Compensation Committee considers both the general and specific feedback received from +shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay +design. +During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in +executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but +none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to +our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational +priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee +decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation +decisions made for our associates who supervise a team of others, which range from store department leaders + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_51.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..455e93b62d44b95514f9c4ed5eb181a33c0e657b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,30 @@ +49 + +through our NEOs. Specifically, one of several performance goals established for these associates and senior officers +relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual Associate +Insights Survey and active mentorship and development of at least one other associate with a different background. +These performance goals are factored into compensation decisions for these associates and senior officers, including +salary increases and the amount of the annual grant of equity awards, consistent with our program design as +described herein. +2023 Compensation Program Overview +The fixed and at-risk pay elements of the NEO compensation program are reflected in the following table and +charts. + +Fiscal Year 2023 CEO Compensation +The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 8% of his +compensation is fixed. The remaining 92% of target compensation is at-risk, meaning that the actual compensation +Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by +the Compensation Committee, and with respect to all of the equity vehicle s, the future value of Kroger common +shares. +The table below compares fiscal 2023 to 2022 target direct compensation. Target total direct compensation is a +more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than +the disclosure provided in the Summary Compensation Table, which includes a combi nation of actual base salary +and annual incentive compensation earned in the fiscal year, the grant date fair market value of at -risk equity +compensation to be earned in future fiscal years, and the actuarial value of future pension benefits. +Mr. McMullen’s total target direct compensation shown below was based on our independent compensation +consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer +group. Mr. McMullen’s base salary and target annual incentive remained unchanged in fiscal 2023. The only +increase was to his long-term equity compensation to position his total target direct compensation to market median. +Target total compensation, which is the sum of target annual compensatio n and target long- term compensation, is +positioned around market median. + diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_52.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..a54edb2fe1f00bfc695884c1358fb775af70c1fe --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,50 @@ +50 +($000s) +Annual Long-Term +Year Salary +Target +Annual +Incentive +Total +Annual +Performance +Units +Restricted +Stock +Stock +Options +Total +LTI +Target +TDC Increase +2023 1,400 2,800 4,200 6,250 3,750 2,500 12,500 16,700 +6.4% +2022 1,400 2,800 4,200 5,750 3,450 2,300 11,500 15,700 +CEO and Named Executive Officer Target Pay Mix +The amounts used in the charts below are based on 2023 target total direct compensation for the CEO and the +average of other NEOs. As illustrated below, 92% of the CEO’s target total direct compensation is at-risk. On +average, 84% of the other NEOs’ compensation is at risk. +CEO Pay Mix Average of Other NEOs +Our Compensation Philosophy and Objectives +Our executive compensation philosophy is to attract and retain the best management talent as well as motivate +these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the +actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner +consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a +strong link between our business strategy, the performance metrics in our short-term and long-term incentive +programs, and the business results that drive shareholder value. +To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and +that there is a direct link between pay and performance. To do so, it is guided by the following principles: +• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at +Kroger. +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an NEO’s level of responsibility. +• Compensation should include incentive-based pay to drive performance, providing superior pay for superior +performance, including both a short- and long-term focus. +• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership +to align the interests of NEOs and shareholders. +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy and progress toward our corporate ESG +priorities. +• Compensation plans should provide a direct line of sight to company performance. +• Compensation programs should be aligned with market practices. +• Compensation programs should serve to both motivate and retain talent. +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_53.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..85ba0ef6c89a7b741e4761492e50907e4f3420cd --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +51 +What we do: What we do not do: +✓ Alignment of pay and performance +✓ Stock ownership guidelines for executives +✓ Multiple performance metrics under our short- +and long-term performance-based plans +discourage excessive risk taking and align with +our long-term value creation strategy +✓ Double-trigger change in control provisions in all +equity awards +✓ Double-trigger change in control provisions in +cash severance benefits +✓ All long-term compensation is equity-based +✓ Engagement of an independent compensation +consultant +✓ Robust clawback policy +✓ Ban on hedging, pledging, and short sales of +Kroger securities +✓ Minimal perquisites +× No employment contracts with executive officers +× No special severance or change in control +programs applicable only to executive officers +× No cash component in long-term incentive plans +× No tax gross-up payments for executives +× No special executive life insurance benefit +× No re-pricing or backdating of stock options +without shareholder approval +× No guaranteed salary increases or bonuses +× No payment of dividends or dividend equivalents +until performance units are earned +× No evergreen or reload feature; no shares can be +added to stock plan without shareholder approval +Establishing Each Component of Executive Compensation +The Compensation Committee recommends, and the independent members of the Board determine, each +component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each +component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to +compensation in March of 2023. Equity awards were granted in March and salary and annual incentive plan +increases were effective April 1, 2023. +The Compensation Committee determines the amount of each NEO’s salary, annual cash incentive plan target, +and long-term equity compensation by taking into consideration numerous factors including: +• An assessment of individual contribution and performance; +• Benchmarking with comparable positions at peer group companies; +• Level in organization and tenure in role; and +• Internal equity among executives. +The assessment of individual contribution and performance is a qualitative determination, based on the +following factors: +• Leadership; +• Contribution to the executive officer group; +• Achievement of established performance objectives; +• Decision-making abilities; +• Performance of the areas or groups directly reporting to the NEO; +• Support of company culture; +• Strategic thinking; and +• Demonstrated commitment to Kroger’s Values: Safety, Honesty, Integrity, Respect, Diversity, and Inclusion, +including improvement in the DE&I category score as measured by our annual Associate Insights Survey +and active mentorship and development of at least one other associate with a different background. +Summary of Key Compensation Practices \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_54.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca9970feba295522a38d3b1bc57a6054692fcb70 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,42 @@ +52 + +At the end of each year, individual performance is evaluated based on the NEO’s performance objectives listed +above, and the results of that evaluation are used in the determination of salary increases and the grant amount of all +annual equity awards: restricted stock and stock options, which are time-based, and performance units granted under +the long-term incentive plan, which are performance-based. +Elements of Compensation +Salary +Our philosophy with respect to salary is to provide a sufficient and stable source of fixed cash compensation +that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April +1, 2022 and April 1, 2023 were as follows: +Name 2022 Base Salary 2023 Base Salary +W. Rodney McMullen $1,400,000 $1,400,000 +Gary Millerchip $825,000 $900,000 +Stuart W. Aitken $925,000 $1,000,000 +Yael Cosset $825,000 $875,000 +Timothy A. Massa $850,000 $900,000 + +2023 Annual Incentive Plan +The NEOs participate in a corporate performance-based annual cash incentive plan. The corporate annual cash +incentive plan is a broad-based plan used across the Kroger enterprise. Approximately 54,000 associates are eligible +to receive incentive payouts based all or in part on the incentive plan described below. The value of annual cash +incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to +goals established by the Compensation Committee based on the business plan adopted by the Board of Directors. +A minimum level of performance must be achieved before any payout is earned, while a payout of up to 200% +of target incentive potential can be achieved for superior performance on the corporate plan metrics. There are no +guaranteed or minimum payouts; if none of the performance goals are achieved, then none of the incentive amount +is earned, and no payout is made. +The annual cash incentive plan is designed to encourage decisions and behavior that drive the annual operating +results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and +accordingly, the Compensation Committee believes that it is important to encourage behavior that supports multiple +elements of our business strategy. +NEO target incentive potentials for fiscal years 2022 and 2023, were as follows: +Name 2022 Target Annual Incentive 2023 Target Annual Incentive +W. Rodney McMullen $2,800,000 $2,800,000 +Gary Millerchip $850,000 $950,000 +Stuart W. Aitken $850,000 $950,000 +Yael Cosset $850,000 $950,000 +Timothy A. Massa $775,000 $850,000 + + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_55.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..23f487dfa9d12a6544c4b7d9e409a496d036408f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,43 @@ +53 + +2023 Annual Incentive Plan Metrics +Metric Rationale for Use +Sales and Profit Grid, Maximum Payout of 200% of Target +ID Sales, excluding Fuel +• Identical Sales (“ID Sales”) represent sales, excluding fuel, at our supermarkets that +have been open without expansion or relocation for five full quarters, excluding +supermarket fuel sales, plus sales growth at all other customer-facing non- +supermarket businesses. +• We believe that ID Sales are the best measure of real growth of our sales across the +enterprise. A key driver of our model is ID Sales growth. +Adjusted FIFO Operating Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to-day +operational effectiveness. It is a useful measure to investors because it reflects the +revenue and expense that a company can control. +Potential payouts under the plan are based on Company performance on two primary metrics, ID Sales, +excluding Fuel, and Adjusted FIFO Operating Profit, including Fuel. The performance objectives are shown in the +grid below, with payouts interpolated for actual performance between levels. +The goals established by the Compensation Committee were as follows: + +ID Sales, excluding Fuel and Adjusted FIFO Operating Profit, including Fuel +ID Sales, excluding Fuel + + + -1.30% 0.95% 3.20% 5.45% 7.70% +Adjusted FIFO Operating +Profit, including fuel ($M) ≥4,983 0% 14% 20% 29% 40% + ≥5,083 10% 25% 45% 60% 75% + ≥5,183 20% 65% 80% 95% 115% + ≥5,283 30% 75% 90% 105% 130% + ≥5,383 40% 85% 100% 115% 160% + ≥5,483 55% 95% 110% 125% 170% + ≥5,583 70% 105% 120% 135% 180% + ≥ 5,683 100% 115% 130% 155% 190% + ≥5,783 110% 125% 140% 170% 200% + + + +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_56.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e75daf150ccd2135fff7a4238b33d195815da26 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,39 @@ +54 + +2023 Annual Incentive Plan – Actual Results and Payout Percentage + +Corporate Plan Metric 2023 Performance(1) Payout +Identical Sales, excluding fuel 0.9% 24.02% Adjusted FIFO Operating Profit, including fuel $5.0B +Total Payout 24.02% +(1) See grid above. +Following the close of the 2023 fiscal year, the Compensation Committee reviewed Kroger’s performance +against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our +performance compared to the goals established by the Compensation Com mittee resulted in a payout of 24.02% of +the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken. +Mr. Aitken’s annual bonus payout equaled 22.71% of his bonus potential because it included the corporate +annual plan described above and a team metric as follows. The merchandising team metric measured supermarket +ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments +excluding pharmacy and fuel. + Payout Percentage Weight +Corporate Annual Bonus Plan 24.02 % 60 % +Merchandising Team Metric 20.75 % 40 % +Total Payout (24.02% x 0.6) + (20.75% x 0.4%) = 22.71% +The Compensation Committee maintains the ability to reduce the annual cash incentive payout for all executive +officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if +they determine for any reason that the incentive payouts were not appr opriate given their assessment of Company or +individual performance. No adjustments were made to the incentive payout amount in 202 3. +As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan +target which is determined by the Compensation Committee, and the independent directors in the case of the CEO. +The actual amounts of performance-based annual incentive paid to the NEOs for 2023 are reported in the Summary +Compensation Table in the “Non-Equity Incentive Plan Compensation” column. +Long-Term Compensation Program +The Compensation Committee believes in the importance of providing an incentive to the NEOs to achieve the +long-term goals established by the Board. As such, a majority of NEO compensation is dependent on the +achievement of those goals. Long-term compensation promotes long-term value creation and discourages the over- +emphasis of attaining short-term goals at the expense of long-term growth. +The long-term incentive program is structured to be a combination of performance- and time-based +compensation that reflects elements of financial and common share performance to provide both retention value and +alignment with company performance. The Compensation Committee determined that all long-term compensation +would be equity-based as follows: 50% of equity granted under the program would be performance -based and the +remaining 50% of equity would be time-based, consisting of 30% in restricted stock and 20% in stock options. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_57.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cb9d0cfe43aac0649a2b9c710c8b2647f3f85bd --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,60 @@ +55 + +Each year, NEOs receive grants under the long-term compensation program, which is structured as follows: +• Performance-Based (50% of NEO long-term target compensation) +• Long-term performance-based compensation is provided under a Long-Term Incentive Plan adopted by +the Compensation Committee. The Committee adopts a new plan every year, measuring improvement +on the Company’s long-term goals over successive three-year periods. Accordingly, at any one time +there are three plans outstanding, which are summarized below. +• Under the Long-Term Incentive Plans, NEOs receive grants of equity called performance units. A target +number of performance units based on level and individual performance is awarded to each participant +at the beginning of the three-year performance period. +• Payouts under the plan are contingent on the achievement of certain strategic performance and financial +measures and incentivize recipients to promote long-term value creation and enhance shareholder +wealth by supporting the Company’s long-term strategic goals. +• The payout percentage, based on the extent to which the performance metrics are achieved, is applied to +the target number of performance units awarded. Then, a modifier based on Relative Total Shareholder +Return compared to the S&P 500 is applied, which can increase or decrease the payout. +• Performance units are paid out in Kroger common shares based on actual performance, along with +dividend equivalents for the performance period on the number of issued common shares. +• Time-Based (50% of NEO long-term target compensation) +• Long-term time-based compensation consists of 20% stock options and 30% restricted stock, which are +linked to common share performance, creating alignment between the NEOs’ and our shareholders’ +interests. Grants vest ratably over four years. +• Stock options have no initial value and recipients only realize benefits if the value of our common +shares increases following the date of grant, further aligning the NEOs’ and our shareholders’ interests. +Amounts of long-term compensation awards issued and outstanding for the NEOs are set forth in the Executive +Compensation Tables section. +Summary of The Three Long-Term Incentive Plans Outstanding During 2023 +With respect to our long-term performance-based compensation, the Compensation Committee designed plan +metrics to align with Kroger’s long-term business plans and growth model. These metrics are the key elements in +driving Kroger’s TSR. +The Compensation Committee adopts a new Long-Term Incentive Plan each year, which provides for +overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below, +and a summary of the design of the plans outstanding during 2023 is as follows: + + 2021 – 2023 LTIP 2022 – 2024 LTIP 2023 – 2025 LTIP +Performance Units and +Dividend Equivalents +Performance units are equity grants which are paid out in Kroger common shares, based on actual performance at +the end of the 3-year performance period, along with dividend equivalents for the performance period on the +number of issued common shares ultimately earned. +Performance Metrics • Total Sales without Fuel + Fuel +Gallons; +• Growth in Adjusted FIFO; +Operating Profit, including Fuel; +• Cumulative Adjusted Free Cash +Flow; +• Fresh Equity metric; and +• Relative Total Shareholder Return +modifier +• Total Sales without Fuel + Fuel Gallons; +• Value Creation Metric (iTSR) Percentage; +• Fresh Equity metric; and +• Relative Total Shareholder Return modifier +Determination of Payout The payout percentage, based on the extent to which the performance metrics are achieved, is applied to number +of performance units awarded. +Maximum Payout 187.5% 187.5% 187.5% +Payout Date March 2024 March 2025 March 2026 + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_58.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e408bfcac53515954224212be55d66ec12542c4 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,50 @@ +56 + +2021-2023 Long-Term Incentive Plan – Metrics +The 2021-2023 Long-Term Incentive Plan has the following components which support our long-term business +plans, each accounting for 25% of the payout calculation: + +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of fuel +gallons sold over the three-year term of the plan. It represents the important +metric of top line growth of the business from all channels. +25% +Growth in Adjusted FIFO Operating +Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to- +day operational effectiveness. It is a useful measure to investors because it +reflects the revenue and expense that a company can control. It is particularly +important to focus on growth of this financial measure over time. +25% +Cumulative Adjusted Free Cash Flow +• Cumulative Adjusted Free Cash Flow is an adjusted free cash flow measure +calculated as net cash provided by operating activities minus payments for +property and equipment, including payments for lease buyout, plus or minus +adjustments for certain items. +• It is an important measure for the business because it reflects the cash left over +after the company pays for operating expenses and capital expenditures. +25% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives trips and +therefore delivers business results. Fresh is the core focus of how we +differentiate and drive great engagement with customers and it will be a key +driver of our growth. +25% + +After the calculation of the four metrics above, a modifier based on Relative Total Shareholder Return +compared to the S&P 500 will be applied which can increase or decrease the payout, as follows, interpolated for +actual results between thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the target number of +performance units granted under the plan to determine the payout amount. The maximum payout under the 2021- +2023 Long-Term Incentive Plan is 187.5% as further described below. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_59.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1336cb9628ecad0dfa66abf6b9ce5d1f4016fcc --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,25 @@ +57 + + +Going into 2021, there were an extraordinary number and degree of unknowns that could have impacted our +financial results. The Compensation Committee considered, among other factors, the course of the pandemic, +including new COVID variants, availability and outcomes of vaccine progr ams, continuing sales trends, food at +home and food away from home trends, inflation/deflation, and other potential market influencing events. To +account for these unknowns, the Compensation Committee designed the 2021-2023 Long-Term Incentive Plan with +an incremental goal setting approach due to our inability to forecast reliable long -term performance targets against +the background of the economic uncertainty at the time. The Committee designed the plan to take into account the +extraordinary uncertainties going into the three-year plan, while aligning to our identical sales and operating profit +growth and productivity improvement goals, all in support of our long -term value creation model. Under the +incremental goal setting approach, the plan was designed with clearly defined financial performance goals for 2021, +and a mechanism for setting the 2022-2023 goals based on actual 2021 results. +For the 2021-2023 Long-Term Incentive Plan, the Compensation Committee aligned the plan with market +practices, increasing the maximum payout potential on the four metrics from 100% to 150%. The highest payout +from the four metrics alone equals 100%. However, the payout may exceed 100%, if for years 2 and 3 of the plan: +(1) the Total Sales without Fuel + Fuel Gallons metric, the Growth in Adjusted FIFO Operating Profit, including +Fuel, metric, and the Cumulative Adjusted Free Cash Flow metric all achieve 100 %, and (2) the 2-year compound +annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will increase +incrementally from 100%, up to 150% maximum if the 2-year compound annual growth rate on the Total Sales +without Fuel + Fuel Gallons metric is 5.0%. With the potential application of the relative TSR modifier, the total +maximum payout would be 187.5%. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_6.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..85628ef0e797989c278174538c3231c18509969c --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_60.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..7778456c38f51786a97bcc287ebbc754a85cbeb3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,76 @@ +58 + +2021-2023 Long-Term Incentive Plan – Results and Payout + +The results and payout of the 2021-2023 Long-Term Incentive Plan are as follows. + +2021 Results +Metric + + +Performance + + +Goal +Payout +Percentage for +2021 + Portion of Plan +Total Sales without Fuel + Fuel Gallons $127.96B $123.99B 100% +Adjusted FIFO Operating Profit $4.31B $3.48B 100% +Adjusted Free Cash Flow $3.94B $1.7B 100% +Fresh Equity Metric N/A + Payout for 2021 Portion of Plan (1/3) 100% + +2022-2023 Results +Metric + + + + + + +Payout +Percentage +For 2022-2023 +Portion of Plan +Total Sales without Fuel + Fuel Gallons $135.61B $135.75B 97.26% +Adjusted FIFO Operating Profit $4.80B $4.75B 100% +Adjusted Cumulative Free Cash Flow $4.9 $4.7B 100% +Fresh Equity Metric 43.2 46.1 0% + Payout for 2022-2023 Portion of Plan (2/3) 74.32% + +Combined Results +Metric + +Calculation + + +Payout +Percentage for +Full 2021-2023 +Plan +Total Sales without Fuel + Fuel Gallons (100% x 1/3) + (97.25% x 2/3) 98.17% +Adjusted FIFO Operating Profit (100% x 1/3) + (100% x 2/3) 100% +Adjusted Cumulative Free Cash Flow (100% x 1/3) + (100% x 2/3) 100% +Fresh Equity Measure 0% + Payout before Modifier (98.17% x 1/4) + (100% x 1/4) + (100% x 1/4) + (0% x 1/4) 74.54% +Relative TSR Modifier* 191st out of 500 in S&P 500 resulting in multiplier +between 100% and 125% 111.8% +Total Payout for 2021-2023 Plan 83.34% + +* The Company ranked 191st in the S&P 500 over the three year period for TSR. Based on this result, the Company +is in the second quartile of TSR results within the S&P 500. Because the Company ranking falls between 125 and +375, the multiplier to be applied in order to calculate the final LTIP payout is calculated based on an interpolation of +payouts between 75% and 125%, illustrated below: +TSR Rank in S&P 500 Payout Multiplier +1 to 125 125% +250 100% +375 to 500 75% +Actual Result = 191 111.8% + +The NEOs were issued the number of Kroger common shares equal to 83.34% of the target number of +performance units awarded to each executive, along with dividend equivalents for the three-year performance period +on the number of issued common shares. +The dividend equivalents paid on common shares earned under the 202 1 – 2023 Long-Term Incentive Plan are +paid at the end of the plan and are reported in the “All Other Compensation” column of the Summary Compensation \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_61.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d15b5538c66f02c19313df5c7a8e85db80614d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,57 @@ +59 + +Table and footnote 5 to that table, and the common shares issued under the plan are reported in the 202 3 Option +Exercises and Stock Vested Table and footnote 2 to that table. +The annual and long-term performance-based compensation awards described herein were made pursuant to +our 2019 Long-Term Incentive Plan, which was approved by our shareholders in June 2019, and the 2019 Amended +and Restated Long-Term Incentive Plan, which was approved by our shareholders in June 2022. + +2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan Metrics + Both the 2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan metrics have been designed to reflect +commitments made to our investors and other stakeholders regarding long -term sales growth, our Value Creation +algorithm (through intrinsic Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic +differentiator. The plan also includes a modifier based on our shareholder return relative to the S&P 500 shareholder +return. +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of +fuel gallons sold over the three-year term of the plan. It represents the +important metric of top line growth of the business from all channels. +25% +Value Creation Metric (iTSR) Percentage • This financial metric equals adjusted earnings per diluted share (EPS) +growth plus dividend yield. 50% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives +trips and therefore delivers business results. Fresh is the core focus of +how we differentiate and drive great engagement with customers and it +will be a key driver of our growth. +25% + +The highest payout from the three metrics alone equals 100%. However, the payout may exceed 100% if: (1) +both the Total Sales without Fuel + Fuel Gallons metric and the iTSR metric achieve 100%, and (2) the 3 -year +compound annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will +increase incrementally from 100%, up to 150% maximum if the 3-year compound annual growth rate on the Total +Sales without Fuel + Fuel Gallons metric is 5.0%. +After the calculation described above, a modifier based on Relative Total Shareholder Return compared to the +S&P 500 will be applied, as follows, interpolated for actual results between the 25 th percentile and 75th percentile +thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of +performance units granted under the plan to determine the payout amount. If all three metrics are achieved at the +maximum level and the Relative Total Shareholder Return modifier is maximized, the total plan payout would be +187.5%. +Stock Options and Restricted Stock +Stock options and restricted stock continue to play an important role in rewarding NEOs for the achievement of +long-term business objectives and providing incentives for the creation of shareholder value. Awards based on +Kroger’s common shares are granted annually to the NEOs. Kroger historically has distributed time-based equity +awards widely, aligning the interests of associates with interests of shareholders. +The options permit the holder to purchase Kroger common shares at an option price equal to the closing price +of Kroger common shares on the date of the grant. Options are granted only on one of the four dates of Board +meetings conducted at least one business day after Kroger’s public release of its quarterly earnings results. +The Compensation Committee determines the vesting schedule for stock options and restricted stock. During +2023, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four -year +ratable vesting schedule. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_62.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..99223b3eddc4b283a25df481a60af542dca81781 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,51 @@ +60 + +Restricted stock awards are reported in the “Stock Awards” column of the Summary Compensation Table and +footnote 1 to the table and the 2023 Grants of Plan Based Awards Table. Stock option awards are reported in the +“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the +2023 Grants of Plan Based Awards Table. +Retirement and Other Benefits +Kroger maintains several defined benefit and defined contribution retirement plans for its associates. The NEOs +participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in +retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly +compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to +the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2023 Pension Benefits +Table and the accompanying narrative. +Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate. +This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation +each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be +found below in the 2023 Nonqualified Deferred Compensation Table and the accompanying narrative. +Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our +management associates who are classified as exempt under the federal Fair Labor Standards Act and certain +administrative or technical support personnel who are not covered by a collective bargaining agreement, with at least +one year of service. KEPP has a double trigger change in control provision, and it provides for severance benefits +and extended Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an +associate is actually or constructively terminated without cause within two years following a change in control of +Kroger (as defined in KEPP). Participants are entitled to severance pay of up to 24 months’ salary and annual +incentive target. The actual amount is dependent upon pay level and years of service. KEPP can be amended or +terminated by the Board at any time prior to a change in control. +Stock option and restricted stock grant agreements with award recipients provide that those awards “vest,” with +options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in control as +described in the grant agreements, but only if an associate is actually or constructively terminated without cause +within two years following a change in control of Kroger (as defined in the grant agreement, and consistent with +KEPP). +None of the NEOs are party to an employment agreement. +Perquisites +Our NEOs receive limited perquisites as the Compensation Committee does not believe that it is necessary for +the attraction or retention of management talent to provide executives with a substantial amount of compensation in +the form of perquisites. +Process for Establishing Executive Compensation +The Compensation Committee of the Board has the primary responsibility for establishing the compensation of +our executive officers, including the NEOs, with the exception of the CEO. The Compensation Committee’s role +regarding the CEO’s compensation is to make recommendations to the independent members of the Board; those +members of the Board establish the CEO’s compensation. +The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the +Compensation Committee in the design of compensation for executive officers and to advise with respect to the +unique circumstances of the 2023 compensation cycle. +Korn Ferry conducted an annual competitive assessment of executive positions at Kroger for the Compensation +Committee. The assessment is one of several factors, as described above, on which the Compensation Committee +determines compensation. The consultant assessed: +• base salary; +• target performance-based annual cash incentive; +• target annual cash compensation (the sum of salary and annual cash incentive potential); +• long-term incentive compensation, comprised of performance units, stock options and restricted stock; and \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_63.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc0fccb56158baeaa436066f4445973707409e12 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,64 @@ +61 + +• total direct compensation (the sum of target annual cash compensation and long -term compensation). +In addition to the factors identified above, the consultant also reviewed actual payout amounts against the +targeted amounts. +The consultant compared these elements against those of other companies in a group of publicly traded +companies selected by the Compensation Committee. For 2023, our peer group consisted of: +Albertsons +Best Buy +Cardinal Health +Cencora, Inc (formerly known as +AmerisourceBergen) +Costco Wholesale +CVS Health +Home Depot +Johnson & Johnson +Lowe’s +Procter & Gamble +Sysco +Target +TJX Companies +Walgreens Boots Alliance +Walmart +The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. In +addition, the Compensation Committee considered supplemental data provided by its independent compensation +consultant from “general industry” companies, a representation of the Fortune 40, excluding financial services +companies. This data provided reference points, particularly for senior executive positions where competition for +talent extends beyond the retail sector. The peer group includes a combina tion of food and drug retailers, other large +retailers based on revenue size, and large consumer-facing companies. Median 2023 revenue for the peer group was +$108 billion, compared to our 2023 revenue of $150 billion. +Considering the size of Kroger in relation to other peer group companies, the Compensation Committee +believes that salaries paid to our NEOs should be competitively positioned relative to amounts paid by peer group +companies for comparable positions. The Compensation Committee also aims to provide an annual cash incentive +potential to our NEOs around the market median. Actual payouts may be as low as zero if performance does not +meet the baselines established by the Compensation Committee while superior fin ancial performance is rewarded +with compensation falling above the median. +The independent members of the Board have the exclusive authority to determine the amount of the CEO’s +compensation. In setting total compensation, the independent directors consider the median compensation of the +peer group’s CEOs. With respect to the annual incentive plan, the independent directors make two determinations: +(1) the annual cash incentive potential that will be multiplied by the corporate annual cash incentive +payout percentage earned that is applicable to the NEOs and (2) the annual cash incentive amount paid to the CEO +by retaining discretion to reduce the annual cash incentive percentage payout the CEO would otherwise receive +under the formulaic plan. The independent directors also retain discretion to determine the form of payout, to +include a portion in equity in place of cash. +The Compensation Committee performs the same function and exercises the same authority as to the other +NEOs. In its annual review of compensation for the NEOs, the Compensation Committee: +• Conducts an annual review of all components of compensation, quantifying total compensation for the NEOs +including a summary for each NEO of salary; performance-based annual cash incentive; and long-term +performance-based equity comprised of performance units, stock options and restricted stock. +• Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The +Compensation Committee has determined that the compensation of the CEO and that of the other NEOs +bears a reasonable relationship to the compensation levels of other executive positions at Kroger taking into +consideration performance and differences in responsibilities. +• Reviews a report from the Compensation Committee’s compensation consultant reflecting a comprehensive +review of each element of pay, both annual and long-term and comparing NEO compensation with that of +other companies, including both our peer group of competitors and a larger general industry group, to ensure +that the Compensation Committee’s objectives of competitiveness are met. +• Takes into account a recommendation from the CEO for salary, annual cash incentive potential and long - +term compensation awards for each of the senior officers including the other NEOs. The CEO’s +recommendation takes into consideration the objectives established by and the reports received by the +Compensation Committee as well as his assessment of individual job performance and contribution to our +management team. +The Compensation Committee does not make use of a formula, but both qualitatively and quantitatively +considers each of the factors identified above in setting compensation. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_64.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..af9665a4e1895bcdf51027a396c3dbc677ca2df0 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,52 @@ +62 +Stock Ownership Guidelines +To more closely align the interests of our officers and directors with your interests as shareholders, the Board +has adopted stock ownership guidelines. These guidelines require independent directors, executive officers, and +other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below: +Position Multiple +Chief Executive Officer 5 times base salary +President and Chief Operating Officer 4 times base salary +Executive Vice Presidents and Senior Vice Presidents 3 times base salary +Independent Directors 5 times annual base cash retainer +All covered individuals are expected to achieve the target level within five years of appointment to their +positions. Until the requirements are met, covered individuals, including the NEOs, must hold 100% of common +shares issued pursuant to performance units earned, shares received upon the exercise of stock options and upon the +vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes, +and must retain all Kroger common shares unless the disposition is approved in advance by the CEO, or by the +Board or Compensation Committee for the CEO. +Executive Compensation Recoupment Policy (Clawback) +Under the 2019 Amended and Restated Long-Term Incentive Plan (the “2019 Plan”), unless an award +agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after +termination the Compensation Committee determines either that (i) prior to termination, the participant engaged in +an act or omission that would have warranted termination for cause or (ii) after termination, the participant violates +any continuing obligation or duty of the participant with respect to Kroger, any gain realized by the participant from +the exercise, vesting or payment of any award may be cancelled, forfeited or recouped in the sole discretion of the +Committee. Under the 2019 Plan, any gain realized by the participant from the exercise, vesting or payment of any +award may also be recouped if, within one year after such exercise, vesting or payment, (i) a participant is +terminated for cause, (ii) the Compensation Committee determines that the participant is subject to recoupment +pursuant to any Kroger policy, or (iii) after a participant’s termination for any reason, the Compensation Committee +determines either that (1) prior to termination the participant engaged in an act or omission that would have +warranted termination for cause, or (2) after termination the participant violates any continuing obligation or duty of +the participant with respect to Kroger. Unless otherwise defined under 2019 Plan award agreement, “cause” has the +meaning as defined in The Kroger Co. Employee Protection Plan, as amended from time to time. +Additionally, if an award based on financial statements that are subsequently restated in a way that would +decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written +request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been +received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy +or applicable law. +We have adopted a +policy on incentive compensation-based recovery, which meets the requirements of +NYSE listing standards and Section 10D of the Exchange Act. The policy requires the recoupment of incentive- +based compensation paid to certain current and former executive officers in the event that the Company is required +to restate its financial results due to the Company’s material non-compliance with any financial reporting +requirement under the securities laws. Under the policy, the Company will seek recovery of erroneously awarded +incentive-based compensation received by current and former executive officers during the three-year fiscal year +period prior to the date the Company is required to prepare an accounting restatement. The Policy is administered b +y +the Compensation Committee of the Board. +Kroger also has an additional recoupment policy, which provides that if a material error of facts results in +the payment to an executive officer at the level of Group Vice President or higher of an annual or a long-term +incentive in an amount higher than otherwise would have been paid, as determined by the Compensation Committee, +then the officer, upon demand from the Compensation Committee, will reimburse Kroger for the amounts that would +not have been paid if the error had not occurred. This recoupment policy applies to those amounts paid by Kroger +within 36 months prior to the detection and public disclosure of the error or restatement. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_65.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..e42995d831c483079e7f78d64fe9582c9887d3ab --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,35 @@ +63 + +Prohibition on Hedging and Pledging +The Board has adopted a policy prohibiting Kroger directors and executive officers from engaging, directly or +indirectly, in the pledging of, hedging transactions in, or short sales of, Kroger securities. +Section 162(m) of the Internal Revenue Code +Prior to the effective date of the Tax Cuts and Jobs Act of 2017, Section 162(m) of the Code generally +disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year +to specified executive officers unless the compensation was “qualified performance-based compensation” under that +section. Pursuant to the Tax Cuts and Jobs Act of 2017, the exception for “qualified performance -based +compensation” under Section 162(m) of the Code was eliminated with respect to all remuneration in excess of +$1 million other than qualified performance-based compensation pursuant to a written binding contract in effect on +November 2, 2017 or earlier which was not modified in any material respect on or after such date (the legisl ation +providing for such transition rule, the “Transition Rule”). +As a result, performance-based compensation that the Compensation Committee structured with the intent of +qualifying as performance-based compensation under Section 162(m) prior to the change in the law may or may not +be fully deductible, depending on the application of the Transition Rule. In addition, compensation arrangements +structured following the change in law will be subject to the Section 162(m) limitation (without any exception for +performance-based compensation). Consistent with its past practice, the Committee will continue to retain flexibility +to design compensation programs that are in the best long-term interests of the Company and our shareholders, with +deductibility of compensation being one of a variety of considerations taken into account . +Compensation Committee Report +The Compensation Committee has reviewed and discussed with Kroger’s management the Compensation +Discussion and Analysis contained in this proxy statement. Based on its review and discussions with management, +the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be +included in Kroger’s proxy statement and incorporated by reference into its Annual Report on Form 10 -K. +Compensation Committee: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark Sutton + + + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_66.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..cdc7e70cbb4bee3bf7546132ffec1afeff4a1dfd --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,89 @@ +64 + + Executive Compensation Tables +Summary Compensation Table +The following table and footnotes provide information regarding the compensation of the NEOs for the +fiscal years presented. + +Name and Principal +Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(1) +Option +Awards +($)(2) +Non-Equity +Incentive Plan +Compensation +($)(3) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($)(4) +All Other +Compensation +($)(5) +Total +($) +W. Rodney McMullen +Chairman and Chief +Executive Officer +2023 1,422,581 10,000,038 2,500,632 672,560 193,388 921,373 15,710,572 +2022 1,388,495 10,367,639 2,299,636 4,130,769 175,750 847,554 19,209,843 +2021 1,351,358 8,800,023 2,199,162 4,647,750 159,640 1,010,797 18,168,730 + +Gary Millerchip +Senior Vice President +and Chief Financial Officer +2023 901,411 3,400,063 850,220 224,176 313,928 5,689,798 +2022 809,879 3,358,792 749,879 1,269,231 265,342 6,453,123 +2021 726,815 2,800,022 699,735 1,498,006 261,842 5,986,420 + +Stuart W. Aitken +Senior Vice President and +Chief Merchant & Marketing +Officer +2023 1,003,024 3,400,063 850,220 211,950 325,497 5,790,754 +2022 915,632 3,346,838 749,879 1,269,231 277,694 6,559,274 +2021 878,387 2,800,022 699,735 1,527,013 300,214 6,205,371 + +Yael Cosset +Senior Vice President +and Chief Information Officer +2023 880,376 3,400,063 850,220 224,176 318,427 5,673,262 +2022 809,879 3,358,792 749,879 1,269,231 267,548 6,455,329 +2021 739,685 2,800,022 699,735 1,498,006 265,342 6,002,790 + +Timothy A. Massa +Senior Vice President +and Chief People Officer +2023 905,780 2,400,017 600,162 201,159 234,018 4,341,136 +2022 839,113 2,320,484 499,919 1,133,654 208,794 5,001,964 +2021 780,914 1,760,033 439,836 1,194,114 210,350 4,385,247 +(1) Amounts reflect the grant date fair value of restricted stock and performance units granted each fiscal year, as +computed in accordance with FASB ASC Topic 718. The following table reflects the value of each type of +award granted to the NEOs in 2023: +Name Restricted Stock Performance Units +Mr. McMullen $3,750,044 $6,249,994 +Mr. Millerchip $1,275,041 $2,125,022 +Mr. Aitken $1,275,041 $2,125,022 +Mr. Cosset $1,275,041 $2,125,022 +Mr. Massa $900,018 $1,499,999 + +The Restricted Stock values include the annual grant of restricted stock in 2023. +The grant date fair value of the performance units reflected in the stock awards column and in the table above is +computed 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. The assumptions used in calculating the val uations are set forth in Note 11 to +the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_67.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..67a8db3c7f3e666fc5a1bf79da385101dba16ff7 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,53 @@ +65 + +Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 202 3 +performance unit awards at the grant date is as follows: + +Name +Value of Performance Units +Assuming Maximum Performance +Mr. McMullen $11,718,756 +Mr. Millerchip $3,984,404 +Mr. Aitken $3,984,404 +Mr. Cosset $3,984,404 +Mr. Massa $2,812,509 + +(2) These amounts represent the aggregate grant date fair value of option awards computed in accordance with +FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the +consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. +(3) Non-equity incentive plan compensation earned for 2023 consists of amounts earned under the 2023 Annual +Incentive Plan. The 2023 Annual Incentive Plan was calculated at 24.02.% and was applied to each NEO’s +annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 22.71% of his annual incentive +target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. See +“2023 Annual Incentive Plan Results” in the Compensation Discussion and Analysis for more information on +this plan. +(4) The amount reported consists of preferential earnings on nonqualified deferred compensation, which only +applies to Mr. McMullen. The remainder of the NEOs do not participate in a defined benefit pension plan or in +a nonqualified deferred compensation plan. + Change in Pension Value. The actuarial present value of Mr. McMullen’s accumulated pension benefits +decreased by $168,788. This change in value of accumulated pension benefits is not included in the Summary +Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the +change in value of the benefit due to the increase in discount rates as well as the change in value of the benefit +due to aging. The Company froze the compensation and service periods used to calculate pension benefits for +active associates who participate in the affected pension plans, including Mr. McMullen’s, as of December 31, +2019. Beginning January 1, 2020, the affected active associates will no longer accrue additional benefits for +future service and eligible compensation received under these plans. Please see the 202 3 Pension Benefits +section for further information regarding the assumptions used in calculating pension benefits. + Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co. +Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings +of $193,388. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten - +year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of +each deferral year. For each participant, a separate deferral account is created each year and the interest rate +established for that year is applied to that deferral account until the deferred compensation is paid out. If the +interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long -term +interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of +the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts +in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual +earnings on the account exceed what the annual earnings would have been if the account earned interest at +120% of the corresponding federal rate, and discloses those amounts as prefer ential earnings. +(5) Amounts reported in the “All Other Compensation” column for 202 3 include Company contributions to defined +contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on +unvested restricted stock. In 2023, the total amount of perquisites and personal benefits for each of the NEOs +was less than $10,000. The following table identifies the value of each element of All Other Compensation: + +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_68.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..f993f363c27de19e760db940b6c92b71d99286eb --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,104 @@ +66 + +Name +Retirement Plan +Contributions(a) +Payment of +Dividend +Equivalents +on Earned +Performance +Units +Dividends +Paid on +Unvested +Restricted +Stock +Mr. McMullen $ 307,075 $ 369,950 $ 244,348 +Mr. Millerchip $ 117,025 $ 117,712 $ 79,191 +Mr. Aitken $ 127,351 $ 117,712 $ 80,434 +Mr. Cosset $ 120,463 $ 117,712 $ 80,252 +Mr. Massa $ 106,831 $ 73,991 $ 53,196 + +(a) Retirement plan contributions. The Company makes automatic and matching contributions to NEOs’ +accounts under the applicable defined contribution plan on the same terms and using the same formulas as +other participating associates. The Company also makes contributions to NEOs’ accounts under the +applicable defined contribution plan restoration plan, which is intended to make up the shortfall in +retirement benefits caused by the limitations on benefits to highly compensated individuals under the +defined contribution plans in accordance with the Code. + +2023 Grants of Plan-Based Awards +The following table provides information about equity and non-equity incentive awards granted to the NEOs in +2023. + Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Future +Payouts Under +Equity Incentive +Plan Awards +All Other +Stock +Awards: +Number +of +Shares of +Stock or +Units +(#)(3) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#)(4) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards +($) +Name Grant +Date +Target +($)(1) +Maximum +($)(1) +Target +(#)(2) +Maximum +(#)(2) +W. Rodney +McMullen 2,800,000 5,600,000 + 3/9/2023 79,366 3,750,044 + 3/9/2023 165,893 47.25 2,500,632 + 3/9/2023 132,275 248,016 6,249,994 +Gary Millerchip 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Stuart W. Aitken 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Yael Cosset 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Timothy A. +Massa 850,000 1,700,000 + 3/9/2023 19,048 900,018 + 3/9/2023 39,815 47.25 600,162 + 3/9/2023 31,746 59,524 1,499,999 + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_69.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e08a2d7274157996914fd972199fd91d9722325 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,43 @@ +67 + + +(1) These amounts relate to the 2023 performance-based annual incentive plan. The amount listed under “Target” +represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more +than 200% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is +200% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were +paid out in March 2024; are described in the Compensation Discussion and Analysis; and are included in the +Summary Compensation Table for 2023 in the “Non-Equity Incentive Plan Compensation” column and +described in footnotes 1 and 3 to that table. See “2023 Annual Cash Incentive Plan” in CD&A for more +information about the program for 2023. +(2) These amounts represent performance units awarded under the 2023 Long-Term Incentive Plan, which covers +performance during fiscal years 2023, 2024 and 2025. The amount listed under “Maximum” represents the +maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target +amount. 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 u nder FASB +ASC Topic 718, excluding the effect of estimated forfeitures. 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. The aggregate +grant date fair value of these awards is included in the Summary Compensation Table for 2023 in the “Stock +Awards” column and described in footnote 1 to that table. +(3) These amounts represent the number of shares of restricted stock granted in 202 3. 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 202 3 in the “Stock +Awards” column and described in footnote 1 to that table. +(4) These amounts represent the number of stock options granted in 202 3. 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 202 3 in the “Option Awards” +column and described in footnote 2 to that table. +The Compensation Committee, and the independent members of the Board in the case of the CEO, established +the incentive potential amounts for the performance-based annual incentive awards (shown in this table as “Target”) +and the number of performance units awarded for the long-term incentive awards (shown in this table as “Target”). +Amounts are payable to the extent that Kroger’s actual performance meets specific performance metrics established +by the Compensation Committee at the beginning of the performance period. There are no guaranteed or minimum +payouts; if none of the performance metrics are achieved, then none of the award is earned and no payout is made. +As described in the CD&A, actual earnings under the performance-based annual incentive plan may exceed the +target amount if the Company’s performance exceeds the performance goals, but are limited to 2 00% of the target +amount. The potential values for performance units awarded under the 2023-2025 Long-Term Incentive Plan are +more particularly described in the CD&A. +The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts +on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate. Any +dividends declared on Kroger common shares are payable on unvested restricted stock. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_7.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bb21433eed46a0e9c1fb9f24c8d91604ee6cc18 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,89 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_70.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c89e02edd61293ee5664c3d719865b541fd8332 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,104 @@ +68 + +2023 Outstanding Equity Awards at Fiscal Year-End +The following table provides information about outstanding equity-based incentive compensation awards for +the NEOs as of the end of 2023. The vesting schedule for each award is described in the footnotes to this table. The +market value of unvested restricted stock and unearned performance units is based on the closing price of Kroger’s +common shares of $46.14 on February 2, 2024, the last trading day of fiscal 2023. + + Option Awards Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares +or Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan Awards: +Number of +Unearned +Shares, +Units or +Other Rights +That Have +Not Vested +(#) +Equity +Incentive Plan +Awards: Market +or Payout Value +of Unearned +Shares, Units +or Other Rights +That Have Not +Vested +($) +W. Rodney McMullen 300,000 24.67 7/15/2024 27,044(5) 1,247,810 + 235,415 38.33 7/15/2025 47,224(6) 2,178,915 + 358,091 37.48 7/13/2026 45,324(7) 2,091,249 + 573,127 22.92 7/13/2027 79,366(8) 3,661,947 + 349,293 28.05 7/13/2028 24,712(9) 1,140,212 + 348,259 24.75 3/14/2029 64,510(10) 3,182,923 + 246,865 82,289(1) 29.12 3/12/2030 132,275(11) 6,555,550 + 130,486 130,487(2) 34.94 3/11/2031 + 35,714 107,144(3) 57.09 3/10/2032 + 165,893(4) 47.25 3/9/2033 +Gary Millerchip 9,600 24.67 7/15/2024 6,954(5) 320,858 + 13,992 38.33 7/15/2025 15,026(6) 693,300 + 27,972 37.48 7/13/2026 14,780(7) 681,949 + 34,905 22.92 7/13/2027 26,985(8) 1,245,088 + 30,251 28.05 7/13/2028 7,593(9) 350,341 + 82,919 24.75 3/14/2029 21,036(10) 1,037,916 + 51,116 22.08 7/15/2029 44,974(11) 2,228,911 + 63,480 21,160(1) 29.12 3/12/2030 + 41,518 41,519(2) 34.94 3/11/2031 + 11,646 34,938(3) 57.09 3/10/2032 + 56,404(4) 47.25 3/9/2033 +Stuart W. Aitken 11,149 22.92 7/13/2027 6,954(5) 320,858 + 33,124 28.05 7/13/2028 15,026(6) 693,300 + 99,503 24.75 3/14/2029 14,780(7) 681,949 + 63,480 21,160(1) 29.12 3/12/2030 26,985(8) 1,245,088 + 41,518 41,519(2) 34.94 3/11/2031 7,340(9) 338,668 + 11,646 34,938(3) 57.09 3/10/2032 21,036(10) 1,037,916 + 56,404(4) 47.25 3/9/2033 44,974(11) 2,228,911 +Yael Cosset 10,611 28.83 3/9/2027 6,954(5) 320,858 + 8,704 22.92 7/13/2027 15,026(6) 693,300 + 29,499 28.05 7/13/2028 14,780(7) 681,949 + 82,919 24.75 3/14/2029 26,985(8) 1,245,088 + 63,480 21,160(1) 29.12 3/12/2030 7,593(9) 350,341 + 41,518 41,519(2) 34.94 3/11/2031 21,036(10) 1,037,916 + 11,646 34,938(3) 57.09 3/10/2032 44,974(11) 2,228,911 + 56,404(4) 47.25 3/9/2033 + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_71.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..29ee1b2fc634ed125abcaebb3d400a9f37d12426 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,66 @@ +69 + +Timothy A. Massa 29,970 38.33 7/15/2025 5,152(5) 237,713 + 25,889 37.48 7/13/2026 9,445(6) 435,792 + 45,065 22.92 7/13/2027 9,854(7) 454,664 + 40,561 28.05 7/13/2028 19,048(8) 878,875 + 66,336 24.75 3/14/2029 6,782(9) 312,921 14,024(10) 691,943 + 47,022 15,674(1) 29.12 3/12/2030 31,746(11) 1,573,331 + 26,097 26,098(2) 34.94 3/11/2031 + 7,764 23,292(3) 57.09 3/10/2032 + 39,815(4) 47.25 3/9/2033 + +(1) Stock options vest on 3/12/2024. +(2) Stock options vest in equal amounts on 3/11/2024 and 3/11/2025. +(3) Stock options vest in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(4) Stock options vest in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(5) Restricted stock vests on 3/12/2024. +(6) Restricted stock vests in equal amounts on 3/11/2024 and 3/11/2025. +(7) Restricted stock vests in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(8) Restricted stock vests in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(9) Restricted stock vests on 3/9/2024. +(10) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance through fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. +(11) Performance units granted under the 2023 long-term incentive plan are earned as of the last day of fiscal 2025, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance in fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. + +2023 Option Exercises and Stock Vested +The following table provides information regarding 2023 stock options exercised, restricted stock vested, and +common shares issued pursuant to performance units earned under long-term incentive plans. + + Option Awards(1) Stock Awards(2) +Name +Number of +Shares +Acquired on +Exercise +(#) +Value +Realized on +Exercise +($) +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized +on +Vesting +($) +W. Rodney McMullen 194,880 5,912,659 228,769 11,880,857 +Gary Millerchip — — 73,141 3,792,552 +Stuart W. Aitken — — 73,838 3,825,427 +Yael Cosset — — 72,323 3,753,949 +Timothy A. Massa 46,000 1,013,795 43,942 2,290,693 +(1) Stock options have a ten-year life and expire if not exercised within that ten-year period. The value +realized on exercise is the difference between the exercise price of the option and the closing price of +Kroger’s common shares on the exercise date. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_72.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..44b63cdbe70c850841da5b2a5c735a6d2035080a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,62 @@ +70 + +(2) The Stock Awards columns include vested restricted stock and earned performance units, as follows: + + Vested Restricted Stock Earned Performance Units +Name +Number of +Shares +Value +Realized +Number of +Shares +Value +Realized +W. Rodney McMullen 97,581 $4,598,611 131,188 $7,282,246 +Gary Millerchip 31,399 $1,475,454 41,742 $2,317,098 +Stuart W. Aitken 32,096 $1,508,329 41,742 $2,317,098 +Yael Cosset 30,581 $1,436,851 41,742 $2,317,098 +Timothy A. Massa 17,704 $834,222 26,238 $1,456,471 +Restricted stock. The table includes the number of shares acquired upon vesting of restricted stock and the +value realized on the vesting of restricted stock, based on the closing price of Kroger common shares on the vesting +date. +Performance Units. Participants in the 2021-2023 Long-Term Incentive Plan were awarded performance units +that were earned based on performance criteria established by the Compensation Committee as described in “20 21- +2023 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of +performance achieved and were paid in common shares. The number of common shares issued, and the value +realized based on the closing price of Kroger common shares of $ 55.51 on March 14, 2024, the date of deemed +delivery of the shares, are reflected in the table above. +2023 Pension Benefits +The following table provides information regarding pension benefits for the NEOs as of the last day of fiscal +2023. Only Mr. McMullen participates in a pension plan. +Name Plan Name +Number of +Years Credited +Service +(#)(1) +Present Value of +Accumulated +Benefit +($)(2) +Payments during +Last fiscal year +($) +W. Rodney McMullen Pension Plan 34 1,597,556 — + Excess Plan 34 17,854,044 — +Gary Millerchip Pension Plan — — — + Excess Plan — — — +Stuart W. Aitken Pension Plan — — — + Excess Plan — — — +Yael Cosset Pension Plan — — — + Excess Plan — — — +Timothy A. Massa Pension Plan — — — + Excess Plan — — — + +(1) In 2018, the Company froze the service periods used to calculate pension benefits and thus, Mr. McMullen’s +number of years of credited service is less than his actual 45 years of service. +(2) The discount rate used to determine the present values was 5.27% for The Kroger Consolidated Retirement +Benefit Plan Spin Off (the “Pension Plan”) and 5.25% for The Kroger Co. Consolidated Retirement Excess +Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting +purposes. Additional assumptions used in calculating the present values are set forth in Not e 14 to the +consolidated financial statements in Kroger’s 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_73.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad0ce206fcdf033fcb0189e6f82e08375ccc7684 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,60 @@ +71 + +Pension Plan and Excess Plan +In 2023, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan. +Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in +Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused +by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in +accordance with the Code. +Although participants generally receive credited service beginning at age 21, certain participants in the Pension +Plan and the Excess Plan who commenced employment prior to 1986, including Mr. McMullen, began to accrue +credited service after attaining age 25 and one year of service. The Pension Plan and the Excess Plan generally +determine accrued benefits using a cash balance formula but retain benefit formulas applicable under prior plans for +certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Mr. McMullen is +eligible for these grandfathered benefits. +Grandfathered Participants +Benefits for grandfathered participants are determined using formulas applicable under prior plans, including +the Kroger formula covering service to The Kroger Co. As a “grandfathered participant,” Mr. McMullen will receive +benefits under the Pension Plan and the Excess Plan, determined as follows: +• 11∕2% times years of credited service multiplied by the average of the highest five years of total earnings +(base salary and annual cash incentive) during the last ten calendar years of employment, reduced by 11∕4% +times years of credited service multiplied by the primary social security benefit; +• normal retirement age is 65; and +• unreduced benefits are payable beginning at age 62. + +In 2018, we announced changes to these company-sponsored pension plans. The Company froze the compensation +and service periods used to calculate pension benefits for active associates who participate in the affected pension +plans, including the NEO participants, as of December 31, 2019. Beginning January 1, 2020, the affected active +associates no longer accrue additional benefits for future service and eligible compensation received under these +plans. +2023 Nonqualified Deferred Compensation +The following table provides information on nonqualified deferred compensation for the NEOs for 2023. Only +Mr. McMullen participates in a nonqualified deferred compensation plan. + +Name +Executive Contributions +in Last FY +Aggregate Earnings +in Last FY(1) +Aggregate Balance +at Last FYE(2) +W. Rodney McMullen $77,500 $960,586 $15,144,738 +Gary Millerchip — — — +Stuart W. Aitken — — — +Yael Cosset — — — +Timothy A. Massa — — — +(1) This amount includes the aggregate earnings on Mr. McMullen’s account, including any above-market or +preferential earnings. The amount of $193,388 earned in 2023 is deemed to be preferential earnings and is +included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the +Summary Compensation Table for 2023. +(2) The amount of $4,188,521 for Mr. McMullen was reported in the Summary Compensation Tables covering +fiscal years 2006 – 2022. +Executive Deferred Compensation Plan +Mr. McMullen participates in the Deferred Compensation Plan, which is a nonqualified deferred compensation +plan. Participants may elect to defer up to 100% of the amount of their salary that exceeds the sum of the FICA +wage base and pre-tax insurance and other Code Section 125 plan deductions, as well as up to 100% of their cash +incentive compensation. Kroger does not match any deferral or provide other contributions. Deferral account +amounts are credited with interest at the rate representing Kroger’s cost of ten -year debt as determined by Kroger’s +CFO and approved by the Compensation Committee prior to the beginning of each deferral year. The interest rate +established for deferral amounts for each deferral year will be applied to those deferral amounts for all +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_74.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc2c16616fab2cb31c8d729a2e6eaf6f7bae4e8a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,40 @@ +72 + +subsequent years until the deferred compensation is paid out. Participants can elect to receive lump sum distributions +or quarterly installments for periods up to ten years. Participants also can elect between lump sum distributions and +quarterly installments to be received by designated beneficiaries if the participant dies before distribution of deferred +compensation is completed. +Participants may not withdraw amounts from their accounts until they leave Kroger, except that Kroger has +discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency. +Participants who are “specified associates” under Section 409A of the Code, which includes the NEOs, may not +receive a post-termination distribution for at least six months following separation. If the associate dies prior to or +during the distribution period, the remainder of the account will be distributed to his or her designated beneficiary in +lump sum or quarterly installments, according to the participant’s prior election. +Potential Payments upon Termination or Change in Control +Kroger does not have employment agreements that provide for payments to the NEOs in connection with a +termination of employment or a change in control of Kroger. However, KEPP and award agreements for stock +options, restricted stock and performance units provide for certain payments and benefits to participants, including +the NEOs, in the event of a termination of employment or a change in control of Kroger, as defined in the applicable +plan or agreement. Our pension plans and nonqualified deferred compensa tion plan also provide for certain +payments and benefits to participants in the event of a termination of employment, as described above in the 202 3 +Pension Benefits section and the 2023 Nonqualified Deferred Compensation section, respectively. +The Kroger Co. Employee Protection Plan +KEPP applies to all management associates who are classified as exempt under the federal Fair Labor +Standards Act and to certain administrative or technical support personnel who are not covered by a collective +bargaining agreement, with at least one year of service, including the NEOs. KEPP provides severance benefits +when a participant’s employment is terminated actually or constructively within two years following a change in +control of Kroger, as defined in KEPP. The actual amount of the severance benef it is dependent on pay level +and years of service. Exempt associates, including the NEOs, are eligible for the following benefits: +• a lump sum severance payment equal to up to 24 months of the participant’s annual base salary and target +annual incentive potential; +• a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation; +• continued medical and dental benefits for up to 24 months and continued group term life insurance coverage +for up to six months; and +• up to $10,000 as reimbursement for eligible outplacement expenses. +In the event that any payments or benefits received or to be received by an eligible associate in connection with +a change in control or termination of employment (whether pursuant to KEPP or any other plan, arrangement or +agreement with Kroger or any person whose actions result in a change in control) would constitute parachute +payments within the meaning of Section 280G of the Code and would be subject to the excise tax under +Section 4999 of the Code, then such payments and benefits will either be (i) paid in full or (ii) reduced to the +minimum extent necessary to ensure that no portion of such payments or benefits will be subject to the excise tax, +whichever results in the eligible associate receiving the greatest aggregate amount on an after -tax basis. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_75.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..00496b2ac6052bc070e8eed34be12bf44e890f1b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,114 @@ +73 + +Long-Term Incentive Awards +The following table describes the treatment of long-term incentive awards following a termination of +employment or change in control of Kroger, as defined in the applicable agreement. In each case, the continued +vesting, exercisability or eligibility for the incentive awards will end if the participant provides services to a +competitor of Kroger. +Triggering Event Stock Options Restricted Stock Performance Units +Involuntary Termination Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary +Termination/Retirement +• Prior to minimum age and +five years of service(1) +Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary Termination/ +Retirement +• After minimum +age and five years of service(1) +Unvested options held greater +than one year continue vesting +on the original schedule. All +options are exercisable for +remainder of the original 10- +year term +Unvested shares held +greater than one year +continue vesting on the +original schedule +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Death Unvested options are +immediately vested. All options +are exercisable for the +remainder of the original 10- +year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results +through the end of the fiscal year in +which death occurs. Award will be +paid following the end of such fiscal +year +Disability Unvested options are +immediately vested. All options +are exercisable for remainder of +the original 10-year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Change in Control(3) +• For awards prior to 2019 +Unvested options are +immediately vested and +exercisable +Unvested shares +immediately vest +50% of the units granted at the +beginning of the performance period +earned immediately +Change in Control(3) +• For awards in March 2019 +and thereafter +Unvested options only vest and +become exercisable upon an +actual or constructive +termination of employment +within two years following a +change in control +Unvested shares only vest +upon an actual or +constructive termination of +employment within +two years following a +change in control +50% of the units granted at the +beginning of the performance period +earned upon an actual or +constructive termination of +employment within two years +following a change in control +(1) The minimum age requirement is age 62 for stock options and restricted stock and age 55 for +performance units. +(2) The prorated amount is equal to the number of weeks of active employment during the performance period +divided by the total number of weeks in the performance period. +(3) These benefits are payable upon an actual or constructive termination of employment within two years after a +change in control, as defined in the applicable agreements. +Quantification of Payments upon Termination or Change in Control +The following table provides information regarding certain potential payments that would have been made to +the NEOs if the triggering event occurred on the last day of the fiscal year, February 3, 2024, given compensation, +age and service levels as of that date and, where applicable, based on the closing market price per Kroger common +share on the last trading day of the fiscal year ($46.14 on February 2, 2024). Amounts actually received upon the +occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the +market price of Kroger common shares, and the officer’s age, length of service and compensation level. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_76.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..72deef11134a54369f028c7d6f68c1f4eab486d1 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,91 @@ +74 + + + +Name +Involuntary +Termination +Voluntary +Termination/ +Retirement Death Disability +Change +in Control +without +Termination +Change in +Control with +Termination +W. Rodney McMullen +Accrued and Banked +Vacation +$654,904 $654,904 $654,904 $654,904 $654,904 $654,904 +Severance – – – – – $8,400,000 +Continued Health +and Welfare +Benefits(1) +– – – – – $53,825 +Stock Options(2) $0 $2,862,013 $2,862,013 $2,862,013 $0 $2,862,013 +Restricted Stock(3) $0 $10,320,134 $10,320,134 $10,320,134 $0 $10,320,134 +Performance Units(4) $0 $4,018,713 $4,018,713 $4,018,713 $0 $5,375,149 +Executive Group Life +Insurance – – $2,000,000 – – – +Gary Millerchip +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,700,008 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,726 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,350,000 – – – +Stuart W. Aitken +Accrued and Banked +Vacation $11,539 $11,539 $11,539 $11,539 $11,539 $11,539 +Severance – – – – – $3,900,000 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,822 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,279,862 $3,279,862 $0 $3,279,862 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,500,000 + – – – +Yael Cosset +Accrued and Banked +Vacation $10,096 $10,096 $10,096 $10,096 $10,096 $10,096 +Severance – – – – – $3,650,016 + +Continued Health +and Welfare +Benefits(1) +– – – – – $34,081 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,312,500 – – – +Timothy A. Massa +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,500,016 +Continued Health +and Welfare +Benefits(1) +– – – – – +$53,286 +Stock Options(2) $0 $0 $559,069 $559,069 $0 $559,069 +Restricted Stock(3) $0 $0 $2,319,965 $2,319,965 $0 $2,319,965 +Performance Units(4) $0 $919,624 $919,624 $919,624 $0 $1,237,498 +Executive Group Life +Insurance – – $1,350,000 – – – + +(1) Represents the aggregate present value of continued participation in the Company’s medical, dental and +executive term life insurance plans, based on the premiums payable by the Company during the eligible period. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_77.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..94174d3819c7c7982fda02aa1988ce582a75dc64 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,91 @@ +75 +The eligible period for continued medical and dental benefits is based on the level and length of service, which +is 24 months for all NEOs. The eligible period for continued executive term life insurance coverage is +six months for the NEOs. The amounts reported may ultimately be lower if the NEO is no longer eligible to +receive benefits, which could occur upon obtaining other employment and becoming eligible for substantially +equivalent benefits through the new employer. +(2) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the intrinsic value +of the accelerated vesting of unvested stock options, calculated as the difference between the exercise price of +the stock option and the closing price per Kroger common share on February 3, 2024. A value of $0 is +attributed to stock options with an exercise price greater than the market price on the last day of the fiscal year. +In accordance with SEC rules, no amount is reported in the “Voluntary Termination/Retirement” column +because vesting is not accelerated, but the options may continue to vest on the original schedule if the +conditions described above are met. +(3) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the aggregate value +of the accelerated vesting of unvested restricted stock. In accordance with SEC rules, no amount is reported in +the “Voluntary Termination/Retirement” column because vesting is not accelerated, but the restricted stock +may continue to vest on the original schedule if the conditions described above are met. +(4) Amounts reported in the “Voluntary Termination/Retirement,” “Death” and “Disability” columns represent the +aggregate value of the performance units granted in 2022 and 2023, based on performance through the last day +of fiscal 2023 and prorated for the portion of the performance period completed. Amounts reported in the +change in control column represent the aggregate value of 50% of the maximum number of performance units +granted in 2022 and 2023. Awards under the 2021 Long-Term Incentive Plan were earned as of the last day of +2023 so each NEO age 55 or over was entitled to receive (regardless of the triggering event) the amount +actually earned, which is reported in the Stock Awards column of the 202 3 Option Exercises and Stock Vested +Table. +Pay Versus Performance +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item +402(v) of Regulation S-K, we are providing the following information about the relationship between executive +“compensation actually paid,” or “CAP,” and certain financial performance of the Company. For further +information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive +compensation with the Company’s performance, refer to the CD&A beginning on page 47. +PAY VERSUS PERFORMANCE TABLE* +(a) (b) (c) (d) (e) (f) (g) (h) +Year +Summary +Compensation +Table Total for +PEO +($)1 +Compensation +Actually Paid +to PEO +($)2 +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs +($)3 +Average +Compensation +Actually Paid +to Non-PEO +NEOs +($)4 +Value of Initial Fixed +$100 Investment Based +on5 Net +Income +($)6 +(in millions) +Adjusted +FIFO +Operating +Profit +($)7 +(in millions) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return +($) +2023 15,710,572 16,841,015 5,373,738 5,669,814 186.91 164.01 2,164 4,986 +2022 19,209,843 23,325,794 6,117,423 6,281,085 178.23 140.77 2,244 5,079 +2021 18,168,730 36,111,316 5,644,957 9,323,327 168.66 145.25 1,655 4,310 +2020 22,373,574 29,840,084 6,932,437 9,191,933 131.19 123.01 2,585 4,056 +*Totals in the above table might not equal the summation of the columns due to rounding amounts to the nearest dollar. +1. During fiscal 2020, 2021, 2022 and 2023 Mr. McMullen served as our Principal Executive Officer +(“PEO”). The dollar amounts reported in column (b) are the amounts of total compensation reported for +each corresponding year in the Total column of the Summary Compensation Table (“SCT”). +2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. +McMullen as computed in accordance with Item 402(v) of Regulation S -K. The amounts do not reflect the +actual amount of compensation earned by or paid to Mr. McMullen during the applicable year. In \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_78.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..18473d1522978c77cf392e2e0bbdfb9063e52e58 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,99 @@ +76 + +accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made +to Mr. McMullen’s total compensation for each year to determine the CAP: + +PEO SCT Total to CAP Reconciliation + +Year +Reported +Summary +Compensation +Table for PEO +($) +Reported +Summary +Compensation +Table Value of +Equity +Awards(a) +($) +Equity Award +Adjustments(b) +($) + Reported +Change in the +APV of +Pension +Benefits in +Summary +Compensation +Table (c) +($) +Plus: Pension +Benefit +Adjustments(b)(c) +($) +Compensation +Actually Paid to +PEO +($) +2023 15,710,572 12,500,670 13,631,113 16,841,015 + +a) The amounts included in this column are the amounts reported in “Stock Awards” and “Option +Awards” column of the SCT for fiscal 2023 and are subtracted from the Reported Summary +Compensation Table for PEO. +b) The equity award and pension benefit adjustments for fiscal 2023 were calculated in accordance +with the methodology required by Item 402(v) of Regulation S-K as follow: the equity award +adjustments for each applicable year include the addition (or subtraction, as applicable) of the +following: (i) the year-end fair value of any equity awards granted in fiscal 2023 that are +outstanding and unvested as of the end of the year; (ii) the amount equal to the change as of the +end of fiscal 2023 (from the end of the prior fiscal year) in the fair value of any awards granted in +prior years that are outstanding and unvested as of the end of fiscal 2023; (iii) for awards that are +granted and vest in fiscal 2023, the fair value as of the vesting date; (iv) for awards granted in +prior years that vest in fiscal 2023, the amount equal to the change as of the vesting date (from the +end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined +to fail to meet the applicable vesting conditions during fiscal 2023, a deduction for the amount +equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends +or other earnings paid on stock or option awards in the applicable year prior to the vesting date +that are not otherwise reflected in the fair value of such award or included in any other component +of total compensation for the applicable year. The valuation assumptions used to calculate fair +values did not materially differ from those disclosed at the time of grant. The amounts deducted +or added in calculating the equity award adjustments for the PEO are provided in the table below : +PEO Equity Award Adjustments +Year +Year End Fair Value +of Awards Granted in +the Year +($) +YoY Change in Fair +Value of Outstanding +& Unvested Awards +($) +Fair Value as of +Vesting Date of +Awards Granted +and Vested in the +Year +($) +Year over Year +Change in Fair Value +of Awards Granted +in Prior Years that +Vested in the Year +($) +Total Equity Award +Adjustments +($) +2023 13,146,559 (1,842,542) - 2,327,096 13,631,113 + +c) The amounts included in this column are the amounts reported in “Change in Pension and +Nonqualifed Deferred Compensation” of the SCT for fiscal 2023. Total Pension Benefit +Adjustments are equal to the Pension Service Costs incurred during the relevant period. No Prior +Service Costs were incurred as no modifications were made to the pension plan during the relevant +period. +3. The dollar amounts reported in column (d) represent the average of the amounts reported for our non -PEO +NEOs as a group in the Total column of the SCT in fiscal 2023. +4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to +the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S -K. The +dollar amounts do not reflect the actual average amount of compensation earned by or paid to these NEOs \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_79.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f10dd9be09f593433f973d2998878d33dafad0f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,113 @@ +77 + +as a group during fiscal 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the +following adjustments were made to the average total compensation for these NEOs as a group for fiscal +2023 to determine the CAP using the same methodology as described in footnote 2: +Average Non-PEO NEOs Summary Compensation Table Total to CAP Reconciliation + +Year +Average +Reported +Summary +Compensation +Table for Non- +PEO NEOs +($) +Average +Reported +Summary +Compensation +Table Value of +Equity Awards +for non-PEO +NEOs +($) +Average Equity +Award +Adjustments(a) +($) +Average +Reported +Change in the +APV of +Pension +Benefits in +SCT(b) +($) +Plus: Average +Pension Benefit +Adjustments +($) +Average +Compensation +Actually Paid to +non-PEO NEOs +($) +2023 5,373,738 3,937,757 4,233,833 - - 5,669,814 + +(a) The amounts deducted or added in calculating the total average equity award adjustments are +provided in the table below: + +Equity Award Adjustments for Non-PEO NEOs +Year + +Average Year End +Fair Value of +Awards Granted +in the Year +($) + +Year over Year +Average Change in +Fair Value of +Outstanding & +Unvested Awards +($) +Average Fair Value +as of Vesting Date +of Awards Granted +and Vested in the +Year +($) +Year over Year +Average Change in +Fair Value of Awards +Granted in Prior +Years that Vested in +the Year +($) + + + + +Total Average +Equity Award +Adjustment +($) +2023 4,120,112 (543,557) - 657,278 4,233,833 + +(b) Total Pension Benefit Adjustments are equal to the Pension Service Costs incurred during the relevant +period. No Prior Service Costs were incurred as no modifications were made to the pension plan +during the relevant period. + +5. Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the +measurement period, assuming dividend reinvestment, and the difference between the Company’s share +price at the end and the beginning of the measurement period by (b) the Company’s share price at the +beginning of the measurement period. The peer group selected by the Company for purposes of the TSR +benchmarking for the pay versus performance disclosures is the same peer group the Company uses for its +performance graph in the Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The +Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), +Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., +Walgreens Boots Alliance Inc. and Walmart Inc. The cumulative TSR depicts a hypothetical $100 +investment in Kroger common shares on February 1, 2021, and shows the value of that investment over +time (assuming the reinvestment of dividends) for each calendar year. A hypothetical $100 investment in +the Peer Group using the same methodology is shown for comparison. +6. Net income is as reported in the Company’s audited financial statements for the applicable year in +accordance with U.S. GAAP. +7. Adjusted FIFO Operating Profit equals gross profit, excluding the LIFO charge, minus OG&A, minus rent, +and minus depreciation and amortization. For a reconciliation of non-GAAP information, see pages 29-36 +of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April +2, 2024. +Most Important Performance Measures +The three measures listed below represent the most important financial performance measures used by the Company +to link CAP to Company performance for the 2023 fiscal year: \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_8.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a5bc75074049b1646bf277577f2adad8da63e5 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_8.txt @@ -0,0 +1 @@ +[This page intentionally left blank] \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_80.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea267736b846d72ef3024da9dfe02405fd8d9fc3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,58 @@ +78 + +• Adjusted FIFO Operating Profit +• ID sales, without fuel +• Adjusted net earnings per diluted share attributable to The Kroger Co. + +For a reconciliation of non-GAAP information, see pages 29-36 of our Annual Report on Form 10-K for the fiscal +year ended February 3, 2024, filed with the SEC on April 2, 2024. +COMPANY SELECTED METRIC – Adjusted FIFO Operating Profit + + +NET INCOME GRAPHICAL REPRESENTATION + + + + + $- + $1,000 + $2,000 + $3,000 + $4,000 + $5,000 + $6,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Adj. FIFO Operating Profit +CAP +CAP vs. Adj. FIFO Operating Profit +CEO CAP Non-CEO NEO CAP Adj. FIFO Operating Profit + $- + $500 + $1,000 + $1,500 + $2,000 + $2,500 + $3,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Net Income +CAP +CAP vs. Net Income +CEO CAP Non-CEO NEO CAP Net Income \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_81.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..47683554979ef6d27a05e20a2977f93428a098a5 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,62 @@ +79 + +KROGER TSR GRAPHICAL REPRESENTATION + + +CEO Pay Ratio +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and +Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total +compensation of our Chairman and CEO, Mr. McMullen, to the annual total compensation of our median associate. +As reported in the Summary Compensation Table, our CEO had annual total compensation for 202 3 of +$15,710,572. Using this Summary Compensation Table methodology, the annual total compensation of our median +associate for 2023 was $31,302. As a result, we estimate that the ratio of our CEO’s annual total compensation to +that of our median associate for fiscal 2023 was 502 to 1. Our median employee is a full-time associate in the +Central region. Over half of Kroger’s associates are part-time workers. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll +records and the methodology described below. The SEC rules for identifying the median compensated associate and +calculating the pay ratio based on that associate’s annual total compensation allow companies to adopt a variety of +methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their +compensation practices. As such, other companies may have different employment and compensation practices and +may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios report ed by other +companies and should not be used as a basis for comparison between companies. + +We identify the “median employee” from our employee population on the last day of our 12th fiscal period +(December 30, 2023), which included full-time, part-time, temporary, and seasonal employees who were employed +on that date. The consistently applied compensation measure we used was “base salary/wages paid,” which we +measured from the beginning of our payroll calendar year, January 1, 2023, through December 30, 2023; and as +reflected on 2023 W2 statements. For associates hired in 2023 or associates on le ave at the end of 2023, their +earnings were annualized based on their full-time equivalent percent and rate. We did not make any other +adjustments permissible by the SEC nor did we make any other material assumptions or estimates to identify our +median employee. There were no changes in our employee population or compensation arrangements that would +have significantly affected our pay ratio calculation. +We then determined the median associate’s annual total compensation using the Summary Compensation Table +methodology as detailed in Item 402(c)(2)(x) of Regulation S-K and compared it to the annual total compensation of +Mr. McMullen as detailed in the “Total” column of the Summary Compensation Table for 2023, to arrive at the pay +ratio disclosed above. Because our median associate in fiscal 2022 was not employed for all of fiscal 2023, we +identified a substitute median associate whose compensation is substantially similar as permitted under SEC rules on + $- + $20 + $40 + $60 + $80 + $100 + $120 + $140 + $160 + $180 + $200 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +TSR +CAP +CAP vs. TSR Performance +CEO CAP Non-CEO NEO CAP TSR Peer Group TSR \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_82.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..4af60b708794cf105a4946864ffe282fe20c2fa4 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,51 @@ +80 + +March 25, 2024 because we reasonably believed that continuing to use the prior median associate would have +significantly affected our CEO pay ratio disclosure and the CEO pay ratio would not reflect the actual ratio that was +used to calculate the pay ratio. +Compensation Policies as They Relate to Risk Management +As part of the Compensation Committee’s review of our compensation practices, the Compensation Committee +considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As +discussed in this Compensation Discussion and Analysis, our policies and practices for c ompensating associates are +designed to, among other things, attract and retain high quality and engaged associates. In this process, the +Compensation Committee also focuses on minimizing risk through the implementation of certain practices and +policies, such as the executive compensation recoupment policy, which is described above. Accordingly, we do not +believe that our compensation practices and policies create risks that are reasonably likely to have a material adverse +effect on Kroger. + +Item No. 2 – Advisory Vote to Approve Executive Compensation + +You are being asked to vote, on an advisory basis, to approve the compensation of our NEOs. +FOR The Board recommends a vote FOR the approval of compensation of our NEOs. + +The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we give our +shareholders the right to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed +earlier in this proxy statement in accordance with the SEC’s rules. +As discussed earlier in the CD&A, our compensation philosophy is to attract and retain the best management +talent and to motivate these associates to achieve our business and financial goals. Our incentive plans are designed +to reward the actions that lead to long-term value creation. To achieve our objectives, we seek to ensure that +compensation is competitive and that there is a direct link between pay and performance. To do so, we are guided by +the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. +The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote +relates to the compensation of our NEOs as described in this proxy statement. The vote is advisory. This means that +the vote is not binding on Kroger. The Compensation Committee of the Board is responsible for establishing +executive compensation. In so doing, the Compensation Committee will consider, along with all other relevant +factors, the results of this vote. +We ask our shareholders to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of +Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related +narrative discussion, is hereby APPROVED.” +The next advisory vote will occur at our 2025 Annual Meeting. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_83.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..c36b286e75fbef83f08f7cc707d7f53054da16e6 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,50 @@ +81 + +Item No. 3 – Ratification of the Appointment of Kroger’s Independent Auditor +You are being asked to ratify the appointment of Kroger’s independent auditor, PricewaterhouseCoopers +LLC. + +FOR The Board recommends a vote FOR the ratification of PricewaterhouseCoopers LLP as our +independent registered public accounting firm. +The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight +responsibilities regarding the Company’s financial reporting and accounting practices including the integrity of the +Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the +independent public accountants’ qualifications and independence; the performance of the Company’s internal audit +function and independent public accountants; and the preparation of the A udit Committee Report. The Audit +Committee performs this work pursuant to a written charter approved by the Board of Directors. The Audit +Committee charter most recently was revised during fiscal 2012 and is available on the Company’s website at +ir.kroger.com under Investors — Governance — Committee Composition. The Audit Committee has implemented +procedures to assist it during the course of each fiscal year in devoting the attention that is necessary and appropriate +to each of the matters assigned to it under the Audit Committee’s charter. The Audit Committee held 5 meetings +during fiscal year 2023. +Selection of Independent Auditor +The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, +retention, and oversight of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On +March 14, 2024, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for +the fiscal year ending February 1, 2025. PricewaterhouseCoopers LLP or its predecessor firm has been the +Company’s independent auditor since 1929. +In determining whether to reappoint the independent auditor, our Audit Committee: +• Reviews PricewaterhouseCoopers LLP’s independence and performance; +• Considers the tenure of the independent registered public accounting firm and safeguards around auditor +independence; +• Reviews, in advance, all non-audit services provided by PricewaterhouseCoopers LLP, specifically with +regard to the effect on the firm’s independence; +• Conducts an annual assessment of PricewaterhouseCoopers LLP’s performance, including an internal +survey of their service quality by members of management and the Audit Committee; +• Conducts regular executive sessions with PricewaterhouseCoopers LLP; +• Conducts regular executive sessions with the Vice President of Internal Audit; +• Considers PricewaterhouseCoopers LLP’s familiarity with our operations, businesses, accounting policies +and practices and internal control over financial reporting; +• Reviews candidates for the lead engagement partner in conjunction with the mandated rotation of the public +accountants’ lead engagement partner; +• Reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and +its peer firms; and +• Obtains and reviews a report from PricewaterhouseCoopers LLP describing all relationships between the +independent auditor and Kroger at least annually to assess the independence of the internal auditor. +As a result, the members of the Audit Committee believe that the continued retention of +PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of +our Company and its shareholders. +While shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor is +not required by Kroger’s Regulations or otherwise, the Board of Directors is submitting the selection of +PricewaterhouseCoopers LLP to shareholders for ratification, as it has in past years, as a good corporate governance +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_84.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f6f1aace35c86047d55485add2f891ff60317be --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,41 @@ +82 + +practice. If the shareholders fail to ratify the selection, the Audit Committee may, but is not required to, reconsider +whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the +appointment of a different auditor at any time during the year if it determines that such a change would be in the best +interests of our Company and our shareholders. +A representative of PricewaterhouseCoopers LLP is expected to participate in the meeting to respond to +appropriate questions and to make a statement if he or she desires to do so. +Audit and Non-Audit Fees +The following table presents the aggregate fees billed for professional services performed by +PricewaterhouseCoopers LLP for the annual audit and quarterly reviews of our consolidated financial statements for +fiscal 2023 and 2022, and for audit-related, tax and all other services performed in 2023 and 2022. + + Fiscal Year Ended + February 3, +2024 +($) +January 28, +2023 +($) +Audit Fees(1) 6,738,000 5,886,900 +Audit-Related Fees 1,394,000 982,000 +Tax Fees(2) 155,049 153,000 +All Other Fees(3) 970 5,850 +Total 8,288,019 7,027,750 + +(1) Includes annual audit and quarterly reviews of Kroger’s consolidated financial statements, the issuance +of comfort letters to underwriters, consents, and assistance with review of documents filed with the +SEC. +(2) Includes pre-approved assistance with tax compliance and assistance in connection with tax audits. +(3) Includes use of accounting research tool. +The Audit Committee requires that it approve in advance all audit and non -audit work performed by +PricewaterhouseCoopers LLP. Pursuant to the Audit Committee audit and non -audit service pre-approval policy, the +Committee will annually pre-approve certain defined services that are expected to be provided by the independent +auditors. If it becomes appropriate during the year to engage the independent accountant for additional services, the +Audit Committee must first approve the specific services before the in dependent accountant may perform the +additional work. +PricewaterhouseCoopers LLP has advised the Audit Committee that neither the firm, nor any member of the +firm, has any financial interest, direct or indirect, in any capacity in Kroger or its subsidiaries. +The Board of Directors Recommends a Vote For This Proposal. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_85.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..294938bedf5da5b0fbb35e143ce459c5c0ddb2c2 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,35 @@ +83 + +Audit Committee Report +Management of the Company is responsible for the preparation and presentation of the Company’s financial +statements, the Company’s accounting and financial reporting principles and internal controls, and procedures that +are designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws +and regulations. The independent public accountants are responsible for auditing the Company’s financial +statements and expressing opinions as to the financial statements’ conformi ty with generally accepted accounting +principles and the effectiveness of the Company’s internal control over financial reporting. +In performing its functions, the Audit Committee: +• Met separately with the Company’s internal auditor and PricewaterhouseCoopers LLP with and +without management present to discuss the results of the audits, their evaluation and +management’s assessment of the effectiveness of Kroger’s internal controls over financial +reporting and the overall quality of the Company’s financial reporting; +• Met separately with the Company’s Chief Financial Officer or the Company’s General Counsel +when needed; +• Met regularly in executive sessions; +• Reviewed and discussed with management the audited financial statements included in our Annual +Report; +• Discussed with PricewaterhouseCoopers LLP the matters required to be discussed under the +applicable requirements of the Public Company Accounting Oversight Board and the SEC; and +• Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the +applicable requirements of the Public Accounting Oversight Board regarding the independent +public accountant’s communication with the Audit Committee concerning independ ence and +discussed the matters related to their independence. +Based upon the review and discussions described in this report, the Audit Committee recommended to the +Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report +on Form 10-K for the year ended February 3, 2024, as filed with the SEC. +This report is submitted by the Audit Committee. +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_86.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..4844a5ece43a1bb2a0e9cfd8626807b571e50910 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,49 @@ +84 +Items 4 – 7 +SHAREHOLDER PROPOSALS +Included in this proxy statement are four separate shareholder proposals that have been submitted under SEC +rules by shareholders who notified the company of their intention to present the proposals for voting at the 202 4 +Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions about +Kroger that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s +responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole +responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and +shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written +request made to Corporate Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202 -1100. The +information on, or accessible through, Kroger’s websites or report links included in this proxy statement, including +the statements that follow, is not part of, or incorporated by reference into, this proxy statement. +AGAINST The Board recommends a vote AGAINST each of the following shareholder proposals, in each +case if properly presented at the meeting, for the reasons stated in Kroger’s statements in +opposition following each shareholder proposal. +Item No. 4 – Shareholder Proposal – Report on Public Health Costs from Sale of Tobacco Products +We have been advised that The Sisters of St. Francis of Philadelphia or an appointed representative, along with eight +co-filers, will present the following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“RESOLVED, shareholders ask that the board commission and disclose a report on the external public health +costs created by the sale of tobacco products by our company (the "Company") and the manner in which such +costs affect the vast majority of its shareholders who rely on overall market returns. +The negative health and productivity impacts from consumption of tobacco products impose $1.2 trillion in +social damage; tobacco's unpriced social burden amounts to almost 3 percent of global GDP annually.1 Yet , +in spite of the Company dedicating an entire division , Kroger Health, to addressing its customers' healthcare +needs2, as well as the overwhelming evidence that tobacco - a known carcinogen that impairs respiratory +function - significantly prejudices the health outcomes of smokers, the Company continues to sell tobacco +products in its stores. In 2019 the company discontinued the sale of e-cigarettes in response to news reports +of vaping-related illnesses and deaths. The science on cigarettes and other combustible tobacco products is +settled. They cause illness and death. +These public health costs, year after year, are devastating to economic growth and further compound the +financial devastation wrought by the COVID-19 pandemic. Yet Kroger does not disclose any methodology +to address the public health costs of its tobacco sales. Thus, shareholders have no guidance as to costs the +Company is externalizing and consequent economic harm. This information is essential to shareholders, the +majority of whom are beneficial owners with broadly diversified interests. +But Kroger undermines its commitments to promoting good health and ultimately the interests of its +diversified shareholders by not disclosing the social and environmental costs and risks imposed on +stakeholders, even when these costs and risks threaten society, the economy and the performance of other +companies. All stakeholders are unalterably harmed when companies impose costs on the economy that +lower GDP, which reduces equity value.3 While the Company may profit by ignoring costs it externalizes, +diversified shareholders will ultimately pay these costs, and they have a right to ask what they are. +The Company's disclosures do not address this issue, because they do not address the public health costs +that Kroger's tobacco sales impose on shareholders as diversified investors who must fund retirement, +education, public goods and other critical social needs. This is a separate social issue of great importance. A +report would help shareholders determine whether these externalized costs and the economic harm they may +create ultimately serve their interests.” +1 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm +2 Kroger Health – Business & Community Health Solutions +3 https://www.unempfi.org/fileadmin/documents/universal_ownership_full.pdf \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_87.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..f47672c2bb1dacd5048b8aaf2c62d3a3baa7365e --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,44 @@ +85 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger takes the responsibility of selling tobacco products very seriously and has established policies and processes +to limit the sale of these items only to customers who are legally permitted to purchase them. We offer customers a +wide range of choices across all product categories to meet wide-ranging tastes and preferences, including food and +discretionary items. +The Company supports our customers’ freedom of choice and offers a variety of ways to improve health, +including tobacco cessation. +The Kroger family of companies is committed to ethical and responsible behavior in all parts of our business. Our +behavior is rooted in Our Purpose – to Feed the Human Spirit™ – and our promise to our customers. This includes +upholding Our Values, which have been the foundation of Kroger’s culture for decades. The Audit Committee and +Public Responsibilities Committee of the Board of Directors oversee progress in regulatory compliance and +pharmacy safety measures. +We recognize our responsibility as a business to support our communities and help families by making it easier for +them to live healthier lives. We also believe in our customers’ freedom of choice, and adult customers can choose to +purchase tobacco products understanding fully the potential health impacts. +The Company designs its approach and policies to comply with regulations governing the sale of tobacco +products. +Tobacco sales, like the sales of many products, are governed by regulations, which we strictly follow. The +Company’s Tobacco Sales Policy is designed to comply with these regulations and affirm our commitment to the +health and welfare of our nation’s youth by reducing adolescent access to tobacco. The policy outlines internal +business procedures and best practices to maintain compliance at retail stores. +The Company continually reviews its product assortment, including tobacco and tobacco cessation products. +Notably, recent studies show the percentage of U.S. adults who smoke cigarettes remains near record lows.1 Sales +for both tobacco products and tobacco cessation products at Kroger have similarly decreased in recent years. +The Company encourages health and healthier choices through our core grocery business, Kroger Health +strategy, and community engagement. +We aim to serve and improve health for millions of people across the country through our business operations, ESG +strategy, and Kroger Health’s convenient and accessible services. We encourage healthy food and lifestyle choices +to support our customers and communities, offering tools, resources and services that advance population health. We +inform our customers and associates about the importance of healthy choices, and we equip Kroger Health's retail +pharmacy and health clinic teams and telehealth counselors to support people making healthier choices, including +quitting tobacco. +Specifically related to the use of tobacco products, we: +• Offer smoking cessation coaching programs that are available to all, including coaching through telehealth +services; +• Offer affordable prescription and over-the-counter smoking cessation products that are available to all; and +• Encourage associates not to use tobacco through Company health plan incentives, coverage for +smoking cessation products, and employee assistance programs for smoking cessation. +Kroger continues to make a wide range of fresh, nutritious foods as well as health and wellness services more +affordable and convenient for millions of customers and for local communities across the U.S. As a trusted local +partner, we also provide essential support for our communities by offering a wide range of vaccinations that prevent +disease and improve population health. +1 https://news.gallup.com/poll/509720/cigarette-smoking-rate-steady-near-historical-low.aspx \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_88.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb6784dbb3ffb4c8c3d59658ad366618d014dc99 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,39 @@ +86 +Additional public reporting on tobacco use is not in the best interests of our shareholders. +Assessing the external public health costs related to the Company’s sale of a single category of products is not +reasonable or practicable given the resources and expertise required to consider all externalities and related topics +outside of our control. In light of the above, we do not believe an additional report would add meaningfully to the +extensive body of research currently available on this subject and therefore do not believe such an additional report +is necessary. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 5 – Listing of Charitable Contributions of $10,000 or more +We have been advised that The Louis B & Diana R Eichhold Trust or an appointed representative will present the +following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“Whereas the Company's charitable contributions, properly managed, are likely to enhance the reputation of the +Company; +Whereas increased disclosure regarding appropriate charitable contributions can create good will for our Company; +Whereas making the benefits of our Company's philanthropic programs better known is likely to promote the +company's interests; +Whereas feedback from employees, shareholders, and customers could help guide the Company's future charitable +giving process. +Resolved: The Proponent requests that the Board of Directors consider listing on the Company website any +recipient of $10,000 or more of direct contributions, excluding employee matching gifts. +Supporting Statement +Absent a system of accountability and transparency, some charitable contributions may be made unwisely, +potentially harming the Company's reputation and shareholder value. Corporate philanthropic gifts should be given +as much exposure as possible, lest their intended impact on goodwill is diminished. For example, if we gave to the +American Cancer Society, thousands our stakeholders might potentially approve of our interest in challenging this +disease. Likewise, our support of Planned Parenthood could win the praise of millions of Americans who have had +an abortion at one of their facilities. Educational organizations like the Southern Poverty Law Center have seen an +increase in funding since they included several conservative Christian organizations on their list of hate groups. +Our stake holders and customers might be similarly enthused if we supported them. Be it the Girl Scouts, +American Heart Association, Boys and Girls Club of America, Red Cross, or countless possible recipients, our +support should be publicly noted. Those who might disagree with our decisions can play a valuable role also. Some +charities may be controversial. +Charitable contributions come from the fruit of our employee's labor and belong to our shareholders. Both groups +represent a wide diversity of opinions. More importantly, we market ourselves to the general public and should +avoid offending segments of this most critical group. It would be unfortunate if a charitable contribution resulted in +lower employee morale and shareholder interest, much less a loss of potential revenue. +Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more +beneficial choices.” +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_89.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..319844685491d30ce79248db0b384d0fb6509cae --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,45 @@ +87 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long history of giving back meaningfully in the communities we serve. Charitable giving is central to +Our Purpose – to Feed the Human Spirit – and strategically aligned to our mission – Kroger’s Zero Hunger | Zero +Waste impact plan. This plan enables Kroger to pursue our goal to help create communities free of hunger and waste +across the country. Additionally, we provide annual public disclosures related to charitable giving areas of focus and +grant-making. +Every year, we direct charitable contributions at the national, regional, and local levels to advance positive impacts +for people and our planet. This giving includes funds, in-kind product donations, and retail store donations of +surplus fresh food that our associates recover for local food bank partners through our leading Zero Hunger | Zero +Waste Food Rescue program. For example, in 2023, 100% of our retail stores participated in the Food Rescue +program, donating more than 114 million pounds of fresh food to our communities. +Through corporate giving and the work of our two nonprofit foundations – The Kroger Co. Foundation and The +Kroger Co. Zero Hunger | Zero Waste Foundation – we direct more than $300 million annually to partners and +causes that align with our mission. Of this, more than 75% supports hunger relief programs to feed individuals and +families where we live and work. These totals include support from our associates and customers through in -store +fundraising programs at checkout that benefit the Zero Hunger | Zero Waste Foundation. The largest share of +corporate funds, in-kind product donations, and customer donations is directed to the Feeding America -affiliated +network of local food banks, pantries, and agencies in our communities. +Other national organizations receiving significant charitable funds from Kroger include No Kid Hungry, American +Red Cross, United Service Organizations (USO), American Heart Association, and World Wildlife Fund. Notably, +Kroger is the largest cumulative corporate donor to the USO in the organization’s history, showing our long- +standing support for the nation’s active-duty military service men and women and their families. At the regional and +local levels, we support other nonprofit organizations and causes that matter most to our associates and customers. +The Company provides substantial public reporting on nonprofit foundation grant -making. +Kroger provides detailed annual disclosures on the work of our two foundations. As registered charitable +organizations with 501(c)(3) status, a list of each foundation’s annual grants is publicly available through Form 990 - +PF filings. +The Kroger Co. Foundation, the Company’s private foundation established in 1987, focuses grant-making on +causes that support hunger relief; sustainability; disaster relief; diversity and inclusion; and education and youth +development. The Foundation’s 2023 Report includes grantee highlig hts and a view of funding levels across the +country. This report is available here: https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co- +Foundation-2022-Report.pdf. The information on, or accessible through, this website is not part of, or incorporated +by reference into this proxy statement. +In 2022, the Kroger Foundation directed $8 million in grants, of which 60% aligned with hunger relief and +sustainability causes. Specific grants and grant recipients are highlighted in the foundation annual report. +The Kroger Co. Zero Hunger | Zero Waste Foundation, a nonprofit public charity established in 2018, is +designed to advance collective action and innovation to build a better food system for the future. More about the +Zero Hunger | Zero Waste Foundation is available here: https://thekrogercozerohungerzerowastefoundation.com/. +The information on, or accessible through, this website is not part of, or incorporated by reference into this proxy +statement. +More details about the Foundation’s general grant-making and signature program, the Zero Hunger | Zero Waste +Innovation Fund, are disclosed in its 2023 annual report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/The-Kroger-Co-Zero-Hunger-Zero-Waste-Foundation-Report_2023.pdf. The information +on, or accessible through, this website is not part of, or incorporated by reference into this proxy statement. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_9.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..32392e5656976d2db62098ad872b76fe5c7d47aa --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,39 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_90.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5e7886c594de775f84d0cb6887516abf35526b --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +In 2022, the Zero Hunger | Zero Waste Foundation directed $11.3 million in grants; of these, 96% aligned to hunger +relief and sustainability causes. Grants included $8.4 million in funds to improve food access and food security and +$2.3 million to advance more sustainable food systems. Grant highlights are included in the Zero Hunger | Zero +Waste Foundation report. +We follow established guidelines for charitable giving. +Kroger follows best practices and specific guidelines when reviewing grant requests. Our Donation Guidelines +provide direction on the types of organizations that Kroger supports and, importantly, make clear the types of +organizations to which donations will not be granted. We accept and consider donation requests from 501(c)(3) +registered nonprofit organizations through an online grant management platform. We use the Guidestar Charity +Check to confirm they meet all Internal Revenue Service requirements to receive grants and donations. The +Company’s Donation Guidelines are publicly available here: https://thekrogerco.versaic.com/login?Select-A- +Store=Enabled&ReturnTo=/default.aspx. The information on, or accessible through, this website is not part of, or +incorporated by reference into this proxy statement. +We do not make charitable donations to individuals, political campaigns, sectarian or religious organizations for +projects that serve only its own members or supporters, or organizations that discriminate based on race, color, sex, +pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, genetic information, or any +other characteristic protected by applicable law. +The Company has adequate public disclosures related to charitable giving areas of focus and annual grant- +making. +We believe the extensive information and other disclosures already provided in Kroger’s annual ESG report, The +Kroger Co. Foundation annual report, The Kroger Co. Zero Hunger | Zero Waste Foundation annual report, public +filings, and our website provide ample disclosures related to charitable giving. Additional reporting on charitable +giving at this time is an unnecessary and inefficient use of shareholder resources. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 6 – Shareholder Proposal – Living Wage Policy +We have been advised that Shareholder Commons, on behalf of LGIM America, or an appointed representative, +along with four co-filers, will present the following proposal for consideration during the 2024 Annual +Shareholders’ Meeting. +“ITEM 6: Set compensation policy that optimizes portfolio value for Company shareholders BE IT RESOLVED, +shareholders ask that the board and management exercise their discretion to establish Company wage policies that +are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings +necessary to meet a family’s basic needs, because Company compensation practices that fail to provide a living +wage are harmful to the economy and therefore to the returns of diversified shareholders.1 +Supporting Statement: +Kroger increased associates’ average hourly wage to $18/hour in 2023, suggesting its lowest paid workers earn still less. +The living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults)2. Kroger’s +CEO, meanwhile, makes 671 times more than the Company’s median employee. While Kroger’s workforce is 49.6 +percent female and 40.6 percent people of color, these groups compose only 31.7 percent and 26.3 percent of store +leaders3, indicating they make up a disproportionate number of employees not earning a living wage. +1 https://theshareholdercommons.com/case-studies/labor-and-inequality-case-study/ +2 https://livingwage.mit.edu/articles/103-new-data-posted-2023-living-wage-calculaor +3 https://thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_91.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e2d7944a37d54dbbe581f70c243a1e3aa5a6c9 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,48 @@ +89 +In response to a recent survey, 75 percent of Kroger workers said they were food insecure, 14 percent said they were +homeless, and 63 percent said they earned too little to cover basic expenses.4 +Such inequality and disparity harm the entire economy. For example, closing the living wage gap worldwide could +generate an additional $4.56 trillion every year through increased productivity and spending, 5 translating to a more +than 4 percent increase in annual GDP. A 2020 report found that had four ke y racial gaps for Black Americans— +wages, education, housing, and investment—been closed in 2000, $16 trillion could have been added to the U.S. +economy. Closing those gaps in 2020 could have added $5 trillion t o the U.S. economy over the ensuing five years.6 +By underpaying so many of its employees, Kroger may believe it will increase margins and thus financial +performance. But gain in Company profit that comes at the expense of society and the economy is a bad trad e for +Company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives. +The costs and risks created by low wages and inequality will directly reduce long- term diversified portfolio returns +because a drag on GDP directly reduces returns on diversified portfolios.7 +This proposal asks the Board to set a Company compensation policy of paying a living wage to prevent contributing +to inequality and racial/gender disparity. Kroger could achieve this Proposal’s objective by securing Living Wage +for US Employer certification.8 Additionally, MIT has an online living wage calculator, or Kroger can work within +frameworks promulgated by organizations such as IDH Sustainable Trade Initiative or The Living Wage Network. +Kroger should use such frameworks in a manner that allows shareholder s to gauge compliance and progress, while +providing the Company with discretion as to how to achieve the living-wage goal. +Please vote for: Set compensation policy that optimizes portfolio value for Company shareholders – +Proposal 6” +The Board of Directors Recommends a Vote Against the Proposal for the Following Reasons: +Kroger is proud to be an employer with a culture of opportunity and advancement that has created an environment +where people from any walk of life can come for a job and discover for a career. Kroger has provided an incredible +number of +people with first jobs, second chances, and lifelong careers and we take seriously our role as a leading +employer in the United States. +Proponents acknowledge Kroger’s progress in raising associate wages. +Kroger’s national average hourly rate is nearly $19 per hour and its average hourly rate inclusive of benefits like health +care and retirement is nearly $25 per hour. +In fact, Kroger has raised wages more than 33% the last five years, far outpacing inflation. The Company has invested +a total of $2.4 billion in incremental investments since 2018, which has increased our national average hourly rate of +pay from $13.66 to nearly $19, or nearly $25 per hour with comprehensive benefits. +In addition to Kroger’s historic investments in wages and benefits, the Company is committed to growing +tomorrow’s leaders through programs including free financial coaching and our education benefit, which offers +associates up to $21,000 in tuition reimbursements, available to both full and part time associates. +Kroger will continue investing in wages in 2024. +Kroger will continue making significant incremental investments in associates in 2024. These investments are +included in Kroger’s forward-looking financial model. These continued investments will further raise average hourly +rates, continue improving healthcare options, establish new training and development opportunities, and more. +The majority of Kroger’s workforce is covered under collective bargaining agreements, which facilitate pay equity +for frontline associates. Wages, healthcare and pensions are included in approximately 350 collective bargaining +agreements that cover approximately 64% of our associates. The negotiated pay structures within those agreements +4 https://www.mytimes.com/2022/02/12/business/kroger-grocery-stores-workers-pay.html +5 https//tacklinginequality.org/files/introduction.pdf +6 https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3ldy7vY59bOtN2lxVQM= +7 https://www.epi.org/publication/secular-stagnation/ +8 https://livingwageforus.org/becoming-certified/ \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_92.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d7794945075480ded5fd7658fb2ed3a86eb0d6a --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,51 @@ +90 +facilitate standard and consistent pay progression based on tenure and experience. Pay parity is promoted within the +model because of the structured wage grids and inherent progression framework. Non -union hourly roles follow +similar wage progressions. +Kroger’s pay policies confirm there are no meaningful differences in pay for associates by race or gender. +Earlier this year, Kroger published a new Statement on Pay Equity to reflect findings from our annual pay analysis to +monitor the company’s performance and identify unintended discrepancies in compensation practices. In 2023 we +enhanced the methodology for pay analyses to align with evolving industry standards. Our review of associates’ total +compensation for calendar year 2023, including base pay, cash bonuses and equity, adjusting for factors such as +position, tenure, performance, geographic location and collective bargaining unit, confirms there are no meaningful +differences in pay on an adjusted basis for associates who self-identify as male, female or a person of color. +Kroger’s aim is to strike a balance between significantly increasing wages for our associates over time while +also keeping food affordable for our customers. +The Board’s fiduciary duty includes the obligation to maintain a financially sustainable and growing business over +time, which allows Kroger to create additional social and economic benefits, most notably the creation of more jobs +and growth opportunities, for more people in our communities. +Adopting a nascent, under -developed and overly -prescriptive approach to well -established pay policies, especially +one that fails to account for free -market dynamics, is unnecessary and potential harmful to the interests of Kroger’s +associates, customers, communities, and shareholders – all of whom benefit from the Company’s thoughtful approach +to wage policy and sustainable growth. +Considering the Company’ current transparency and disclosures on this topic, and its established framework that takes +into account geographical and market -based pay differences, ensures equal pay for equal work, and the fact that the +majority of our workfo rce is covered under collective bargaining agreements, we recommend a vote AGAINST this +motion. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 7 – Just Transition Report +We have been advised that Domini Impact Equity Fund or an appointed representative will present the following +proposal for consideration during the 2024 Annual Shareholders’ Meeting. +1 https://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_ent/documents/publication/wcms_432859.pdf; +https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--- publ/documents/publication/wcms_711919.pdf +2 https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf +3 https://insideclimatenews.org/news/31122023/california-farmworkers-dying-in-the-heat/ +4 https://www.bloomberg.com/news/articles/2021-08-12/farmworkers-overheat-on-frontlines-of-climate-change +5 https://www.farmworkerjustice.org/wp-content/uploads/2022/05/EJ-Symposium-Issue-Brief-Climate- Change_FINAL.pdf +6 https://polarisproject.org/wp- content/uploads/2021/06/Polaris_Labor_Exploitation_and_Trafficking_of_Agricultural_Workers_During_the_Pand +emic.pdf +“Whereas: +A “just transition” is increasingly recognized as an important component of climate action to address the needs, +priorities, and realities of society while mitigating climate change and fostering resilience. The International Labor +Organization (ILO) published just transition guidelines for governments and businesses with guidance on anticipating, +preparing, and adapting to the employment impacts of climate change,1 premised on respect for rights at work and +fundamental labor protections, including against forced labor. The World Benchmarking Alliance (WBA) developed a +methodology to assess companies on their contribution to a just transition.2 + +Kroger acknowledges in its 10K and CDP report that climate change presents physical and transition risks that may +impact the company’s ability to operate its own facilities and supply chain. The food and agriculture industry +contributes one third of global greenhouse gas emissions, and the agricultural supply chain is vulnerable to changing +patterns of drought, extreme heat, and precipitation, as well as climate migration. In 2030, the sector may account for +60 percent of global work hours lost to heat stress. Farmworkers face heightened climate related risks, including heat +related illness and death,3 exhaustion and heat stress,4 mental health stressors, increased pesticide exposure,5 as well as +other severe human rights violations including forced labor.6 \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_93.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..6961d37cfd5e64de2fb4f291e89c5fb9435f4bc3 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,49 @@ +91 +Yet, Kroger’s disclosures overlook the climate-related risks to workers, such as impacts of heat stress on job +quality and productivity for workers that harvest and deliver the commodities and products to Kroger’s stores. +Failure to identify, evaluate, and adapt to these risks can lead to business disruptions, lack of supply chain +resilience, and legal and reputational risk. In 2023 a Kroger distribution center employee died on the job due to +heat-related causes.7 Despite Kroger’s existing responsible sourcing policies, it has been connected in 2023 and +2024 to major forced labor cases in the United States involving its suppliers, which resulted in convictions or +are currently being prosecuted.8 +9 +Worker-driven social responsibility models, including the Fair Food Program (FFP), + have been responsive to identifying the risks of climate change and developing appropriate and enforceable protections from these +risks and others facing farmworkers, without fear of retaliation.10 +Resolved: Shareholders request that the Board of Directors publish a just transition report, at reasonable cost +omitting proprietary information, disclosing how Kroger is assessing and addressing the impacts of climate +change and ensuring fundamental labor protections for workers in its agricultural supply chain, consistent with +the ILO’s just transition guidelines. +Supporting Statement: Shareholders recommend the report include, at Board discretion: +● A set of measurable, time-bound indicators, such as those recommended by the WBA, +● An evaluation of the risks facing its agricultural supply chain workers, and how, if at all Kroger is +addressing them, detailing how its efforts compare to other effective mechanisms such as the FFP, and +● Disclosure on the stakeholder engagement process used in developing its just transition report.” +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long-standing commitment to corporate responsibility in our own operations and global supply chain to +provide affordable food and other essential items for communities across the U.S. We put our associates, customers +and communities first in everything we do and lead with our Values. We welcome and include the perspectives of our +associates and other workers in our supply chain in the context of goal-setting, program development and +implementation, and progress reporting. +The Company already provides robust annual reporting on sustainability and social impact topics and +engages stakeholders to inform content. +People are at the heart of Kroger’s purpose-driven approach and shared-value ESG Strategy: Thriving Together. As +outlined in our ESG report, we aim to advance positive impacts across three strategic pillars – People, Planet, and +Systems. The centerpiece of our strategy is Kroger’s Zero Hunger | Zero Waste impact plan. It reflects our people- +first approach to complex food systems issues, including food access and food security, health and nutrition, waste +and circularity, responsible sourcing, climate resilience, and climate-related impacts from agricultural production, +including food loss and waste. +Kroger’s detailed annual ESG report and other public disclosures describe our strategy and management approach: +https://www.thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. Additional +topic-specific resources are available here: https://www.thekrogerco.com/esgreport/. The information on, or +accessible through, these websites are not part of, or incorporated by reference into this proxy statement. +Just Transition approaches are nascent and not an established reporting practice. +7 https://www.theguardian.com/us-news/2023/aug/28/kroger-worker-dies-heat-temperature +8 https://www.dol.gov/newsroom/releases/whd/whd20230202-2; https://www.levernews.com/how-krogersmerger- +push-leads-back-to-alleged-human-trafficker/ +9 https://www.cbp.gov/sites/default/files/assets/documents/2021- +Aug/CBP%202021%20VTW%20FAQs%20%28Forced%20Labor%29.pdf; https://blog.dol.gov/2022/01/13/exposingthe- +brutality-of-human-trafficking; https://www.ams.usda.gov/services/grants/flsp/faq +10 https://ciw-online.org/blog/2023/11/how-the-fair-food-programs-heat-protections-are-saving-lives-and-leadingthe- +way-toward-a-worker-driven-solution/; https://www.thepacker.com/news/social-responsibility/farmingunder- +big-red-sun-worker-advocates-push-heat-stress-protections \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_94.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ad07092265dcdafe2a88335675859131f24c977 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,52 @@ +92 + +Feedback from our shareholders and subject matter experts about Kroger’s ESG strategy and public reporting is +overwhelmingly positive. Report contents are shaped by established materiality best practices; in 2023, we +completed an assessment based on the leading principles of double materiality. As a result, our latest report includes +a number of worker-focused topics, including human capital management; diversity and inclusion; labor relations +and freedom of association; and responsible sourcing and supply chain. +The World Benchmarking Alliance Just Transition Methodology was introduced in 2021, and few examples of such +reports have been published to date. It is one of many benchmarks and topic-specific reporting frameworks that have +multiplied in recent years above and beyond established standards. In recent years, Kroger expanded our climate- +related reporting to begin aligning with the Task Force on Climate-related Financial Disclosures (TCFD), which is +most commonly cited among stakeholders during engagement. +We will continue to assess our disclosures as best practices and standards evolve, particularly for complex, +interconnected systems issues affecting people and our planet. +We are focused on reviewing our current climate-related goals and roadmap against science-aligned +frameworks and future regulatory reporting requirements. +Kroger’s current climate goal is to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 30% by 2030 +against a 2018 baseline. We are making solid progress toward this goal, achieving a cumulative reduction of 15.2% +in 2022. We are reviewing this goal against the requirements of the Science Based Targets initiative to determine the +feasibility of increasing the level of ambition and setting a new Scope 3 emissions reduction goal. We will provide +an update on this work in our next ESG report. +We engage a wide range of people and perspectives in our climate strategy and roadmap development. We also +assess climate risk to support business and community resilience amid changing temperatures and weather patterns +and potential business disruptions. +Kroger’s approach to responsible sourcing includes programs to engage and respect the rights of farmworkers +in agricultural supply chains. +Our sourcing and sustainability workstreams already contemplate potential impacts to workers. We set and uphold +clear expectations for respecting human rights for workers in our own operations and global supply chain. The +Company’s Human Rights Policy outlines expectations for all suppliers to agree to and comply with our Vendor Code +of Conduct, including suppliers hiring farmworkers in agricultural supply chains. Recent agricultural worker-focused +achievements include: +• Developing a human rights due diligence framework to operationalize and embed accountability for supplier +oversight within the company’s business functions. +• Conducting human rights impact assessments (HRIA) in our supply chain and publishing comprehensive +reports. For example, we engaged a third party to conduct a HRIA focused on the production of mixed +greens in California and included detailed interviews with farmworkers and rightsholders. Based on the +workers’ feedback, we are in the process of developing heat exposure guidelines for farmworkers that +address the potential impact of climate-related temperature changes and severe weather events. The full +report on this HRIA is available here: https://www.thekrogerco.com/wp- +content/uploads/2023/06/Kroger_Mixed-Greens-HRIA-Report-June-FINAL-2023.pdf. The information on, +or accessible through, this website is not part of, or incorporated by reference into this proxy statement. +• Co-leading the development and rollout of the International Fresh Produce Association’s Ethical Charter and +Ethical Charter Implementation Program (ECIP) to strengthen management systems and responsible labor +practices among domestic produce and floral suppliers and their growers. In 2023, Kroger began onboarding +suppliers to the ECIP, with program oversight from The Sustainability Consortium and the Equitable Food +Initiative, which offers capacity-building resources to enable continuous improvement. +• Introducing a goal to promote more sustainable agricultural practices in our fresh produce supply chain by +requiring growers to use Integrated Pest Management practices, reducing both pesticide exposure for +farmworkers and nature-based impacts from food production. Kroger’s goal to Protect Pollinators and +Biodiversity is available here: https://www.thekrogerco.com/wp-content/uploads/2024/01/Kroger-Goal-to- +Protect-Pollinators-and-Biodiversity_Jan-2024_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into this proxy statement. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_95.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d7fb8cddfbb5b0fc254d1f8f7df4a6f83cfd9d --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,15 @@ +93 + +• Continuing Kroger’s long-standing work with Fair Trade USA to source Fair Trade Certified™ ingredients +for Our Brands products. In 2022, Kroger procured more than 20.4 million pounds of Fair Trade Certified +ingredients for Our Brands products like coffee, tea, baking ingredients, fruit-based snacks, coconut water +and milk, oils, and personal care – a 21% increase from the prior year. This resulted in $2.1 million in +Community Development Funds to benefit growers and their communities around the world. + +Because of Kroger’s robust disclosure practices, adoption of peer -validated disclosure frameworks, and well- +established responsible supply chain programs, additional reporting against a nascent and still -evolving approach is +both an unnecessary and inefficient use of shareholder resources. + +For the foregoing reasons, we urge you to vote AGAINST this proposal. + + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_96.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..a03a795a08e79f19b7668c4ccc0ab9f6a0939845 --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,56 @@ +94 + +Shareholder Proposals and Director Nominations — 2025 Annual Meeting +Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholder proposals intended +for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 202 5 should be +addressed to Kroger’s Secretary and must be received at our executive offices not later than January 15, 2025. These +proposals must comply with Rule 14a-8 and the SEC’s proxy rules. If a shareholder submits a proposal outside of +Rule 14a-8 for the 2025 annual meeting and such proposal is not delivered within the time frame specified in the +Regulations, Kroger’s proxy may confer discretionary authority on persons being appointed as proxies on behalf of +Kroger to vote on such proposal. +In addition, Kroger’s Regulations contain an advance notice of shareholder business and director nominations +requirement, which generally prescribes the procedures that a shareholder of Kroger must follow if the shareholder +intends, at an annual meeting, to nominate a person for election to Kroger’s Board of Directors or to propose other +business to be considered by shareholders. These procedures include, among other things, that the shareholder give +timely notice to Kroger’s Secretary of the nomination or other proposed business, that the notice contain specified +information, and that the shareholder comply with certain other requirements. In order to be timely, this notice must +be delivered in writing to Kroger’s Secretary, at our principal executive offic es, not later than 45 calendar days prior +to the date on which our proxy statement for the prior year’s annual meeting of shareholders was mailed to +shareholders. If a shareholder’s nomination or proposal is not in compliance with the procedures set forth in the +Regulations, we may disregard such nomination or proposal. Accordingly, if a shareholder intends, at the 202 5 +Annual Meeting, to nominate a person for election to the Board of Directors or to propose other business, the +shareholder must deliver a notice of such nomination or proposal to Kroger’s Secretary not later than March 31, +2025 and comply with the requirements of the Regulations. +Furthermore, in addition to the requirements of SEC Rule 14a-8 or our Regulations, as applicable, as described +above, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director +nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information required +by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional requirements +of Rule 14a-19(b). +Eligible shareholders may also submit director nominees for inclusion in our proxy statement for the 202 4 +annual meeting of shareholders. To be eligible, shareholders must have owned at least three percent of our common +shares for at least three years. Up to 20 shareholders will be able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Shareholder proposals, director nominations, including, if applicable pursuant to proxy access, and advance +notices must be addressed in writing, and addressed and delivered timely to: Corporate Secretary, The Kroger Co., +1014 Vine Street, Cincinnati, Ohio 45202-1100. +Questions and Answers about the Annual Meeting +Why are you holding a virtual meeting? +We believe a virtual meeting is the most effective approach for enabling the highest possible attendance. Based +on our experience with virtual meetings during the COVID-19 pandemic, we believe this facilitates shareholder +attendance and participation, and has allowed a greater number of questions from a broader group of shareholders to +be asked and answered at the Meeting than in an in-person format. It also reduces our costs and in a small way the +carbon footprint of our activities. Therefore, our 2024 Annual Meeting is being held on a virtual-only basis with no +physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in +the meeting, while providing substantially the same access and exchange with Management and the Board as an in- +person meeting. We believe that we are observing best practices for virtual shareholder meetings, including by +providing a support line for technical assistance and addressing as many shareholder questions as time allows. +Who can vote? +You can vote if, as of the close of business on April 30, 2024, the record date, you were a shareholder of record +of Kroger common shares. + +Who is asking for my vote, and who pays for this proxy solicitation? +Your proxy is being solicited by Kroger’s Board of Directors. Kroger is paying the cost of solicitation. We +have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies and we will pay them a +fee estimated not to exceed $18,500, plus reasonable expenses for the solicitation. +The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_97.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..237253af99cb4001f0cce567873c6683d0e0ea3e --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,50 @@ +95 + +We also will reimburse banks, brokers, nominees, and other fiduciaries for postage and reasonable expenses +incurred by them in forwarding the proxy material to beneficial owners of our common shares. +Proxies may be solicited personally, by telephone, electronically via the Internet, or by mail. +Who are the members of the Proxy Committee? +Anne Gates, W. Rodney McMullen, and Ronald L. Sargent, all Kroger Directors, are the members of the Proxy +Committee for our 2024 Annual Meeting. +What is the difference between a “shareholder of record” and a “beneficial shareholder” of shares held in +street name? +You are the “shareholder of record” for any Kroger common shares that you own directly in your name in an +account with Kroger’s stock transfer agent, EQ Shareowner Services. +You are a “beneficial shareholder” of shares held in street name if your Kroger common shares are held in an +account with a broker, bank, or other nominee as custodian on your behalf. The broker, bank, or other nominee is +considered the shareholder of record of these shares. As the beneficial owner, you have the right to instruct the +broker, bank, or other nominee on how to vote your Kroger common shares. +How do I vote my shares held in street name? +If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from +the holder of record. Your broker is required to vote your shares in accordance with your instructions. In most cases, +you may vote by telephone or over the internet as instructed. +How do I vote my proxy? +You can vote your proxy in one of the following ways: +1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. +2. By telephone, you can vote by telephone by following the instructions on your proxy card, voting +instruction form, or notice. +3. By mail, you can vote by mail by signing and dating your proxy card if you requested printed materials, +or your voting instruction form, and returning it in the postage-paid envelope provided with this proxy +statement. +4. By mobile device, by scanning the QR code on your proxy card, notice of internet availability of proxy +materials, or voting instruction form. +5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. +How can I participate and ask questions at the Annual Meeting? +We are committed to ensuring that our shareholders have substantially the same opportunities to participate in +the virtual Annual Meeting as they would at an in-person meeting. In order to submit a question at the Annual +Meeting, you will need your 16-digit control number that is printed on the Notice or proxy card that you received in +the mail, or via email if you have elected to receive material electronically. You may log in 15 minutes before the +start of the Annual Meeting and submit questions online. You will be able to submit questions during the Annual +Meeting as well. We encourage you to submit any question that is relevant to the business of the meeting. Questions +asked during the Annual Meeting will be read and addressed during the meeting. Shareho lders are encouraged to log +into the webcast at least 15 minutes prior to the start of the meeting to test their Internet connectivity. You may also +submit questions in advance of the meeting via the internet at www.proxyvote.com when you vote your shares. +What documentation must I provide to be admitted to the virtual Annual Meeting and how do I attend? +If your shares are registered in your name, you will need to provide your sixteen -digit control number included +on your Notice or your proxy card (if you receive a printed copy of the proxy materials) in order to be able to +participate in the meeting. If your shares are not registered in your name (if, for instance, your shares are held in +“street name” for you by your broker, bank or other institution), you must follow the instructions printed on your +Voting Instruction Form. In order to participate in the Annual Meeting, please log on to +www.virtualshareholdermeeting.com/KR2024 at least 15 minutes prior to the start of the Annual Meeting to provide +time to register and download the required software, if needed. The webcast replay will be available at \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_98.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b4214b84b3363d2afdeb9c52cb6a760f95d6dad --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,45 @@ +96 + +www.virtualshareholdermeeting.com/KR2024 until the 2025 Annual Meeting of Shareholders. If you access the +meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able +to vote or otherwise participate. +What if I have technical or other “IT” problems logging into or participating in the Annual Meeting webcast? +We have provided a toll-free technical support “help line” that can be accessed by any shareholder who is +having challenges logging into or participating in the virtual Annual Meeting. If you encounter any difficulties +accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that +will be posted on the virtual Annual Meeting login page. +What documentation must I provide to vote online at the Annual Meeting? +If you are a shareholder of record and provide your sixteen-digit control number when you access the meeting, +you may vote all shares registered in your name during the Annual Meeting webcast. If you are not a shareholder of +record as to any of your shares (i.e., instead of being registered in your name, all or a portion of your shares are +registered in “street name” and held by your broker, bank or other institution for your benefit), you must follow the +instructions printed on your Voting Instruction Form. +How do I submit a question at the Annual Meeting? +If you would like to submit a question during the Annual Meeting, once you have logged into the webcast at +www.virtualshareholdermeeting.com/KR2024, simply type your question in the “ask a question” box and click +“submit”. You may also submit questions in advance of the meeting via the internet at www.proxyvote.com when +you vote your shares. +When should I submit my question at the Annual Meeting? +Each year at the Annual Meeting, we hold a question-and-answer session following the formal business portion +of the meeting during which shareholders may submit questions to us. We anticipate having such a question-and- +answer session at the 2024 Annual Meeting. You can submit a question up to 15 minutes prior to the start of the +Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we +encourage you to submit your questions before or during the formal business portion of the meeting and our +prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to +address questions in an orderly manner. You may also submit questions in advance of the meeting via the internet at +www.proxyvote.com when you vote your shares. +Can I change or revoke my proxy? +The common shares represented by each proxy will be voted in the manner you specified unless your proxy is +revoked before it is exercised. You may change or revoke your proxy by providing written notice to Kroger’s +Secretary at 1014 Vine Street, Cincinnati, Ohio 45202, by executing and sending us a subsequent proxy, or by +voting your shares while logged in and participating in the 2024 Annual Meeting of Shareholders. +How many shares are outstanding? +As of the close of business on April 30, 2024, the record date, our outstanding voting securities consisted of +727,594,870 common shares. +How many votes per share? +Each common share outstanding on the record date will be entitled to one vote on each of the 11 director +nominees and one vote on each other proposal. Shareholders may not cumulate votes in the election of directors. +What voting instructions can I provide? +You may instruct the proxies to vote “For” or “Against” each proposal, or you may instruct the proxies to +“Abstain” from voting. + \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_99.txt b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..80f7232cbe7f7e6e93db3ab498ce4fee1cb0283f --- /dev/null +++ b/Kroger/Kroger_150Pages/Text_TextNeedles/Kroger_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,54 @@ +97 + +What happens if proxy cards or voting instruction forms are returned without instructions? +If you are a registered shareholder and you return your proxy card without instructions, the Proxy Committee +will vote in accordance with the recommendations of the Board. +If you hold shares in street name and do not provide your broker with specific voting instructions on proposals +1, 2, and 4 – 7, which are considered non-routine matters, your broker does not have the authority to vote on those +proposals. This is generally referred to as a “broker non-vote.” Proposal 3, ratification of auditors, is usually +considered a routine matter and, therefore, your broker may vote your shares according to your broker’s discretion. +The vote required, including the effect of broker non-votes and abstentions for each of the matters presented for +shareholder vote, is set forth below. +What are the voting requirements and voting recommendation for each of the proposals? +Proposals +Board +Recommendation +Voting Approval +Standard +Effect of +Abstention +Effect of +broker +non-vote +No. 1 Election of Directors FOR +Each Director +Nominee +recommended by +your Board +More votes “FOR” than +“AGAINST” since it is an +uncontested election +No Effect No Effect +No. 2 Advisory Vote to Approve +Executive Compensation +FOR Affirmative vote of the +majority of shares +participating in the +voting(1) +No Effect No Effect + +No. 3 Ratification of Independent +Auditors +FOR Affirmative vote of the +majority of shares +participating in the +voting1 +No Effect No Effect +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Affirmative vote of the +majority of shares +participating in the voting +No Effect No Effect +1Although this is an advisory vote, the Board will take into consideration the outcome of the vote based on this +standard. \ No newline at end of file diff --git a/Kroger/Kroger_150Pages/needles.csv b/Kroger/Kroger_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_150Pages/needles_info.csv b/Kroger/Kroger_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..b07a3680005871d98d9ad408bacb381fa9b562fa --- /dev/null +++ b/Kroger/Kroger_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,6,8,green,white,0.86,0.636,helvetica,107 +The secret object #2 is a "phone".,10,10,orange,black,0.237,0.964,times-bold,116 +The secret animal #2 is a "kangaroo".,18,10,red,white,0.311,0.901,courier,87 +The secret kitchen appliance is a "rice cooker".,21,12,white,black,0.535,0.31,helvetica-boldoblique,129 +The secret vegetable is "broccoli".,30,12,purple,white,0.052,0.497,helvetica-bold,62 +The secret animal #5 is a "bear".,31,9,blue,white,0.562,0.488,courier-oblique,111 +The secret food is a "hamburger".,37,13,gray,white,0.466,0.807,times-roman,129 +The secret animal #3 is a "shark".,48,7,black,white,0.829,0.353,times-bolditalic,102 +The secret drink is "tea".,52,10,brown,white,0.913,0.777,times-italic,78 +The secret shape is a "triangle".,55,9,yellow,black,0.902,0.377,courier-bold,140 +The secret currency is a "dollar".,65,10,blue,white,0.58,0.824,courier,133 +The secret object #4 is a "tree".,67,10,purple,white,0.099,0.616,helvetica-bold,114 +The secret fruit is a "banana".,73,12,gray,white,0.559,0.584,courier-oblique,80 +The secret office supply is a "paperclip".,83,13,green,white,0.555,0.083,times-roman,95 +The secret flower is a "sunflower".,88,10,white,black,0.468,0.591,times-bolditalic,88 +The secret object #3 is a "fork".,96,12,yellow,black,0.394,0.631,times-bold,100 +The secret tool is a "wrench".,102,11,red,white,0.304,0.11,times-italic,101 +The secret animal #1 is a "cat".,103,12,black,white,0.393,0.053,courier-bold,106 +The secret object #1 is a "table".,114,10,orange,black,0.065,0.206,helvetica,56 +The secret landmark is the "Statue of Liberty".,117,9,brown,white,0.393,0.184,helvetica-boldoblique,80 +The secret clothing is a "hat".,125,8,black,white,0.813,0.838,courier-oblique,100 +The secret animal #4 is a "frog".,131,8,yellow,black,0.348,0.437,times-bold,125 +The secret transportation is a "boat".,133,13,brown,white,0.446,0.438,times-roman,92 +The secret sport is "tennis".,144,12,purple,white,0.843,0.816,times-bolditalic,115 +The secret object #5 is a "toothbrush".,145,11,red,white,0.918,0.356,courier,103 diff --git a/Kroger/Kroger_150Pages/prompt_questions.txt b/Kroger/Kroger_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret object #2 in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret animal #5 in the document? +What is the secret food in the document? +What is the secret animal #3 in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret object #4 in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret object #1 in the document? +What is the secret landmark in the document? +What is the secret clothing in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_1.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0c7af06f03b0e8307ae534fc6fa7e56e8a43baf --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,5 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_10.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c6d4b81ce34ce9a92f4df4adbef4b5ef496c1ea --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,44 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_100.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..99b32eca3ea79a7fda57b23813d7ed82a1c74077 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,27 @@ +98 + +Householding of Proxy Materials +We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders +of record who have the same address and last name will receive only one copy of the proxy materials unless one or +more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will +reduce our printing costs and postage fees. Householding will not in any way affect dividend check mailings. +If you are eligible for householding, but you and other shareholders of record with whom you share an address +currently receive multiple copies of our proxy materials or if you hold in more than one account, and in either case +you wish to receive only a single copy for your household or if you prefer to receive separate copies of our +documents in the future, please contact your bank or broker, or contact Kroger’s Secretary at 1014 Vine Street, +Cincinnati, Ohio 45202 or via telephone at 513-762-4000. +Beneficial shareholders can request information about householding from their banks, brokers or other holders +of record. +The management knows of no other matters that are to be presented at the meeting, but, if any should be +presented, the Proxy Committee expects to vote thereon according to its best judgment. +Available Information +The Company files Annual Reports on Form 10-K with the Securities and Exchange Commission. A copy of +the Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (except for certain exhibits thereto), +including our audited financial statements and financial statement schedules, may be obtained, free of charge, upon +written request by any shareholder to Kroger’s Secretary at 1014 Vine Street, Cincinnati, Ohio 45202 or via +telephone at 513-762-4000. Copies of all exhibits to the Annual Report on Form 10-K are available upon a similar +request, subject to reimbursing the Company for its expenses in supplying any exhibit. +By order of the Board of Directors, +Christine S. Wheatley, Secretary + +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_101.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e9d4bb34ce4ab1bc24f0f706d8609ef836d3343 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,2 @@ +2023 ANNUAL REPORT +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_102.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_103.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..362ee5b84cc24de224ed5b28a027585de8789822 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_103.txt @@ -0,0 +1,94 @@ + + + + +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, D.C. 20549 + +FORM 10-K +(Mark One) + +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + +For the fiscal year ended February 3, 2024. + +OR + +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + +For the transition period from to + +Commission file number 1-303 + +THE KROGER CO. +(Exact name of registrant as specified in its charter) + +Ohio 31-0345740 +(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) + +1014 Vine Street, Cincinnati, OH 45202 +(Address of Principal Executive Offices) (Zip Code) + +Registrant’s telephone number, including area code (513) 762-4000 + +Securities registered pursuant to Section 12(b) of the Act: + +Title of each class Trading Symbol Name of each exchange on which registered +Common, $1.00 Par Value KR New York Stock Exchange + +Securities registered pursuant to Section 12(g) of the Act: + +NONE +(Title of class) + +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +Yes ☒ No ☐ + +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +Yes ☐ No ☒ + +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding +12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. +Yes ☒ No ☐ + +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T +(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). +Yes ☒ No ☐ + +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth +company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange +Act. + + +Large accelerated filer ☒ Accelerated filer ☐ +Non-accelerated filer ☐ Smaller reporting company ☐ + Emerging growth company ☐ + +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial +accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ + +Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial +reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ + +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the +correction of an error to previously issued financial statements. +Yes ☐ No ☒ + +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the +registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +Yes ☐ No ☒ + +Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). +Yes ☐ No ☒ + +The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common +equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (August 12, 2023). $35.3 billion. + +The number of shares outstanding of the registrant's common stock, as of the latest practicable date. 721,687,844, shares of Common Stock of $1 par value, as of March 27, +2024. +Documents Incorporated by Reference: + +Portions of Kroger’s definitive proxy statement for its 2024 annual meeting of shareholders, which shall be filed with the Securities and Exchange Commission within 120 +days after the end of the fiscal year to which this Report relates, are incorporated by reference into Part III of this Report. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_104.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_105.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..0eb7b065ed60feb34b213fe3a14627adfc3a45fb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,46 @@ + + +The Kroger Co. +Form 10-K +For the Fiscal Year Ended February 3, 2024 +Table of Contents + + + Page +Part I 2 +Item 1 Business 3 +Item 1A Risk Factors 11 +Item 1B Unresolved Staff Comments 19 +Item 1C Cybersecurity 20 +Item 2 Properties 21 +Item 3 Legal Proceedings 22 +Item 4 Mine Safety Disclosures 22 + +Part II 22 +Item 5 Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity +Securities +22 +Item 6 Reserved 24 +Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 +Item 7A Quantitative and Qualitative Disclosures About Market Risk 48 +Item 8 Financial Statements and Supplementary Data 51 +Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 +Item 9A Evaluation of Disclosure Controls and Procedures 99 +Item 9B Other Information 99 +Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 99 + +Part III 100 +Item 10 Directors, Executive Officers and Corporate Governance 100 +Item 11 Executive Compensation 100 +Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 100 +Item 13 Certain Relationships and Related Transactions, and Director Independence 101 +Item 14 Principal Accounting Fees and Services 101 + +Part IV 102 +Item 15 Exhibits, Financial Statement Schedules 102 +Item 16 Form 10-K Summary 104 + Signatures 105 + + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_106.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..f43d293cc4c8baba59bea2b2db185605d52f5704 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,57 @@ + +2 +PART I + +FORWARD LOOKING STATEMENTS. + +This Annual Report on Form 10-K contains forward-looking statements about our future performance. These +statements are based on our assumptions and beliefs in light of the information currently available to us. These +statements are subject to a number of known and unknown risks, uncertainties and other important factors, including the +risks and other factors discussed in “Risk Factors” below, that could cause actual results and outcomes to differ +materially from any future results or outcomes expressed or implied by such forward looking statements. Such +statements are indicated by words such as “achieve,” “affect,” “anticipate,” “assumptions,” “believe,” “committed,” +“continue,” “could,” “deliver,” “effect,” “enable,” “estimate,” “expects,” “future,” “goal,” “growth,” “intended,” +“likely,” “may,” “model,” “objective,” “plan,” “position,” “program,” “range,” “result,” “strategy,” “strive,” “strong,” +“target,” “trend,” “will” and “would,” and similar words or phrases. Moreover, statements in the sections entitled Risk +Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and +elsewhere in this report regarding our expectations, projections, beliefs, intentions or strategies are forward-looking +statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. + +Various uncertainties and other factors could cause actual results to differ materially from those contained in the +forward-looking statements. These include: + +• The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state +of the financial markets and the effect that such condition has on our ability to issue commercial paper at +acceptable rates. Our ability to borrow under our committed lines of credit, including our bank credit facilities, +could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual +obligation to lend to us, or in the event that global pandemics, natural disasters or weather conditions interfere +with the ability of our lenders to lend to us. Our ability to refinance maturing debt may be affected by the state +of the financial markets. + +• Our ability to achieve sales, earnings and incremental FIFO operating profit goals may be affected by: the risks +relating to or arising from our proposed nationwide opioid litigation settlement, including our ability to finalize +and effectuate the settlement, the scope and coverage of the ultimate settlement and the expected financial or +other effects that could result from the settlement; our proposed transaction with Albertsons, including, among +other things, our ability to consummate the proposed transaction and related divestiture plan, including on the +terms of the merger agreement and divestiture plan, on the anticipated timeline, with the required regulatory +approvals, and/or resolution of pending litigation challenging the merger; labor negotiations; potential work +stoppages; changes in the unemployment rate; pressures in labor; changes in government-funded benefit +programs; changes in the types and numbers of businesses that compete with us; pricing and promotional +activities of existing and new competitors, and the aggressiveness of that competition; our response to these +actions; the state of the economy, including interest rates, the current inflationary environment and future +potential inflationary, disinflationary and/or deflationary trends and such trends in certain commodities, +products and/or operating costs; the geopolitical environment including wars and conflicts; unstable political +situations and social unrest; changes in tariffs; the effect that fuel costs have on consumer spending; volatility of +fuel margins; manufacturing commodity costs; supply constraints; diesel fuel costs related to our logistics +operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing +in response to economic conditions; the uncertainty of economic growth or recession; stock repurchases; +changes in the regulatory environment in which we operates; our ability to retain pharmacy sales from third- +party payors; consolidation in the healthcare industry, including pharmacy benefit managers; our ability to +negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the +effect of public health crises or other significant catastrophic events; the potential costs and risks associated +with potential cyber-attacks or data security breaches; the success of our future growth plans; the ability to +execute our growth strategy and value creation model, including continued cost savings, growth of our +alternative profit businesses, and our ability to better serve our customers and to generate customer loyalty and +sustainable growth through our strategic pillars of fresh, Our Brands, personalization, and seamless; and the +successful integration of merged companies and new partnerships. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_107.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..55eb4ad73beb55b92daa03b66350fa708f9ec6f0 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,48 @@ + +3 +• Our ability to achieve these goals may also be affected by our ability to manage the factors identified above. +Our ability to execute our financial strategy may be affected by our ability to generate cash flow. + +• Our adjusted effective tax rate may differ from the expected rate due to changes in tax laws, the status of +pending items with various taxing authorities, and the deductibility of certain expenses. + +We cannot fully foresee the effects of changes in economic conditions on our business. + +Other factors and assumptions not identified above, including those discussed in Part 1, Item 1A of this Annual +Report, could also cause actual results to differ materially from those set forth in the forward-looking information. +Accordingly, actual events and results may vary significantly from those included in, contemplated or implied by +forward-looking statements made by us or our representatives. We undertake no obligation to update the forward- +looking information contained in this filing. + +Our ability to complete our proposed transaction with Albertsons may be affected by various factors, including +those set forth in Part I, Item 1A of this Annual Report. Risk Factors included in this Annual Report on Form 10-K and +other factors as may be described in subsequent filings with the SEC. + +ITEM 1. BUSINESS. + +The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built +on the foundation of our retail grocery business, which includes the added convenience of our retail pharmacies and fuel +centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in +four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless. + +We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our +customers that generates alternative profit streams. These alternative profit streams would not exist without our core +retail business. + +Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our +stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that +produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include +procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our fiscal year +ends on the Saturday closest to January 31. All references to 2023, 2022 and 2021 are to the fiscal years ended February +3, 2024, January 28, 2023 and January 29, 2022, respectively, unless specifically indicated otherwise. + +We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional +information about the Company. Kroger’s website and any reports or other information made available by Kroger +through its website are not part of or incorporated by reference into this Annual Report on Form 10-K. We make +available through our web site, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our +current reports on Form 8-K and our interactive data files, including amendments. These forms are available as soon as +reasonably practicable after we have filed them with, or furnished them electronically to, the SEC. + +Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer +demographics. Our combination of assets includes the following: + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_108.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..c5e88d7fe3a20f1abe7281723836cfa4a286de45 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,58 @@ + +4 +Stores + +As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the +District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 +supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. Approximately 50% of our supermarkets were +operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate +under a variety of banners that have strong local ties and brand recognition. We connect with customers through our +expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales +are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at +each of our supermarket locations when it is feasible and it is expected to be profitable. Each fuel center typically +includes five to ten islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel. +Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo +stores”); multi-department stores; marketplace stores; or price impact warehouses. + +The combo store is the primary grocery store format. We believe this format is successful because the stores are +large enough to offer the specialty departments, including natural food and organic sections, pharmacies, general +merchandise, pet centers and high-quality perishables such as fresh seafood and organic produce. + +Multi-department stores are significantly larger in size than combo stores. In addition to the departments offered at a +typical combo store, multi-department stores sell a wide selection of general merchandise items such as apparel, home +fashion and furnishings, outdoor living, electronics, automotive products and toys. + +Marketplace stores are smaller in size than multi-department stores. They offer full-service grocery, pharmacy and +health and beauty care departments as well as an expanded perishable offering and general merchandise area that +includes apparel, home goods and toys. + +Price impact warehouse stores offer a “no-frills, low cost” warehouse format and feature everyday low prices plus +promotions for a wide selection of grocery and health and beauty care items. Quality meat, dairy, baked goods and fresh +produce items provide strategic differentiation for price impact warehouse stores. The average size of a price impact +warehouse store is similar to that of a combo store. + +Seamless Digital Ecosystem + +We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, +including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, +pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital +solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail +store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These +channels allow us to serve customers anything, anytime and anywhere with zero compromise on selection, convenience, +and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are +also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. + +Merchandising and Manufacturing + +Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our +sales in 2023. Our supermarkets, on average, stock over 12,600 private label items. Our Brands products are primarily +produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary +foods and ingredients that deliver amazing eating experiences. The Kroger® brand, which represents the majority of our +private label items, is designed to consistently satisfy and delight customers with quality products that exceed or meet +the national brand in taste and efficacy, as well as with unique and differentiated products. Big K®, Smart Way® and +Heritage Farm® are some of our value brands, designed to deliver good quality at a very affordable price. In addition to +our three “tiers,” Our Brands offers customers a variety of natural and organic products with Simple Truth® and Simple +Truth Organic®. Both Simple Truth® and Simple Truth Organic® are free from a defined list of artificial ingredients +that some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA +certified organic. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_109.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb2721a61d1fe4df09957d3c8f14add038ac1602 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,51 @@ + +5 +Approximately 30% of Our Brands units and 43% of the grocery category Our Brands units sold in our +supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict +specifications by outside manufacturers. We perform a “make or buy” analysis on Our Brands products and decisions +are based upon a comparison of market-based transfer prices versus open market purchases. As of February 3, 2024, we +owned 33 food production plants. These plants consisted of 14 dairies, nine deli or bakery plants, five grocery product +plants, two beverage plants, one meat plant and two cheese plants. + +Our Data + +We are evolving into a more diverse business. The traffic and data generated by our retail business, including +pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households +annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card. +Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized +experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit +businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision +Marketing – provides differentiated media capabilities for our consumer packaged goods partners and other industry +verticals. It is a key driver of our digital profitability and alternative profit. + +Proposed Merger with Albertsons + +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed +merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and +Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and +increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see Note +16 to the Consolidated Financial Statements. + +SEGMENTS + +We operate supermarkets, multi-department stores and fulfillment centers throughout the United States. Our retail +operations, which represent 97% of our consolidated sales, is our only reportable segment. We aggregate our operating +divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar +long-term financial performance. In addition, our operating divisions offer customers similar products, have similar +distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale +from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types +of customers, and are allocated capital from a centralized location. Our operating divisions are organized primarily on a +geographical basis so that the operating division management team can be responsive to local needs of the operating +division and can execute company strategic plans and initiatives throughout the locations in their operating division. This +geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of +organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating +decision maker, assesses performance internally. All of our operations are domestic. Revenues, profits and losses and +total assets are shown in our Consolidated Financial Statements set forth in Item 8 below. + +SEASONALITY + +The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the +major holidays throughout the year. Additionally, certain significant events including inclement weather systems, +particularly winter storms, tend to affect our sales trends. + +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_11.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..977471825a636ead53e75464d4ba7084368778ff --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,11 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_110.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..a75a4d0eeded99dae82c2d7f272a6a5147c41e25 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,54 @@ + +6 +HUMAN CAPITAL MANAGEMENT + +Our People + +We want Kroger to be a place where our customers love to shop and associates love to work. This is why we aim to +create working environments where associates feel encouraged and supported to be their best selves every day. As of +February 3, 2024, Kroger employed nearly 414,000 full- and part-time employees. Our people are essential to our +success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the +communities we serve. We strive to create a culture of opportunity and take seriously our role as a leading employer in +the United States. Kroger has provided a large number of people with first jobs, new beginnings and lifelong careers. +We have long been guided by our values – Honesty, Integrity, Respect, Safety, Diversity and Inclusion. + +Attracting & Developing Our Talent + +To deliver on our customers’ experiences and remain competitive with union and non-union employers, we +continually try to improve how we attract and retain talent. In addition to competitive wages, quality benefits and a safe +work environment, we offer a broad range of employment opportunities for workers of all ages and aspirations. Many +retail roles offer opportunities to learn new skills, grow and advance careers. + +Associates at all levels of Kroger have access to training and education programs to build their skills and prepare for +the roles they want. In 2023, we spent approximately $210 million on training our associates through onboarding, +leadership development programs and programs designed to upskill associates across the Company. We continue to +invest in new platforms and applications to make learning more accessible to our associates. + +Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to +$3,500 annually — $21,000 over the course of employment — toward continuing education. These funds can be applied +to education programs like certifications, associate or graduate degrees. Approximately 7,000 associates, 94% of whom +are hourly, have taken advantage of our tuition reimbursement program in 2023. Kroger has invested approximately $54 +million in this program since it launched in 2018. + +Rewarding Our Associates + +As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent +across the organization to be able to continue delivering for our customers. We are investing in our associates by +expanding our industry-leading benefits, including continuing education, training and development and health and +wellness. During 2023, we increased associate wages resulting in an average hourly rate of nearly $19, and a rate of +nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the last five years. Over the last +five years, we have now invested more than $2.4 billion in incremental wage investments. We remain committed to +supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to +continue to keep products affordable for the communities we serve. We expect to make continued associate investments +in 2024. + +Promoting Diversity, Equity & Inclusion + +Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we +serve and foster a culture that inspires collaboration and feeds the human spirit. We have taken a very thoughtful and +purposeful approach to enact meaningful change and develop what we believe are the right actions to achieve true and +lasting equality. Our Framework for Action: Diversity, Equity & Inclusion plan reflects our desire to redefine, deepen, +and advance our commitment, mobilizing our people, passion, scale and resources. This ongoing commitment includes +the following framework pillars: Create a More Inclusive Culture; Develop Diverse Talent; Advance Diverse +Partnerships; Advance Equitable Communities; and Deeply Listen and Report Progress. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_111.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..4bf71b8cd7085a4fa840c8c7289d5069dafd0781 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,56 @@ + +7 +Creating a Safe Environment + +Our associates’ safety is a top priority. It is also one of our core values. We prioritize providing the right safety +training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through +our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the +number of injuries and accidents that happen in our workplace. We track health and safety metrics centrally for an +enterprise-wide view of issues, trends and opportunities and monitor associate injury performance including total +injuries, Occupational Safety and Health Administration (“OSHA”) injury rates, and lost-time injuries, as well as +customer injury metrics like slip-and-fall injuries. We also track the completion of required training for associates, and +we regularly share these metrics with leaders and relevant team members to inform management decisions. + +Supporting Labor Relations + +A majority of our employees are covered by collective bargaining agreements negotiated with local unions affiliated +with one of several different international unions. There are approximately 350 such agreements, usually with terms of +three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that +cover approximately 65% of our associates. Our objective is to negotiate contracts that balance wage increases that are +competitive with union and non-union employers and provide affordable healthcare for associates with keeping groceries +affordable for the communities we serve. Our obligation is to do this in a way that maintains a financially sustainable +business. + +MANAGING CLIMATE IMPACTS + +Managing climate change impacts is an important part of Thriving Together, Kroger’s Environmental, Social & +Governance (“ESG”) strategy and has been a focus for our business for many years. With a large portfolio of +supermarkets, distribution warehouses and food production plants, as well as a complex supply chain, we recognize +Kroger’s effect on our climate. We continue to explore opportunities and take steps to reduce the effects of our +operations on the environment and to reduce the potential risk of a changing climate on our operations. This includes +enhancing our operational efficiency, increasing our usage of renewable energy and investing in new technologies. The +key elements of our climate strategy are included below. + +Governance + +Climate effects are managed by leadership with input from several departments across the business. The Public +Responsibilities Committee of the Board of Directors oversees our responsibilities as a corporate citizen and Kroger’s +practices related to environmental sustainability, including climate effects, along with other environmental and social +topics of material importance. Kroger discloses detailed energy and emissions data, as well as our approach to managing +climate-related topics, in our annual ESG Report, which can be found at www.thekrogerco.com/esgreport. + +Risk assessment + +To help identify and manage climate-related risks to our business, we conducted a quantitative climate risk +assessment to determine the likelihood that different physical climate risks, including drought, extreme heat and extreme +precipitation, would affect Kroger’s operations at representative facilities in different geographies and, in turn, +potentially increase operating costs for these facilities. As a result of our risk assessments, we do not currently anticipate +the modeled physical risks to adversely affect our financial condition, results of operations or cash flows for the +foreseeable future. We plan to continue these climate risk assessments moving forward. + +Kroger also acknowledges that current and emerging climate-related legislation could affect our business. As a +result of state and federal requirements regarding the phase down of hydrofluorocarbon (“HFC”) refrigerants, we +anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur significant costs to +the business. If legislation required an accelerated timeline regarding the phase down of HFC refrigerants, we could +incur higher costs. Any such legislation will affect all retailers using refrigerants in their operations. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_112.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbec50d23d53e2fee3aebf6fd1a3f488adbdbec3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,24 @@ + +8 +Climate adaptation + +To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to +our supply chain, we maintain more than 200 business continuity plans. We have installed technologies and processes to +ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain +operational. We also monitor energy availability and costs to help anticipate how changing climate patterns, like +increasing temperatures, could affect our energy-sourcing costs and activities. Our teams also monitor transition risks +due to climate change, including the effect possible new legislation may have on our business. + +Climate mitigation + +For many years, Kroger has implemented emission reduction projects, including energy efficiency improvements, +refrigerant leak detection and mitigation measures, renewable energy installations and procurement and fleet +efficiencies. In 2020, we set a goal to reduce absolute greenhouse gas (“GHG”) emissions from our operations (scope 1 +and 2 emissions) by 30% by 2030, against a 2018 baseline. The goal was developed using climate science and is aligned +with the Paris Agreement, specifically supporting a well-below 2°C climate scenario according to the absolute +contraction method. Kroger is reviewing its GHG reduction target against the requirements of the Science Based Targets +initiative. In 2023, we completed our first full Scope 3 emissions baseline. + +Additional discussion about our approach to managing climate effects is included in our annual ESG Report. The +information in our ESG Report is not part of or incorporated by reference into this Annual Report on Form 10-K. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_113.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bfa735e727b8420ad45764cdf4ecb6049312c68 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,53 @@ + +9 +INFORMATION ABOUT OUR EXECUTIVE OFFICERS + +The following is a list of the names and ages of the executive officers and the positions held by each such person. +Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the +discretion of the Board for the ensuing year until removed or replaced. + Name Age Recent Employment History + +Mary E. Adcock 48 Ms. Adcock was elected Senior Vice President effective May 1, 2019 and is +responsible for retail operations as well as the oversight of all Kroger retail divisions. +From June 2016 to April 2019, she served as Group Vice President of Retail +Operations. Prior to that, Ms. Adcock held leadership roles in Kroger’s Columbus +Division, including Vice President of Operations and Vice President of +Merchandising. Prior to that, Ms. Adcock served as Vice President of Natural Foods +Merchandising and as Vice President of Deli/Bakery Manufacturing and held several +leadership positions in the manufacturing department, including human resources +manager, general manager and division operations manager. Ms. Adcock joined +Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in +Bowling Green, Kentucky. + +Stuart W. Aitken 52 Mr. Aitken was named Senior Vice President and Chief Merchant and Marketing +Officer in August 2020. He was elected Senior Vice President in February 2019 and +served as Group Vice President from June 2015 to February 2019. He is responsible +for sales, pricing, promotional and category planning for fresh foods, center store and +general merchandise categories, as well as analytics & execution, e-commerce and +Digital Merchandising, Sourcing and Our Brands. Prior to joining Kroger, he served +as the chief executive officer of dunnhumby USA, LLC. Mr. Aitken has over 15 +years of marketing, academic and technical experience across a variety of industries, +and held various leadership roles with other companies, including Michaels Stores +and Safeway, Inc. + +Gabriel Arreaga 49 Mr. Arreaga was elected Senior Vice President of Supply Chain in December 2020. +He is responsible for the Company’s industry-leading Supply Chain organization, +Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers. +Prior to Kroger, Mr. Arreaga served as Senior Vice President of Supply Chains for +Mondelez, where he was responsible for all operations and functions from field to +consumer, internal and external factories, fulfillment centers, direct to store branches, +Logistics and product development. He was also Global Vice President of Operations +for Stanley Black and Decker and held numerous leadership roles at Unilever +including Vice President of Food and Beverage Operations. + +Yael Cosset 50 Mr. Cosset was elected Senior Vice President and Chief Information Officer in May +2019 and is responsible for leading Kroger’s digital strategy, focused on building +Kroger’s presence in the marketplace in digital channels, personalization and e- +commerce. In August 2020, he also assumed responsibility for Kroger’s alternative +profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦ LLC and +Kroger Personal Finance. Prior to that, Mr. Cosset served as Group Vice President +and Chief Digital Officer, and also as Chief Commercial Officer and Chief +Information Officer of 84.51° LLC. Prior to joining Kroger, Mr. Cosset served in +several leadership roles at dunnhumby USA, LLC, including Executive Vice +President of Consumer Markets and Global Chief Information Officer. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_114.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..52825c2d30341b0b763ab46884b7a36fae8a09c9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,54 @@ + +10 +Carin L. Fike 55 Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to that, +she served as Assistant Treasurer and also as Director of Investor Relations. Ms. Fike +began her career with Kroger in 1999 as a manager in the Financial Reporting +department after working with PricewaterhouseCoopers in various roles, including +audit manager. + +Todd A. Foley 54 Mr. Foley was named Senior Vice President and Interim Chief Financial Officer in +March 2024. Prior to that, he served as Group Vice President, Interim Chief +Financial Officer and Corporate Controller from February 2024 to March 2024. Prior +to that, he served as Group Vice President and Corporate Controller from October +2021 to February 2024. From April 2017 to September 2021, Mr. Foley served as +Vice President and Corporate Controller. Before that, he held several leadership +roles, including Vice President and Treasurer, Assistant Corporate Controller, and +Controller of Kroger’s Cincinnati/Dayton division. Mr. Foley began his career with +Kroger in 2001 as an audit manager in the Internal Audit Department after working +for PricewaterhouseCoopers in various roles, including senior audit manager. + +Valerie L. Jabbar 55 Ms. Jabbar was elected Senior Vice President effective August 19, 2021 and is +responsible for the oversight of several Kroger retail divisions. From July 2020 to +August 2021, she served as Group Vice President of Center Store Merchandising, +and from September 2018 to June 2020, as Group Vice President of Merchandising. +Prior to that, she served as President of the Ralphs Division from July 2016 to +August 2018. Before that, Ms. Jabbar served as Vice President of Merchandising for +the Ralphs Division and as Vice President of Merchandising for the Mid-Atlantic +Division. She also held several leadership roles, including assistant store director, +category manager, Drug/GM coordinator, G.O. Seasonal manager, assistant director +of Drug/GM and director of Drug GM, and district manager in the Fry’s Division. +She joined the Company in 1987 as a clerk in the Fry’s Division. + +Kenneth C. Kimball 58 Mr. Kimball was elected Senior Vice President in March 2022 and is responsible for +the oversight of several Kroger retail divisions. From April 2016 to March 2022, he +served as President of the Smith’s Division. Prior to that, he held several leadership +roles with the Ralphs Division, including Vice President of Operations and Vice +President of Merchandising. Prior to that, he held leadership roles, including store +manager, district manager, and director in the Smith’s Division as well as Senior +Vice President of Sales and Merchandising and Group Vice President of Retail +Operations. Mr. Kimball joined the Company in 1984 as a clerk in the Smith’s +Division. + +Timothy A. Massa 57 Mr. Massa was elected Senior Vice President in June 2018 and serves as the +company’s Chief People Officer, leading all areas of Human Resources and Labor +Relations, including total rewards, labor relations, diversity, business unit human +resources, people operations, training and development, talent hiring, retention and +engagement, corporate affairs, and associate communications. He also leads the areas +of shared services and aviation. Prior to that, Mr. Massa served as Group Vice +President of Human Resources and Labor Relations from June 2014 to June 2018. +Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human +Resources and Talent Development. Prior to joining Kroger, Mr. Massa served in +various Human Resources leadership roles for 21 years at Procter & Gamble, most +recently serving as Global Human Resources Director of Customer Business +Development. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_115.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..d19ce2f30c149bd3b68d90405967cf959e63157b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,43 @@ + +11 +W. Rodney McMullen 63 Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and +Chief Executive Officer effective January 1, 2014. Prior to that, he served as +President and Chief Operating Officer from August 2009 to December 2013. Prior to +that he held numerous leadership roles, including Vice Chairman, Executive Vice +President of Strategy, Planning and Finance, Executive Vice President and Chief +Financial Officer, Senior Vice President, Group Vice President and Chief Financial +Officer, Vice President, Control and Financial Services, and Vice President, Planning +and Capital Management. Mr. McMullen joined Kroger in 1978 as a part-time stock +clerk. + +Brian W. Nichols 51 Mr. Nichols was elected Vice President, Corporate Controller in March 2024 and is +responsible for oversight of Kroger’s Corporate Accounting and Corporate Tax +departments, as well as the Company’s Accounting Centers and Accounting +Modernization, Pension Investment, and Insurance and Claims teams. Prior to that, +he served as Vice President, Assistant Corporate Controller from April 2021 to +March 2024. From May 2018 to April 2021, Mr. Nichols served as Senior Director +and Assistant Corporate Controller. Prior to that, he held several leadership roles, +including Senior Manager of Corporate and External Financial Reporting and Senior +Financial Analyst of SEC Reporting. Mr. Nichols joined Kroger in 2000 as Assistant +Controller of the Central Division. + +Christine S. Wheatley 53 Ms. Wheatley was elected Senior Vice President, General Counsel, and Secretary in +May 2023. Prior to this, she served as Group Vice President, Secretary and General +Counsel from May 2014 to May 2023. She joined Kroger in February 2008 as +Corporate Counsel, and thereafter served as Senior Attorney, Senior Counsel, and +Vice President. Before joining Kroger, Ms. Wheatley was engaged in the private +practice of law for 11 years, most recently as a partner at Porter Wright Morris & +Arthur in Cincinnati. + +COMPETITIVE ENVIRONMENT + +For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive +Environment.” + +ITEM 1A. RISK FACTORS. + +There are risks and uncertainties that can affect our business. The significant risk factors are discussed below. The +following information should be read together with “Management’s Discussion and Analysis of Financial Condition and +Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our +goals or meet our expectations. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_116.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad758485561004fc993f8e6f7fd3fb846264ecf8 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,48 @@ + +12 +OUR PROPOSED TRANSACTION WITH ALBERTSONS CREATES INCREMENTAL BUSINESS, +REGULATORY AND REPUTATIONAL RISKS + +On October 13, 2022, we entered into a merger agreement with Albertsons Companies Inc. (“Albertsons”), which +sets forth the terms of our proposed transaction. In connection with the proposed transaction, Kroger and Albertsons +entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC for the combined sale of certain stores, +distribution centers, offices and private label brands. The proposed transaction with Albertsons and the divestiture plan +entails important risks, including, among others: the expected timing and likelihood of completion of the proposed +transaction and divestiture plan, including the timing, receipt and terms and conditions of any required governmental and +regulatory clearance of the proposed transaction and divestiture plan, and/or resolution of pending litigation challenging +the merger; the effect of the proposed divestiture plan; the occurrence of any event, change or other circumstances that +could give rise to the termination of the merger agreement or divestiture agreement; the outcome of any legal +proceedings that have been instituted and may in the future be instituted against the parties and others following +announcement of the merger agreement and proposed transaction or divestiture plan; the inability to consummate the +proposed transaction or divestiture plan due to the failure to satisfy other conditions to complete the proposed transaction +or divestiture plan; risks that the proposed transaction or divestiture plan disrupts our current plans and operations; the +ability to identify and recognize, including on the expected timeline, the anticipated total shareholder return (“TSR”), +revenue and EBITDA expectations; the amount of the costs, fees, expenses and charges related to the proposed +transaction or divestiture plan; the risk that transaction and/or integration costs are greater than expected, including as a +result of conditions regulators put on any approvals of the transaction; the potential effect of the announcement and/or +consummation of the proposed transaction or divestiture plan on relationships, including with associates, suppliers and +competitors; our ability to maintain an investment grade credit rating; the risk that management’s attention is diverted +from other matters; risks related to the potential effect of general economic, political and market factors, including +changes in the financial markets as a result of inflation or measures implemented to address inflation, and any epidemic, +pandemic or disease outbreaks, on Kroger, Albertsons or the proposed transaction or divestiture plan; the risk of adverse +effects on the market price of our or Albertsons’s securities or on Albertsons’s or our operating results for any reason; +the occurrence of any event, change or other circumstances that could give rise to the termination of the merger +agreement or divestiture agreement; and other risks described in our filings with the SEC. + +INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES + +In addition to the above, we enter into mergers, acquisitions and strategic alliances with expected benefits including, +among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow +for future growth. Achieving the anticipated or desired benefits may be subject to a number of significant challenges and +uncertainties, including, without limitation, whether unique corporate cultures will work collaboratively in an efficient +and effective manner, the coordination of geographically separate organizations, the possibility of imprecise assumptions +underlying expectations regarding potential synergies, capital requirements, and the integration process (including the +integration of internal controls into our business operations), unforeseen expenses and delays and competitive factors in +the marketplace. We could also encounter unforeseen transaction and integration-related costs or other circumstances +such as unforeseen liabilities or other issues. Many of these potential circumstances are outside of our control and any of +them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and +attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits +may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our +business, financial condition, results of operations or cash flows. + +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_117.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..a02968082b1d6ffa69d586e808666895e016821b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_117.txt @@ -0,0 +1,47 @@ + +13 +COMPETITIVE ENVIRONMENT + +The operating environment for the food retailing industry continues to be characterized by the proliferation of local, +regional, and national retailers, including both retail and digital formats, and intense and ever-increasing competition +ranging from online retailers, mass merchant, club stores, regional chains, deep discounters, and dollar stores, as well as +ethnic, specialty and natural food stores. With the proliferation of grocery delivery – both by retailers and third-party +delivery service providers – customers have an even wider range of retailers from which to choose. Customers continue +to expect a great shopping experience both in-store and online. The industry continues to be shaped by e-commerce, +cooking at home and prepared foods to go and other customer needs and preferences. Customers want to be able to shop +on their own terms with zero compromise whether at brick and mortar stores or online, pick-up or delivery, depending +on their particular trip needs and other factors. If we do not appropriately or accurately anticipate customer preferences +or fail to quickly adapt to these ever-changing preferences, our sales and profitability could be adversely affected. If we +fail to meet the evolving needs of our customers, our ability to compete and our financial condition, results of operations +or cash flows could be adversely affected. + +We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless, +Personalization, Fresh, and Our Brands. Each of these strategies is designed to better serve our customers and to +generate customer loyalty and sustainable growth momentum. We believe our plans to continue to improve these four +strategic pillars will enable us to meet the wide-ranging needs and expectations of our customers. If we are unable to +continue to enhance the foregoing key elements of our connection with customers, or they fail to strengthen customer +loyalty, our ability to compete and our financial condition, results of operations or cash flows could be adversely +affected. Our ecosystem monetizes the traffic and data insights generated by our retail grocery business to create fast- +growing, asset-light and margin-rich revenue streams. Growth in loyal households, customer traffic and digitally +engaged customers allow us to grow profits and power the flywheel in our model. We may be unsuccessful in +implementing our alternative profit strategy, which could adversely affect our business growth and our financial +condition, results of operations or cash flows. The nature and extent to which our competitors respond to the evolving +and competitive industry by developing and implementing their competitive strategies could adversely affect our +profitability. + +In addition, evolving customer preferences and the advancement of online, delivery, ship to home and mobile +channels in our industry increase the competitive environment. We must anticipate and meet these evolving customer +preferences and continue to implement technology, software and processes to be able to conveniently and cost- +effectively fulfill customer orders. Providing flexible fulfillment options and implementing new technology is complex +and may not meet customer preferences. If we are not successful in reducing or offsetting the cost of fulfilling orders +outside of our in-store channel with efficiencies, cost-savings, expense reductions, or alternative revenues, our financial +condition, results of operations or cash flows could be adversely affected. + +In addition, if we do not successfully develop and maintain a relevant digital experience for our customers, our +business, financial condition, results of operations or cash flows could be adversely affected. Digital retailing is rapidly +evolving, and we must keep pace with new developments by our competitors as well as the evolving needs and +preferences of our customers. We must compete by offering a convenient shopping experience for our customers +regardless of how they choose to shop with us, and by investing in providing and maintaining relevant customer-facing +apps and interfaces that have the features customers want that are also reliable and easy to use. The future success of the +digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities, +whether in store, in pickup-only locations or through customer fulfillment centers powered by Ocado. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_118.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed4861fd12bc94b870d341dab2b66464e8e93436 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,59 @@ + +14 +PRODUCT SAFETY + +Customers count on Kroger to provide them with safe food and drugs and other merchandise. Concerns regarding +the safety of the products that we sell could cause shoppers to avoid purchasing certain products from us, or to seek +alternative sources of supply even if the basis for the concern is outside of our control. Any lost confidence on the part of +our customers would be difficult and costly to reestablish. We could be adversely affected by personal injury or product +liability claims, product recalls, or other health and safety issues, which occur from time to time. If we sell products that +cause illness or injury to customers, resulting from product contamination or spoilage, the presence of certain substances, +or damage caused in handling, storage or transportation, we could be exposed to claims or litigation. Any issue regarding +the safety of items, whether Our Brands items manufactured by us or for us or CPG products we sell, regardless of the +cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash +flows. + +EMPLOYEE MATTERS + +Nearly two-thirds of our associates are covered by collective bargaining agreements with unions, and our +relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could +have a material adverse effect on our financial condition, results of operations or cash flows. We are a party to +approximately 350 collective bargaining agreements. Upon the expiration of our collective bargaining agreements, work +stoppages by the affected workers could occur (and have occurred in the past) if we are unable to negotiate new +contracts with labor unions. In addition, changes to national labor policy could affect labor relations with our associates +and relationships with unions. Further, if we are unable to control health care, pension and wage costs, or if we have +insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating +costs and an adverse effect on our financial condition, results of operations or cash flows. + +We have committed to paying fair wages and providing the benefits that were collectively bargained with the United +Food and Commercial Workers (“UFCW”) and other labor unions representing associates. Our ability to control labor +and benefit costs is subject to numerous internal and external factors, including regulatory changes, wage rates, and +healthcare and other insurance costs. Changes to wage regulations, including further increases in the minimum wage or +ordinances related to pay or working conditions enacted by local governments, could have an effect on our future +financial condition, results of operations or cash flows. Our ability to meet our labor needs, while controlling wages and +other costs, is subject to numerous external factors, including the available qualified workforce in each area where we +are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws. + +Our continued success depends on the ongoing contributions of our associates, including members of our senior +management and other key personnel. We must recruit, hire, develop and retain qualified associates with an increasingly +large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non- +retail businesses for these associates and invest significant resources in training and motivating them. Competition +among potential employers has resulted, and may in the future result, in increased associate costs and has from time to +time affected our ability to recruit and retain associates. We may not be able to attract or retain sufficient highly qualified +associates in the future, which could have a material adverse effect on our business, financial condition, results of +operations or cash flows. + +DATA AND TECHNOLOGY + +Our business is increasingly dependent on information technology systems that are complex and vital to continuing +operations, resulting in an expansion of our technological presence and corresponding risk exposure. If we were to +experience difficulties maintaining or operating existing systems or implementing new systems, we could incur +significant losses due to disruptions in our operations. As we modernize legacy systems, if we are unable to successfully +implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to +business interruption or reputation risk with our customers, suppliers or associates. + +Through our sales and marketing activities, we collect and store some personal information that our customers +provide to us. We also gather and retain information about our associates in the normal course of business. Under certain +circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or +otherwise in accordance with our privacy policy. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_119.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..308d721c67beb8b7212157e99b0bb707ff402765 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,57 @@ + +15 +Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as +we regularly defend against and respond to data security incidents. Cyber-attackers have targeted and accessed, and may +in the future again target and, if successful, access information stored in our or our vendors’ systems in order to +misappropriate confidential customer or business information. Due to ongoing geopolitical conflicts, there is an +increased possibility of cyberattacks that could either directly or indirectly affect our operations. Although we have +implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that +our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly +sophisticated cyber-attacks as they become more difficult to detect and defend against. Further, a Kroger associate, a +contractor or other third party with whom we do business may in the future circumvent our security measures in order to +obtain information or may inadvertently cause a breach involving information. In addition, hardware, software or +applications we may use may have inherent defects, vulnerabilities, or could be inadvertently or intentionally applied or +used in a way that could compromise our information security. + +Our cybersecurity program, continued investment in our information technology systems, and our processes to +evaluate and select vendors with reasonable information security controls may not effectively insulate us from potential +attacks, data breaches or disruptions to our business operations, which could result in a loss of customers or business +information, negative publicity, damage to our reputation, and exposure to claims from customers, financial institutions, +regulatory authorities, payment card associations, associates and other persons. Any such events could have an adverse +effect on our business, financial condition, results of operations or cash flows and may not be covered by our insurance. +In addition, compliance with privacy and information security laws and standards may result in significant expense due +to increased investment in technology and the development of new operational processes and may require us to devote +significant management resources to address these issues. The costs of attempting to protect against the foregoing risks +and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’ +remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, +and loss of existing or potential customers. In addition, breaches of our and/or our vendors’ security measures and the +unauthorized dissemination of sensitive personal information or confidential information about us or our customers +could expose our customers’ private information and our customers to the risk of financial or medical identity theft, or +expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory +enforcement actions, material fines and penalties, loss of customers and business relationships, litigation or other actions +which could have a material adverse effect on our brands, reputation, business, financial condition, results of operations +or cash flows. + +Data governance failures can adversely affect our reputation and business. Our business depends on our customers’ +willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate +disclosure to our customers of our uses of their information, failures to honor new and evolving data privacy rights, +failing to keep our information technology systems and our customers’ sensitive information secure from significant +attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including +human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and +reputation and operating results and also could expose and/or has exposed us to mandatory disclosure to the media, +litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, +penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, and/or +injunctive relief, any of which could adversely affect our businesses, financial condition, results of operations or cash +flows. Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge +we and our vendors face in maintaining the security of our information technology systems and proprietary information +and of our customers’ information. There can be no assurance that such failures will not occur, or if any do occur, that +we will detect them or that they can be sufficiently remediated. + +The use of data by our business and our business associates is highly regulated. Privacy and information-security +laws and regulations change, and compliance with them may result in cost increases due to, among other things, systems +changes and the development of new processes. If we, our third-party service providers, or those with whom we share +information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our +business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance +Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection +Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to +additional legal risk or financial losses as a result of non-compliance. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_12.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c95c920bbd90a1af0e5321b32f919b6417e23e3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,4 @@ +10 + +Director Nominee Highlights + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_120.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..681c891262c31c3239fa09fa6da0daa0fdf06da3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,47 @@ + +16 +PAYMENT SYSTEMS + +We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and +Kroger Pay, a mobile payment solution. As we offer new payment options to our customers, we may be subject to +additional rules, regulations, compliance requirements, and higher fraud losses. For certain payment methods, we pay +interchange and other related acceptance fees, along with additional transaction processing fees. We rely on third parties +to provide payment transaction processing services for credit and debit cards. It could disrupt our business if these +companies become unwilling or unable to provide these services to us, including due to short term disruption of service. +We are also subject to evolving payment card association and network operating rules, including data security rules, +certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card +Industry Data Security Standards (“PCI DSS”), which contain compliance guidelines and standards with regard to our +security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If +our payment card terminals or internal systems are breached or compromised, we may be liable for card re-issuance +costs and other costs, subject to fines and higher transaction fees, and lose our ability to accept card payments from our +members, or if our third-party service providers’ systems are breached or compromised, our business, financial +condition, results of operations or cash flows could be adversely affected. + +INDEBTEDNESS + +Our indebtedness could reduce our ability to obtain additional financing for working capital, mergers and +acquisitions or other purposes and could make us vulnerable to future economic downturns as well as competitive +pressures. If debt markets do not permit us to refinance certain maturing debt, we may be required to dedicate a +substantial portion of our cash flow from operations to payments on our indebtedness. Changes in our credit ratings, or +in the interest rate environment, could have an adverse effect on our financing costs and structure. + +LEGAL PROCEEDINGS AND INSURANCE + +From time to time, we are a party to legal proceedings, including matters involving personnel and employment +issues, personal injury, contract disputes, regulatory claims and other proceedings. Other legal proceedings purport to be +brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial +loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, +where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the +outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in +our evaluations or predictions about the proceedings, could have an adverse effect on our financial condition, results of +operations or cash flows. Please also refer to the “Litigation” section in Note 12 to the Consolidated Financial +Statements. + +We use a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, +automobile and general liability, property, director and officers’ liability, cyber risk exposure and associate health care +benefits. Any actuarial projection of losses is subject to a high degree of variability. With respect to insured matters, we +are liable for retention amounts that vary by the nature of the claim, and some losses may not be covered by insurance. +Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of +claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes +in discount rates could all affect our financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_121.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..44d7866aab9388fcc2b2136c71425c2cd410bcc3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,59 @@ + +17 +MULTI-EMPLOYER PENSION OBLIGATIONS + +As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of +Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer +pension plans based on obligations arising under collective bargaining agreements with unions representing associates +covered by those agreements. We believe the present value of actuarially accrued liabilities in most of these multi- +employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that Kroger’s contributions to +most of these funds will increase over the next few years. A significant increase to those funding requirements could +adversely affect our financial condition, results of operations or cash flows. Despite the fact that the pension obligations +of these funds are not the liability or responsibility of the Company, except as noted below, there is a risk that the +agencies that rate our outstanding debt instruments could view the underfunded nature of these plans unfavorably, or +adjust their current views unfavorably, when determining their ratings on our debt securities. Any downgrading of our +debt ratings likely would adversely affect our cost of borrowing and access to capital. + +We also currently bear the investment risk of two multi-employer pension plans in which we participate. In addition, +we have been designated as the named fiduciary of these funds with sole investment authority of the assets of these +funds. If investment results fail to meet our expectations, we could be required to make additional contributions to fund a +portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of +operations or cash flows. + +FUEL + +We sell a significant amount of fuel in our 1,665 fuel centers, which could face increased regulation, including due +to climate change or other environmental concerns, and demand could be affected by concerns about the effect of +emissions on the environment as well as retail price increases. We are unable to predict future regulations, environmental +effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to pandemics and +other health crises, geopolitical conflicts and other matters that affect the cost and availability of fuel, and how our +customers will react to such factors, which could adversely affect our financial condition, results of operations or cash +flows. + +ECONOMIC CONDITIONS + +Our operating results could be materially affected by changes in overall economic conditions and other economic +factors that affect consumer confidence and spending, including discretionary spending. Future economic conditions +affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or +recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT, student loan +relief, or child care credits, the availability of credit, interest rates, inflation, disinflation or deflation, tax rates and other +matters could reduce consumer spending. Inflation could materially affect our operating results through increases to our +cost of goods, supply chain costs and labor costs. In addition, the economic factors listed above, or any other economic +factors or circumstances resulting in higher transportation, labor, insurance or healthcare costs or commodity prices, and +other economic factors can increase our merchandise costs and operating, general and administrative expenses and +otherwise adversely affect our financial condition, results of operations or cash flows. Increased fuel prices also have an +effect on consumer spending and on our costs of producing and procuring products that we sell. A deterioration in +overall economic conditions, including the uncertainty caused by inflation rate volatility, could adversely affect our +business in many ways, including slowing sales growth, reducing overall sales and reducing gross margins. Geopolitical +and catastrophic events, such as wars and conflicts, civil unrest, acts of terrorism or other acts of violence, including +active shooter situations (which have occurred in the past at our locations), or the loss of merchandise as a result of +shrink or industry-wide theft and organized retail crime, or pandemics or other health crises, and other matters that +could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows. We +regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance +Corporation (“FDIC”) insurance limit and are therefore reliant on banks and other financial institutions to safeguard and +allow ready access to these assets. If banks or financial institutions enter receivership or become insolvent in the future +in response to financial conditions affecting the banking system and financial markets, our ability to access our existing +cash, cash equivalents and investments may be threatened. We are unable to predict how the global economy and +financial markets will perform. If the global economy and financial markets do not perform as we expect, it could +adversely affect our business, financial condition, results of operations or cash flows. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_122.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e745ba78d1004edd3a11dafe065c88412091262 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,53 @@ + +18 +Our operating results could be adversely affected by any future disease outbreak, including pandemics, epidemics, +or similar widespread health concerns. We cannot predict with certainty the extent that our operations may be affected +by any effects of the foregoing on us or on our customers, suppliers, vendors, and other business partners, and each of +their financial conditions; however, any adverse effect on these parties could materially and adversely affect us. To the +extent that any health crisis affects the U.S. and global economy and our business, it may also heighten other risks +described in this section, including but not limited to those related to consumer behavior and expectations, competition, +implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor +availability and cost, litigation and operational risk as a result of regulatory requirements. + +LEGAL AND GOVERNMENT REGULATION + +We are subject to various laws, regulations, and administrative practices that affect our business, including laws and +regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti- +corruption, tax, accounting, and financial reporting or other matters. These and other rapidly changing laws, regulations, +policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory +agencies, create challenges for us, may alter the environment in which we do business and may increase the ongoing +costs of compliance, which could adversely affect our financial condition, results of operations and cash flows. If we are +unable to continue to meet these challenges and comply with all laws, regulations, policies and related interpretations, it +could negatively affect our reputation and our business results. Additionally, we are currently, and in the future may be, +subject to a number of inquiries, investigations, claims, proceeding, and requests for information from governmental +agencies or private parties, the adverse outcomes of which could harm our business. Failure to successfully manage these +new or pending regulatory and legal matters and resolve such matters without significant liability or damage to our +reputation may adversely affect our financial condition, results of operations and cash flows. Furthermore, if new or +pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also +materially affect our financial condition, results of operations or cash flows. + +In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”) +matters, including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste +production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of +matters that we are required to control, assess, and report and could negatively affect our reputation. Given our +commitment to our ESG strategy, we have established and publicly announced certain goals which we may refine or +even expand further in the future. The execution of this strategy to achieve these goals is subject to risks and +uncertainties, many of which may be outside of our control and prove to be more costly than we anticipate. These risks +and uncertainties include, but are not limited to, our ability to achieve our goals within the currently projected costs and +the expected timeframes; unforeseen operational and technological difficulties; the outcome of research efforts and +future technology developments; and the success of our collaborations with and reliance on third parties. Any failure, or +perceived failure, to achieve these goals or the setting or publication of certain targets could damage our reputation and +customer, investor and other stakeholder relationships, and may even result in regulatory enforcement action. Such +conditions could have an adverse effect on our business, financial condition, results of operations or cash flows. + +Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation +standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food, +drugs, and alcoholic beverages. We cannot predict future laws, regulations, interpretations, administrative orders, or +applications, or the effect they will have on our operations. They could, however, significantly increase the cost of doing +business. They also could require the reformulation of some of the products that we sell (or manufacture for sale to third +parties) to meet new standards. We also could be required to recall or discontinue the sale of products that cannot be +reformulated. These changes could result in additional record keeping, expanded documentation of the properties of +certain products, expanded or different labeling, or scientific substantiation. Any or all of these requirements could have +an adverse effect on our financial condition, results of operations or cash flows. + +The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_123.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..93e9ee0d319713151770bc79012c150e52a040f6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,48 @@ + +19 +WEATHER, NATURAL DISASTERS AND OTHER EVENTS + +A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that +are susceptible to hurricanes, tornadoes, floods, droughts, ice and snow storms and earthquakes. Weather conditions and +natural disasters have, and may again in the future, disrupt our operations at one or more of our facilities, interrupt the +delivery of products to our stores, substantially increase the cost of products, including supplies and materials and +substantially increase the cost of energy needed to operate our facilities or deliver products to our facilities. Moreover, +the effects of climate change, including those associated with extreme weather events, may affect our ability to procure +needed commodities at costs and in quantities that are optimal for us or at all. Adverse weather or natural disasters and +other matters that could reduce consumer spending, could materially affect our financial condition, results of operations +or cash flows. + +CLIMATE IMPACT + +The long-term effects of global climate change present both physical risks, such as extreme weather conditions or +rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and +unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities and +energy including utilities, which in turn may affect our ability to procure goods or services required for the operation of +our business at the quantities and levels we require. In addition, many of our operations and facilities are in locations that +may be affected by the physical risks of climate change, and we face the risk of losses incurred as a result of physical +damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption caused by +such events. We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face +increased regulation and cost increases as a result of climate change or other environmental concerns. Transitioning to +alternative energy sources, such as renewable electricity or electric vehicles, and investments in new technologies, could +incur higher costs. Regulations limiting greenhouse gas emissions and energy inputs will also increase in coming years, +which may increase our costs associated with compliance, tracking, reporting, and sourcing. These events and their +effects could otherwise disrupt and adversely affect our operations and could have an adverse effect on our financial +condition, results of operations or cash flows. + +SUPPLY CHAIN + +Disruption in our global supply chain could negatively affect our business. The products we sell are sourced from a +wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find +qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner +could adversely affect our business. The loss or disruption of such supply arrangements for any reason, labor disputes, +loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, quality control +issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade +sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively +managed and remedied, have an adverse effect on our business, financial condition, results of operations or cash flows. + +ITEM 1B. UNRESOLVED STAFF COMMENTS. + +None. + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_124.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8985e19caeda360a12b17e00adf19779d245fbb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,55 @@ + +20 +ITEM 1C. CYBERSECURITY. + +RISK MANAGEMENT AND STRATEGY + +Securing Kroger’s business information, intellectual property, customer and employee data and technology systems +is essential for the continuity of our businesses, meeting applicable regulatory requirements and maintaining the trust of +our stakeholders. We have adopted enterprise cybersecurity risk mitigation and governance processes, which are set +forth in the Kroger Cybersecurity Risk Management program (“CRM”), the Kroger Third-Party Cybersecurity Risk +Management program (“TPCRM”), and the Kroger Cyber Incident Response Plan (“IR Plan”). Our approach is guided +by the principles of the CRM, which includes monitoring threats and vulnerabilities and assessing and monitoring related +controls, supporting the Corporate Information Security function, the Chief Information Security Officer (“CISO”) and +Chief Information Officer (“CIO”). Kroger’s cybersecurity policies, standards, processes, and practices are integrated +into our overarching risk management system in an effort to enhance our ability to safeguard our operations and +information, which includes quarterly cybersecurity reporting to the Board, delivered by senior leadership. + +Kroger Cyber Risk Management Program + +The CRM was developed in collaboration with third-party consultants and is aligned with the National Institute of +Standards and Technology (“NIST”), Risk Management Framework (“RMF”), Cybersecurity Framework (“CSF”) and +the International Organization for Standardization 27001 (“ISO 27001”). The program includes security and privacy, +risk-based controls, and incorporates lessons learned from cybersecurity incidents. Under Kroger’s CRM, cyber risks, +including cyber threats and cyber events/incidents, are assessed, treated, and monitored on a continuous basis. We +integrate lessons learned from incident response and cyber risk mitigation into our cyber risk management strategy, in an +effort to improve overall cybersecurity on an ongoing basis. Kroger's CRM program is spearheaded by specific +management positions, chosen for their expertise in the field as further discussed below. + +In line with cyber risk management best practices, we have collaborated with recognized third-party experts as +needed to align the CRM’s foundational processes, metrics, monitoring, and reporting with common frameworks such as +NIST and RMF. + +Third-Party Cyber Risk Management + +Recognizing the potential vulnerabilities posed by third-party relationships, Kroger has implemented a +comprehensive TPCRM program. The TPCRM program is designed to assess third-party cybersecurity risks by +employing third-party risk assessments, vendor tiering, and a dedicated team tasked with recommending holistic +improvements to strengthen Kroger’s cybersecurity posture, sourcing, and contracting processes. Kroger’s Information +Security Operations Center (“iSOC”) responds to known third-party incidents on a continuous basis. The iSOC is a part +of the Corporate Information Security (“CIS”) department and is responsible for detecting, responding to, and escalating +security incidents. We partner directly with business stakeholders and technology custodians to determine an appropriate +response to manage incident risk to minimize the effect to the business. This response process is a regular and critical +function of the iSOC and is defined in a separate appendix to the IR Plan. Any material risk identified from these +incidents is escalated and communicated using formal severity and impact criteria as defined in the IR Plan. + +Kroger Cyber Incident Response Plan + +The IR Plan documents the processes by which information security events are detected, identified, prioritized, and +analyzed. The Kroger iSOC, CISO, legal counsel, and corporate affairs stakeholders are then engaged depending on the +incident’s scope, business effect, and potential material risk. This cross-functional team is responsible for assessing an +appropriate response and mitigation pathway. Once security events are identified through the enterprise detection and +monitoring ecosystem, the IR Plan sets forth an incident prioritization/decision workflow to determine scope, business +effect, and potential material risk. This workflow is implemented through collaboration with the iSOC, CISO, legal +counsel, and corporate affairs stakeholders. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_125.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..998a4dbb3b4b6d60b856d86cece97b401f5a03e9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,50 @@ + +21 +In addition to the processes outlined above, we have also implemented an information security training program for +employees that includes security awareness training related to cyber security risks, simulated phishing emails and regular +communication to the enterprise regarding cyber security risks. + +We experience cybersecurity threats and incidents from time to time. We are not aware of any material risks from +cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are +reasonably likely to materially affect us, including our business strategy, our financial condition, results of operations or +cash flows. There can be no assurance that cybersecurity threats will not have a material effect on us, including our +business strategy, our financial condition, results of operations or cash flows. Please see “Item 1A. Risk Factors” for +more information on our cybersecurity-related risks. + +GOVERNANCE + +Protection of our customers’ data is a fundamental priority for our Board and management team. Our risk +management team is integrated into our CIS function and is led by our CIO and CISO. The risk management team +reports to the CISO and has combined experience in information security, governance, and compliance, including +domains such as engineering, architecture, cybersecurity, and privacy. This team is responsible for defining the program, +cybersecurity governance, and gathering insights related to assessing, identifying, and managing cybersecurity threat +risks, their severity, and mitigations. + +Kroger’s CIO reports to the CEO and leads technology and digital capabilities for the Kroger Co., including the +overall cybersecurity strategy. Kroger’s CIO & Chief Digital Officer, has over 20 years of both leading and transforming +technology, digital growth, and e-commerce in the retail and food industry. Kroger’s interim CISO brings nearly 20 +years of experience developing and leading security and risk programs. His experience includes governance, information +security, and threat management. + +The Audit Committee of Kroger’s Board of Directors is charged with oversight of data privacy and cybersecurity +risks. Kroger’s CIO and CISO provide quarterly updates on cybersecurity risks and related mitigating actions to the +Audit Committee, meet with the full Board at least annually and inform the Audit Committee immediately if a +cybersecurity incident is deemed material. They report to the Audit Committee and the Board on compliance and +regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST +Cybersecurity Framework Scorecard. Additionally, the CIO and CISO discuss and present strategies to address +geopolitical threats that may affect operations as well as technological changes, such as AI and quantum computing. In +overseeing cybersecurity risks, the Audit Committee focuses on aggregated, thematic issues with a risk-based approach. +Oversight of cybersecurity risk incorporates strategy metrics, third-party assessments, and internal audit and controls. An +independent third party also regularly reports to the Audit Committee and the full Board on cybersecurity, and outside +counsel advises the Board on best practices for cybersecurity oversight by the Board, and the evolution of that oversight +over time. Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and +their effect. + +ITEM 2. PROPERTIES. + +As of February 3, 2024, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses +and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United +States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food +production equipment. The total cost of our owned assets and finance leases at February 3, 2024, was $56.7 billion while +the accumulated depreciation was $31.5 billion. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_126.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6ee60f2f3960943bf1f57d1eba702df7d584c8f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,42 @@ + +22 +We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in +leased facilities in approximately half of our store locations. Lease terms generally range from 10 to 20 years with +options to renew for varying terms at our sole discretion. Certain leases also include options to purchase the leased +property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include +escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent +expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the +lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. +Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For +additional information on lease obligations, see Note 9 to the Consolidated Financial Statements. + +ITEM 3. LEGAL PROCEEDINGS. + +Incorporated by reference herein is information regarding certain legal proceedings in which we are involved as set +forth under “Litigation” contained in Note 12 – “Commitments and Contingencies” in the notes to the Consolidated +Financial Statements in Item 8 of Part II of this Annual Report. + +ITEM 4. MINE SAFETY DISCLOSURES. + +Not applicable. + +PART II + +ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS +AND ISSUER PURCHASES OF EQUITY SECURITIES. + +Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 27, 2024, there +were 24,275 shareholders of record. + +During 2023, we paid two quarterly cash dividends of $0.26 per share and two quarterly cash dividends of $0.29 per +share. During 2022, we paid two quarterly cash dividends of $0.21 per share and two quarterly cash dividends of $0.26 +per share. On March 1, 2024, we paid a quarterly cash dividend of $0.29 per share. On March 14, 2024, we announced +that our Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on June 1, 2024, to +shareholders of record at the close of business on May 15, 2024. We currently expect to continue to pay comparable cash +dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including +approval by our Board. + +For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 +under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder +Matters.” + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_127.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..53684bea3020e855e9ff6c95c9a5ab27d49f6334 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_127.txt @@ -0,0 +1,33 @@ + +23 +PERFORMANCE GRAPH + +Set forth below is a line graph comparing the five-year cumulative total shareholder return on our common shares, +based on the market price of the common shares and assuming reinvestment of dividends, with the cumulative total +return of companies in the Standard & Poor’s 500 Stock Index and a peer group composed of food and drug companies. + + + + + + Base INDEXED RETURNS + Period Years Ending +Company Name/Index 2018 2019 2020 2021 2022 2023 +The Kroger Co. 100 97.94 128.49 165.19 174.57 183.07 +S&P 500 Index 100 121.56 142.53 172.46 161.03 199.42 +Peer Group 100 120.67 148.43 175.27 169.86 197.90 + +Kroger’s fiscal year ends on the Saturday closest to January 31. + +Data supplied by Standard & Poor’s. + +The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an +express reference thereto. + +* Total assumes $100 invested on February 2, 2019, in The Kroger Co., S&P 500 Index, and the Peer Group, with +reinvestment of dividends. + +** The Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), +Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., +Walgreens Boots Alliance Inc. and Walmart Inc. + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_128.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6ee5259ffccd77f05b36bb0d996659191225697 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,44 @@ + +24 +The following table presents information on our purchases of our common shares during the fourth quarter of 2023: + +ISSUER PURCHASES OF EQUITY SECURITIES + + + Approximate Dollar + Value of Shares + Total Number of that May Yet Be + Shares Purchased Purchased Under + Total Number Average as Part of Publicly the Plans or + of Shares Price Paid Per Announced Plans Programs (4) +Period(1) Purchased (2) Share (2) or Programs (3) (in millions) +First period - four weeks +November 5, 2023 to December 2, 2023 7,093 $ 44.09 6,900 $ 1,000 +Second period - four weeks +December 3, 2023 to December 30, 2023 82,059 $ 44.75 64 ,200 $ 1,000 +Third period - five weeks +December 31, 2023 to February 3, 2024 96,000 $ 46.07 96,000 $ 1,000 +Total 185,152 $ 45.41 167,100 $ 1,000 + +(1) The fourth quarter of 2023 contained two 28-day periods and one 35-day period. +(2) Includes (i) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to +reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases +are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 +Repurchase Program”) and (ii) 18,052 shares that were surrendered to Kroger by participants under our long-term +incentive plans to pay for taxes on restricted stock awards. +(3) Represents shares repurchased under the 1999 Repurchase Program. +(4) On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares +via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to +comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “September 2022 +Repurchase Program”). The amounts shown in this column reflect the amount remaining under the September 2022 +Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program +are dependent upon option exercise activity. The September 2022 Repurchase Program and the 1999 Repurchase +Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time. +No shares have been repurchased under the September 2022 authorization. During the third quarter of 2022, we +paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. + +ITEM 6. RESERVED. + +Not applicable. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_129.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dc581a844c4fd84267ffe7afacccbcd45a92ec5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,54 @@ + +25 +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS. + +The following discussion and analysis of financial condition and results of operations of The Kroger Co. should be +read in conjunction with the “Forward-looking Statements” section set forth in Part I and the “Risk Factors” section set +forth in Item 1A of Part I. MD&A is provided as a supplement to, and should be read in conjunction with, our +Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part +II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K +for the year ended January 28, 2023, which provides additional information on comparisons of fiscal years 2022 and +2021. + +OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL +SHAREHOLDER RETURN + +Kroger’s proven value creation model is allowing us to deliver today and invest for the future. The foundation of our +value creation model is our omnichannel retail business, including fuel and health and wellness. By executing on our go- +to-market strategy built on the four pillars of Fresh, Our Brands, Personalization and Seamless, we are creating a +shopping experience that builds loyalty and grows sales. Our retail business generates traffic and data which accelerates +growth in our high operating margin alternative profit businesses, like Kroger Precision Marketing. In turn, the value +generated from these businesses enables us to reinvest back into our retail business. + +We are focused on enhancing our pillars and delivering an exceptional customer experience to accelerate this +flywheel effect. By expanding our store network and improving our digital capabilities, we expect to grow households +and increase sales. Kroger has evolved into a more diverse business, with a model that provides more ways than ever to +generate net earnings growth. + +This will be achieved by: + +• Growing identical sales without fuel. Our plan involves maximizing growth opportunities in our retail business +and is supported by continued strategic investments in our associates, greater value for our customers and our +seamless ecosystem to ensure we deliver a full, fresh and friendly experience for every customer, every time. +As more and more customers incorporate ecommerce into their permanent routines, we expect digital sales to +grow at a double-digit rate – a faster pace than other food at home sales – over time; and + +• Expanding operating margin through long-term initiatives in gross margin, growing alternative profit +businesses, and productivity and cost saving initiatives that are focused on simplifying processes and utilizing +technology to enhance the associate experience without affecting the customer experience. Together, these will +enable us to improve operating margin, while balancing strategic price investments for customers and wage and +benefit investments for associates. + +We expect to continue to generate strong free cash flow and are committed to being disciplined with capital +deployment in support of our value creation model and stated capital allocation priorities. Our first priority is to invest in +the business through attractive high return opportunities that drive long-term sustainable net earnings growth. We are +committed to maintaining our current investment grade debt rating and our net total debt to adjusted EBITDA ratio +target range of 2.30 to 2.50. We also expect to continue to grow our dividend over time and return excess cash to +shareholders via stock repurchases, subject to Board approval. During the third quarter of 2022, we paused our share +repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. + +We expect our value creation model will result in total shareholder return within our target range of 8% to 11% over +time, which does not contemplate the effect of the proposed merger with Albertsons. + +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_13.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..e311959013293b9bae5987d4b3dc06ac3ce4e602 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,30 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_130.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..959414352ce603b0ba1b988776c51678ae740f3c --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,55 @@ + +26 +2023 EXECUTIVE SUMMARY + +We achieved strong results in 2023, in line with our long-term growth model and built on three consecutive years of +growth, despite navigating a challenging operating environment. By maintaining our long-term commitment to lower +prices, through personalized promotions and rewards, we are increasing customer visits and growing loyal households +through the strength of our retail business, continuing our evolution into a more diverse business, and our value creation +model is providing us multiple ways to drive sustainable future growth. + +Our results provided another proof point of the strength and resilience of our value creation model, which supported +another year of strong free cash flow and adjusted net earnings per diluted share growth, excluding the 53rd week in +fiscal year 2023 (the “Extra Week”). This was the result of continued momentum across several margin expansion +initiatives, strong Our Brands performance, strong growth in alternative profit businesses, our ability to effectively +manage product cost through strong sourcing practices, lower supply chain costs and a lower year-over-year LIFO +charge. During the year, we continued to invest in wages and the associate experience as a way to support the delivery of +a full, fresh and friendly customer experience. In 2023, we increased associate wages resulting in an average hourly rate +of nearly $19, and a rate of nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the +last five years. + +The following table provides highlights of our financial performance: + +Financial Performance Data +($ in millions, except per share amounts) + + + + Fiscal Year + Percentage + 2023 Change 2022 +Sales $ 150,039 1.2 % $ 148,258 +Sales without fuel and the Extra Week $ 130,988 1.1 % $ 129,626 +Net earnings attributable to The Kroger Co. $ 2,164 (3.6)% $ 2,244 +Adjusted net earnings attributable to The Kroger Co. excluding the Extra Week $ 3,335 7.4 % $ 3,104 +Net earnings attributable to The Kroger Co. per diluted common share $ 2.96 (3.3)% $ 3.06 +Adjusted net earnings attributable to The Kroger Co. per diluted common share +excluding the Extra Week $ 4.56 7.8 % $ 4.23 +Operating profit $ 3,096 (25.0)% $ 4,126 +Adjusted FIFO operating profit excluding the Extra Week $ 4,799 (5.5)% $ 5,079 +Dividends paid $ 796 16.7 % $ 682 +Dividends paid per common share $ 1.10 17.0 % $ 0.94 +Identical sales excluding fuel(1) 0.9 % N/A 5.6 % +FIFO gross margin rate, excluding fuel and the Extra Week, bps increase +(decrease)(1) 0.18 N/A (0.09) +OG&A rate, excluding fuel, Adjusted Items and the Extra Week, bps increase +(decrease)(1) 0.21 N/A (0.19) +(Decrease)/increase in total debt, including obligations under finance leases +compared to prior fiscal year end $ (1,152) N/A $ 14 +Share repurchases $ 62 N/A $ 993 + +(1) Identical sales without fuel would have grown 2.3% in fiscal 2023 if not for the reduction in pharmacy sales from +the previously communicated termination of our agreement with Express Scripts effective December 31, 2022. In +fiscal 2023, the terminated agreement had a positive effect on the FIFO gross margin rate, excluding fuel and the +Extra Week, and a negative effect on the OG&A rate, excluding fuel, the Extra Week and the 2023 and 2022 +Adjusted Items, as defined below. The overall net effect on adjusted FIFO operating profit was slightly positive. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_131.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..9966bb1ab1458ab5bbfb12a688ace87d558373be --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,49 @@ + +27 +OVERVIEW + +Notable items for 2023 are: + +Shareholder Return + +• Achieved net earnings attributable to The Kroger Co. per diluted common share of $2.96, which represents a +3.3% decrease compared to 2022. The 2023 results include losses per diluted common share of $1.60 related to +our opioid settlement charges. + +• Net earnings include $179 million, $144 million net of tax, due to the Extra Week. The Extra Week in 2023 +contributed $0.20 to our net earnings per diluted common share result for 2023. + +• Achieved adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the Extra +Week of $4.56, which represents an 8% increase compared to 2022. Including the Extra Week, adjusted net +earnings per diluted common share increased 13% compared to 2022. + +• Achieved operating profit of $3.1 billion, which represents a 25% decrease compared to 2022. The 2023 results +reflect charges of $1.5 billion related to our opioid settlement charges. + +• Achieved adjusted FIFO operating profit excluding the Extra Week of $4.8 billion, which represents a 6% +decrease compared to 2022. Including the Extra Week, adjusted FIFO operating profit decreased 2% compared +to 2022. + +• Generated cash flows from operations of $6.8 billion, which represents a 51% increase compared to 2022. + +• Returned $0.8 billion to shareholders through dividend payments. + +Other Financial Results + +• Identical sales, excluding fuel, increased 0.9%. Identical sales, excluding fuel, would have grown 2.3% in 2023 +if not for the reduction in pharmacy sales from our termination of our agreement with Express Scripts effective +December 31, 2022. This terminated agreement had no material effect on profitability. + +• Digital sales grew to $12 billion in annual sales. Digital sales include products ordered online and picked up at +our stores and our Delivery and Ship solutions. Excluding the Extra Week, digital sales increased 12%, which +was led by strength in our Delivery solutions, which grew by 25%. Delivery solutions growth was driven by our +Boost membership program and expansion of our Kroger Delivery network. Our Delivery solutions include +orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado and +orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through +our owned platforms that are dispatched using mail service or third-party courier. + +• Our LIFO charge for 2023 was $113 million, compared to $626 million in 2022. The decrease in LIFO charge +was due to lower product cost inflation year-over-year. + +• Alternative profit streams contributed $1.3 billion of operating profit in 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_132.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1cbc61d70e47c92f8658ecccc45badd29377e4b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,49 @@ + +28 +Significant Events + +• During the second quarter of 2023, we recognized opioid settlement charges of $1.4 billion, $1.1 billion net of +tax, related to the nationwide opioid settlement framework to settle substantially all opioid lawsuits and claims +against Kroger. We have agreed to make settlement payments related to the nationwide settlement framework +of approximately $1.2 billion in equal installments over 11 years, and $177 million in equal installments over +six years. During the first quarter of 2023, we recognized opioid settlement charges of $62 million, $49 million +net of tax, related to all pending and future opioid litigation claims with the State of West Virginia, which are +payable over 10 years. For additional information about our opioid settlement charges in 2023, see Note 12 to +the Consolidated Financial Statements. + +• On September 8, 2023, Kroger and Albertsons announced they have entered a definitive agreement with C&S +Wholesale Grocers, LLC for the combined sale of 413 stores, eight distribution centers, two offices and five +private label brands for approximately $1.9 billion cash, in connection with the proposed merger, subject to +customary adjustments. The financial terms of this divestiture plan are in line with what we expected and allow +us to reaffirm the shareholder value creation opportunity the proposed merger creates. For additional +information about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements. + +OUR BUSINESS + +The Kroger Co. (the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built +on the foundation of our food retail business, which includes the added convenience of our retail pharmacies and fuel +centers. Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in +four strategic pillars: Fresh, Our Brands, Data & Personalization and Seamless. + +We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our +customers that generate alternative profit streams. These alternative profit streams would not exist without our core retail +business. + +Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our +stores, fuel centers and via our online platforms. We earn income predominately by selling products at price levels that +produce revenues in excess of the costs we incur to make these products available to our customers. Such costs include +procurement and distribution costs, facility occupancy and operational costs, and overhead expenses. Our retail +operations, which represent 97% of our consolidated sales, is our only reportable segment. + +Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer +demographics. Our combination of assets include the following: + +Stores + +As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the +District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 +supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers. We connect with customers through our +expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience. Fuel sales +are an important part of our revenue, net earnings and loyalty offering. Our fuel strategy is to include a fuel center at +each of our supermarket locations when it is feasible and it is expected to be profitable. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_133.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..13a921ece91cb51f5c2b581bdacf428afec826fa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,59 @@ + +29 +Seamless Digital Ecosystem + +We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, +including Pickup, Delivery and Ship. We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, +pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital +solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail +store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These +channels allow us to serve customers anything, anytime, and anywhere with zero compromise on selection, convenience, +and price. We also provide relevant customer-facing apps and interfaces that have the features customers want that are +also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. + +Merchandising and Manufacturing + +Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our +sales in 2023. We own 33 food production plants, primarily bakeries and dairies, which supply approximately 30% of +Our Brands units and 43% of the grocery category Our Brands units sold in our supermarkets; the remaining Our +Brands items are produced to our strict specifications by outside manufacturers. + +Our Data + +We are evolving into a more diverse business. The traffic and data generated by our retail business, including +pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households +annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card. +Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized +experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit +businesses, including data analytic services and third-party media revenue. Our retail media business – Kroger Precision +Marketing – provides best in class media capabilities for our consumer packaged goods partners and other industry +verticals. It is a key driver of our digital profitability and alternative profit. + +Proposed Merger with Albertsons + +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. The proposed +merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands, Personalization and +Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and +increasing associate wages and benefits. For additional information about the proposed merger with Albertsons, see Note +16 to the Consolidated Financial Statements. + +USE OF NON-GAAP FINANCIAL MEASURES + +The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with +generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including First-In, First-Out +(“FIFO”) gross margin, FIFO operating profit, adjusted FIFO operating profit, adjusted net earnings and adjusted net +earnings per diluted share because management believes these metrics are useful to investors and analysts. These non- +GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and +net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in +isolation or considered as a substitute for our financial results as reported in accordance with GAAP. + +We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less +merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out +(“LIFO”) charge. Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure +used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it +measures the merchandising and operational effectiveness of our go-to-market strategy. + +We calculate FIFO operating profit as operating profit excluding the LIFO charge. FIFO operating profit is an +important measure used by management, and management believes FIFO operating profit is a useful metric to investors +and analysts because it measures the operational effectiveness of our financial model. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_134.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..1693f6e202cffddd1cfb07f051b057afc39c0ad9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,42 @@ + +30 +The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are +important measures used by management to compare the performance of core operating results between periods. We +believe adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit are useful +metrics to investors and analysts because they present more accurate year-over-year comparisons of our net earnings, net +earnings per diluted share and FIFO operating profit because adjusted items are not the result of our normal operations. +Net earnings for 2023 include $179 million, $144 million net of tax, due to the Extra Week. In addition, net earnings for +2023 include the following, which we define as the “2023 Adjusted Items:” + +• Charges to operating, general and administrative expenses (“OG&A”) of $316 million, $268 million net of tax, +for merger related costs and $1.5 billion, $1.2 billion net of tax, for opioid settlement charges (the “2023 +OG&A Adjusted Items”). + +• A gain in other income (expense) of $151 million, $116 million net of tax, for the unrealized gain on +investments (the “2023 Other Income (Expense) Adjusted Items”). + +Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:” + +• Charges to operating, general and administrative expenses (“OG&A”) of $25 million, $19 million net of tax, for +obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million +net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for +merger related costs, $85 million, $67 million net of tax, for opioid settlement charges and $164 million for +goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”). + +• Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on +investments (the “2022 Other Income (Expense) Adjusted Items”). + +Net earnings for 2021 include the following, which we define as the “2021 Adjusted Items:” + +• Charges to OG&A of $449 million, $344 million net of tax, for obligations related to withdrawal liabilities for a +certain multi-employer pension fund, $66 million, $50 million net of tax, for the revaluation of Home Chef +contingent consideration and $136 million, $104 million net of tax, for transformation costs (the “2021 OG&A +Adjusted Items”). + +• Losses in other income (expense) of $87 million, $68 million net of tax, related to company-sponsored pension +plan settlements and $821 million, $628 million net of tax, for the unrealized loss on investments (the “2021 +Other Income (Expense) Adjusted Items”). + +• A reduction to income tax expense of $47 million primarily due to the completion of income tax audit +examinations covering multiple years. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_135.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f0410575bb7cd16926e4396d83f61778d762173 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,58 @@ + +31 +The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings +attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common +share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2023, 2022 and +2021 Adjusted Items: + +Net Earnings per Diluted Share excluding the Adjusted Items +($ in millions, except per share amounts) + + + 2023 2022 2021 +Net earnings attributable to The Kroger Co. $ 2,164 $ 2,244 $ 1,655 + +(Income) expense adjustments +Adjustment for pension plan withdrawal liabilities(1)(2) — 19 344 +Adjustment for company-sponsored pension plan settlement charges(1)(3) — — 68 +Adjustment for (gain) loss on investments(1)(4) (116) 561 628 +Adjustment for Home Chef contingent consideration(1)(5) — 15 50 +Adjustment for transformation costs(1)(6) — — 104 +Adjustment for merger related costs(1)(7) 268 34 — +Adjustment for opioid settlement charges(1)(8) 1,163 67 — +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(1)(9) — 164 — +Adjustment for income tax audit examinations(1) — — (47) +Total Adjusted Items 1,315 860 1,147 + +Net earnings attributable to The Kroger Co. excluding the Adjusted Items $ 3,479 $ 3,104 $ 2,802 + +Extra Week adjustment(1)(10) (144) — — + +Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra +Week adjustment $ 3,335 $ 3,104 $ 2,802 + +Net earnings attributable to The Kroger Co. per diluted common share $ 2.96 $ 3.06 $ 2.17 + +(Income) expense adjustments +Adjustment for pension plan withdrawal liabilities(11) — 0.03 0.45 +Adjustment for company-sponsored pension plan settlement charges(11) — — 0.09 +Adjustment for (gain) loss on investments(11) (0.17) 0.76 0.83 +Adjustment for Home Chef contingent consideration(11) — 0.02 0.07 +Adjustment for transformation costs(11) — — 0.14 +Adjustment for merger related costs(11) 0.37 0.05 — +Adjustment for opioid settlement charges(11) 1.60 0.09 — +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com(11) — 0.22 — +Adjustment for income tax audit examinations(11) — — (0.07) +Total Adjusted Items 1.80 1.17 1.51 + +Net earnings attributable to The Kroger Co. per diluted common share excluding the +Adjusted Items $ 4.76 $ 4.23 $ 3.68 + +Extra Week adjustment(11) (0.20) — — + +Net earnings attributable to The Kroger Co. per diluted common share excluding the +Adjusted Items and the Extra Week adjustment $ 4.56 $ 4.23 $ 3.68 + +Average numbers of common shares used in diluted calculation 725 727 754 + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_136.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e0bf7ba97763e9f259bdfa18e71e9b894cafdc6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,33 @@ + +32 +Net Earnings per Diluted Share excluding the Adjusted Items (continued) +($ in millions, except per share amounts) + +(1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax +rates. +(2) The pre-tax adjustment for pension plan withdrawal liabilities was $25 in 2022 and $449 in 2021. +(3) The pre-tax adjustment for company-sponsored pension plan settlement charges was $87. +(4) The pre-tax adjustment for (gain) loss on investments was $(151) in 2023, $728 in 2022 and $821 in 2021. +(5) The pre-tax adjustment for Home Chef contingent consideration was $20 in 2022 and $66 in 2021. +(6) The pre-tax adjustment for transformation costs was $136. Transformation costs primarily include costs related to +store and business closure costs and third-party professional consulting fees associated with business transformation +and cost saving initiatives. +(7) The pre-tax adjustment for merger related costs was $316 in 2023 and $44 in 2022. Merger related costs primarily +include third-party professional fees and credit facility fees associated with the proposed merger with Albertsons. +(8) The pre-tax adjustment for opioid settlement charges was $1,475 in 2023 and $85 in 2022. +(9) The pre-tax and after-tax adjustments for goodwill and fixed asset impairment charges related to Vitacost.com was +$164. +(10) The pre-tax Extra Week adjustment was $(179). +(11) The amount presented represents the net earnings per diluted common share effect of each adjustment. + +Key Performance Indicators + +We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales, +identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net +earnings per diluted share and return on invested capital. We use these financial metrics and related computations to +evaluate our operational effectiveness and our results of operations from period to period and to plan for near and long- +term operating and strategic decisions. These key performance indicators should not be reviewed in isolation or +considered as a substitute for our financial results as reported in accordance with GAAP. These measures, which are +described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance +indicators used by other companies. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_137.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..394fcd3dd49e532b96fcb64cdaf45f895d0fc868 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,59 @@ + +33 +RESULTS OF OPERATIONS + +Sales + +Total Sales +($ in millions) + + + 2023 Percentage Percentage + 2023 Adjusted(1) Change (2) 2022 Change (3) 2021 +Total sales to retail customers without +fuel(4) $ 132,284 $ 129,868 0.9 % $ 128,664 5.2 % $ 122,293 +Supermarket fuel sales 16,621 16,340 (12.3)% 18,632 26.9 % 14,678 +Other sales(5) 1,134 1,120 16.4 % 962 4.9 % 917 +Total sales $ 150,039 $ 147,328 (0.6)% $ 148,258 7.5 % $ 137,888 + +(1) The 2023 adjusted column represents the items presented in the 2023 column adjusted to remove the Extra Week. +(2) This column represents the percentage change in 2023 adjusted sales compared to 2022. +(3) This column represents the percentage change in 2022 compared to 2021. +(4) Digital sales are included in the “Total sales to retail customers without fuel” line above. Digital sales include +products ordered online and picked up at our stores and our Delivery and Ship solutions. Our Delivery solutions +include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado +and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through +our owned platforms that are dispatched using mail service or third-party courier. Digital sales increased +approximately 12% in 2023 excluding the Extra Week, increased approximately 4% in 2022 and decreased +approximately 3% in 2021. Digital sales growth for 2023 and 2022 was led by strength in our Delivery solutions, +which grew by 25% in 2023 excluding the Extra Week and 25% in 2022. Delivery solutions growth was driven by +our Boost membership program and expansion of our Kroger Delivery network. +(5) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media +revenue. The increase in 2023, compared to 2022, and the increase in 2022, compared to 2021, is primarily due to +an increase in data analytic services and third-party media revenue. + +Total 2023 adjusted sales represent total sales for 2023 excluding the Extra Week. Total 2023 adjusted sales +decreased in 2023, compared to 2022, by 0.6%. The decrease was primarily due to the decrease in supermarket fuel +sales, partially offset by the increase in total sales to retail customers without fuel. Total sales, excluding fuel, adjusted +for the Extra Week, increased 1.1% in 2023, compared to 2022, which was primarily due to our identical sales increase, +excluding fuel, of 0.9%. Identical sales, excluding fuel, in 2023, compared to 2022, increased primarily due to an +increase in the number of loyal households shopping with us and an increase in basket value due to retail inflation, +partially offset by a reduction in the number of items in basket and the termination of our agreement with Express +Scripts effective December 31, 2022. Identical sales, excluding fuel, would have grown 2.3% in 2023 if not for the +approximately $1.8 billion reduction in pharmacy sales from the termination of our agreement with Express Scripts +effective December 31, 2022. Total adjusted fuel sales decreased 12.3% in 2023, compared to 2022, primarily due to a +decrease in the average retail fuel price of 11.1% and a decrease in fuel gallons sold of 1.5%. The decrease in the +average retail fuel price was caused by a decrease in the product cost of fuel. + +Total sales increased in 2022, compared to 2021, by 7.5%. The increase was primarily due to increases in +supermarket fuel sales and total sales to retail customers without fuel. Total sales, excluding fuel, increased 5.2% in +2022, compared to 2021, which was primarily due to our identical sales increase, excluding fuel, of 5.6%, partially offset +by discontinued patient therapies at Kroger Specialty Pharmacy. Identical sales, excluding fuel, for 2022, compared to +2021, increased primarily due to an increase in the number of households shopping with us and an increase in basket +value due to retail inflation, partially offset by a reduction in the number of items in basket and the termination of our +agreement with Express Scripts. Identical sales without fuel would have grown 5.8% in 2022 if not for the reduction in +pharmacy sales from our termination of our agreement with Express Scripts effective December 31, 2022. Total +supermarket fuel sales increased 26.9% in 2022, compared to 2021, primarily due to an increase in the average retail fuel +price of 28.5%, partially offset by a decrease in fuel gallons sold of 1.2%, which was less than the national average +decline. The increase in the average retail fuel price was caused by an increase in the product cost of fuel. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_138.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e51ae00002ed23e1a9692a306411e047a53b913 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,55 @@ + +34 +We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at +identical supermarket locations, Kroger Specialty Pharmacy businesses and Delivery and Ship solutions. We define a +supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define +Kroger Specialty Pharmacy businesses as identical when physical locations have been in operation continuously for five +full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of +transfer or termination. We define Kroger Delivery identical sales powered by Ocado based on geography. We include +Kroger Delivery sales powered by Ocado as identical if the delivery occurs in an existing Kroger supermarket +geography. If the Kroger Delivery sales powered by Ocado occur in a new geography, these sales are included as +identical when deliveries have occurred to the new geography for five full quarters. Although identical sales is a +relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by +our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It +is important to understand the methods used by other companies to calculate identical sales before comparing our +identical sales to those of other such companies. Our identical sales, excluding fuel, results are summarized in the +following table. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage +changes for 2023 and 2022. + +Identical Sales +($ in millions) + + + 2023 2022(1) +Excluding fuel $ 131,748 $ 130,562 +Excluding fuel 0.9 % 5.6 % + +(1) Identical sales, excluding fuel, for 2022 were adjusted to a comparable 53 week basis by including week 1 of fiscal +2023 in our 2022 identical sales, excluding fuel, base. However, for the purpose of determining the percentage +change in identical sales, excluding fuel, from 2021 to 2022, 2022 identical sales, excluding fuel, were not adjusted +to include the sales from week 1 of 2023. + +Gross Margin, LIFO and FIFO Gross Margin + +We define gross margin as sales minus merchandise costs, including advertising, warehousing, and transportation. +Rent expense, depreciation and amortization expense, and interest expense are not included in gross margin. + +Our gross margin rates, as a percentage of sales, were 22.24% in 2023 and 21.43% in 2022. This increase in rate +was achieved while also investing in price to maintain a competitive price position and deliver greater value for our +customers. The increase in rate in 2023, compared to 2022, resulted primarily from a decreased LIFO charge, an increase +in our fuel gross margin, strong Our Brands performance, our ability to effectively manage product cost through strong +sourcing practices, lower transportation costs, as a percentage of sales, and the effect of our terminated agreement with +Express Scripts, partially offset by higher shrink, as a percentage of sales, and increased promotional price investment. + +Our LIFO charge was $113 million in 2023 and $626 million in 2022. The decrease in our LIFO charge was +attributable to lower product cost inflation for 2023 compared to 2022. + +Our FIFO gross margin rate, which excludes the LIFO charge, was 22.31% in 2023, compared to 21.86% in 2022. +Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of +fuel sales compared to non-fuel sales. Excluding the effect of fuel and the Extra Week, our FIFO gross margin rate +increased 18 basis points in 2023, compared to 2022. This increase in rate was achieved while also investing in price to +maintain a competitive price position and deliver greater value for our customers. This increase resulted primarily from +strong Our Brands performance, our ability to effectively manage product cost through strong sourcing practices, lower +transportation costs, as a percentage of sales, and the effect of our terminated agreement with Express Scripts, partially +offset by increased promotional price investment and higher shrink, as a percentage of sales. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_139.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..1988e217ee3e0e09037595cca6850f3b5d29dc02 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,50 @@ + +35 +Operating, General and Administrative Expenses + +OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan +costs, utilities, and credit card fees. Rent expense, depreciation and amortization expense, and interest expense are not +included in OG&A. + +OG&A expenses, as a percentage of sales, were 17.50% in 2023 and 16.09% in 2022. The increase in 2023, +compared to 2022, resulted primarily from planned investments in associates, costs related to strategic investments that +are expected to drive future growth and the effect of our terminated agreement with Express Scripts and the 2023 OG&A +Adjusted Items, partially offset by the 2022 OG&A Adjusted Items, broad-based cost savings initiatives that drive +administrative efficiencies, store productivity and sourcing cost reductions and lower incentive plan costs. + +Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of +sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the Extra Week, the 2023 OG&A Adjusted +Items, the 2022 OG&A Adjusted Items, our OG&A rate increased 21 basis points in 2023, compared to 2022. This +increase resulted primarily from planned investments in associates, costs related to strategic investments that are +expected to drive future growth and the effect of our terminated agreement with Express Scripts, partially offset by +broad-based cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions +and lower incentive plan costs. + +Rent Expense + +Rent expense remained relatively consistent, as a percentage of sales, for 2023 compared to 2022. + +Depreciation and Amortization Expense + +Depreciation and amortization expense increased, as a percentage of sales, in 2023, compared to 2022, primarily due +to depreciation of equipment recorded under finance leases related to our Kroger Delivery customer fulfillment center +location openings and additional depreciation associated with higher capital investments, partially offset by the Extra +Week. + +Operating Profit and FIFO Operating Profit + +Operating profit was $3.1 billion, or 2.06% of sales, for 2023, compared to $4.1 billion, or 2.78% of sales, for 2022. +Operating profit, as a percentage of sales, decreased 72 basis points in 2023, compared to 2022, due to increased OG&A +and depreciation and amortization expenses, as a percentage of sales, and a decrease in fuel operating profit, partially +offset by a higher FIFO gross margin rate, a decreased LIFO charge and the Extra Week. + +FIFO operating profit was $3.2 billion, or 2.14% of sales, for 2023, compared to $4.8 billion, or 3.21% of sales, for +2022. FIFO operating profit, as a percentage of sales, excluding the 2023 and 2022 Adjusted Items and the Extra Week, +decreased 15 basis points in 2023, compared to 2022, due to increased OG&A and depreciation and amortization +expenses, as a percentage of sales and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin +rate. + +Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are +discussed earlier in this section. + +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_14.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dc961c272b10b6ee60b24a7fcb887bfae75a53d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,85 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_140.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..8363d055e773f04fb38996f4f0bad80edaa6a5c5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_140.txt @@ -0,0 +1,51 @@ + +36 +The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO +operating profit, excluding the 2023 and 2022 Adjusted Items: + +Operating Profit excluding the Adjusted Items +($ in millions) + + + 2023 2022 +Operating profit $ 3,096 $ 4,126 +LIFO charge 113 626 + +FIFO Operating profit 3,209 4,752 + +Adjustment for pension plan withdrawal liabilities — 25 +Adjustment for Home Chef contingent consideration — 20 +Adjustment for merger related costs(1) 316 44 +Adjustment for opioid settlement charges(2) 1,475 85 +Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com — 164 +Other (14) (11) + +2023 and 2022 Adjusted items 1,777 327 + +Adjusted FIFO operating profit excluding the adjusted items above $ 4,986 $ 5,079 + +Extra Week adjustment (187) — + +Adjusted FIFO operating profit excluding the adjusted items above and the Extra Week $ 4,799 $ 5,079 + +(1) Merger related costs primarily include third-party professional fees and credit facility fees associated with the +proposed merger with Albertsons. +(2) Opioid settlement charges include settlements with the nationwide opioid settlement framework and the States of +West Virginia and New Mexico. + +Interest Expense + +Interest expense totaled $441 million in 2023 and $535 million in 2022. The decrease in interest expense in 2023, +compared to 2022, was primarily due to decreased average total outstanding debt throughout 2023, compared to 2022, +including both the current and long-term portions of obligations under finance leases and increased interest income +earned on our cash and temporary cash investments due to rising interest rates and higher cash and temporary cash +investment balances throughout 2023, compared to 2022, partially offset by the Extra Week. + +Income Taxes + +Our effective income tax rate was 23.5% in 2023 and 22.5% in 2022. The 2023 tax rate differed from the federal +statutory rate due to the effect of state income taxes and non-deductible portion of opioid settlement charges, partially +offset by the benefit from share-based payments and the utilization of tax credits. The 2022 tax rate differed from the +federal statutory rate due to the effect of state income taxes and non-deductible goodwill impairment charges related to +Vitacost.com, partially offset by the benefits from share-based payments and the utilization of tax credits. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_141.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8b01a02c3ca965249113f439d27a16b415a8eaa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_141.txt @@ -0,0 +1,33 @@ + +37 +Net Earnings and Net Earnings Per Diluted Share + +Our net earnings are based on the factors discussed in the Results of Operations section. + +Net earnings of $2.96 per diluted share for 2023 represented a decrease of 3.3% compared to net earnings of $3.06 +per diluted share for 2022. Excluding the 2023 and 2022 Adjusted Items and the Extra Week, adjusted net earnings of +$4.56 per diluted share for 2023 represented an increase of 7.8% compared to adjusted net earnings of $4.23 per diluted +share for 2022. The increase in adjusted net earnings per diluted share resulted primarily from a decreased LIFO charge +and lower interest expense, partially offset by decreased fuel earnings, higher income tax expense and decreased FIFO +operating profit, excluding fuel. + +RETURN ON INVESTED CAPITAL + +We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four +quarters by the average invested capital. Adjusted operating profit for ROIC purposes is calculated by excluding certain +items included in operating profit, and adding back our LIFO charge, depreciation and amortization and rent to our U.S. +GAAP operating profit of the prior four quarters. Average invested capital is calculated as the sum of (i) the average of +our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus +(i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages and +(iv) the average other current liabilities, excluding accrued income taxes. Averages are calculated for ROIC by adding +the beginning balance of the first quarter and the ending balance of the fourth quarter, of the last four quarters, and +dividing by two. ROIC is a non-GAAP financial measure of performance. ROIC should not be reviewed in isolation or +considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure +used by management to evaluate our investment returns on capital. Management believes ROIC is a useful metric to +investors and analysts because it measures how effectively we are deploying our assets. + +Although ROIC is a relatively standard financial term, numerous methods exist for calculating a company’s ROIC. +As a result, the method used by our management to calculate ROIC may differ from methods other companies use to +calculate their ROIC. We urge you to understand the methods used by other companies to calculate their ROIC before +comparing our ROIC to that of such other companies. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_142.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c2614aa08fd271d1a2d879c698f170ae2890de9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_142.txt @@ -0,0 +1,39 @@ + +38 +The following table provides a calculation of ROIC for 2023 and 2022 on a 52 week basis ($ in millions): + + + Fiscal Year Ended + February 3, January 28, + 2024 2023 +Return on Invested Capital +Numerator +Operating profit on a 53 week basis in fiscal year 2023 $ 3,096 $ 4,126 +Extra Week operating profit adjustment (187) — +LIFO charge 113 626 +Depreciation and amortization 3,125 2,965 +Rent on a 53 week basis in fiscal year 2023 891 839 +Extra Week rent adjustment (17) — +Adjustment for Home Chef contingent consideration — 20 +Adjustment for pension plan withdrawal liabilities — 25 +Adjustment for goodwill and fixed asset impairment charges related to +Vitacost.com — 164 +Adjustment for merger related costs 316 44 +Adjustment for opioid settlement charges 1,475 85 +Adjusted ROIC operating profit $ 8,812 $ 8,894 + +Denominator +Average total assets $ 50,064 $ 49,355 +Average taxes receivable(1) (197) (137) +Average LIFO reserve 2,253 1,883 +Average accumulated depreciation and amortization(2) 30,573 27,843 +Average accounts payable (10,280) (10,016) +Average accrued salaries and wages (1,535) (1,741) +Average other current liabilities (3,414) (3,435) +Average invested capital $ 67,464 $ 63,752 +Return on Invested Capital 13.06 % 13.95 % + +(1) Taxes receivable were $163 as of February 3, 2024, $231 as of January 28, 2023 and $42 as of January 29, 2022. +(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and +amortization for definite-lived intangible assets. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_143.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..7e3a8a2105828e92ada2551e7aea8db0e3029738 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_143.txt @@ -0,0 +1,50 @@ + +39 +CRITICAL ACCOUNTING ESTIMATES + +We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating +results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting +policies are summarized in Note 1 to the Consolidated Financial Statements. + +The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions +that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets +and liabilities. We base our estimates on historical experience and other factors we believe to be reasonable under the +circumstances, the results of which form the basis for making judgments about the carrying values of assets and +liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. + +We believe the following accounting estimates are the most critical in the preparation of our financial statements +because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently +uncertain. + +Impairments of Long-Lived Assets + +We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain +triggering events have occurred. These events include current period losses combined with a history of losses or a +projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, +we perform an impairment calculation, comparing projected undiscounted cash flows, utilizing current cash flow +information and expected growth rates related to specific stores, to the carrying value for those stores. If we identify +impairment for long-lived assets to be held and used, we compare the assets’ current carrying value to the assets’ fair +value. Fair value is determined based on market values or discounted future cash flows. We record impairment when the +carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, we adjust the +value of the property and equipment to reflect recoverable values based on our previous efforts to dispose of similar +assets and current economic conditions. We recognize impairment for the excess of the carrying value over the estimated +fair market value, reduced by estimated direct costs of disposal. We recorded asset impairments in the normal course of +business totaling $69 million in 2023 and $68 million in 2022. We record costs to reduce the carrying value of long-lived +assets in the Consolidated Statements of Operations as OG&A expense. + +The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our +cash flow projections look several years into the future and include assumptions on variables such as inflation, the +economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived +assets for impairment at a different level, could produce significantly different results. + +Business Combinations + +We account for business combinations using the acquisition method of accounting. All the assets acquired, liabilities +assumed and amounts attributable to noncontrolling interests are recorded at their respective fair values at the date of +acquisition once we obtain control of an entity. The determination of fair values of identifiable assets and liabilities +involves estimates and the use of valuation techniques when market value is not readily available. We use various +techniques to determine fair value in such instances, including the income approach. Significant estimates used in +determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates, discount +rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as +goodwill. See Note 2 for further information about goodwill. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_144.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a4e9b264b981abb8141fac63362dea6b4dd884f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_144.txt @@ -0,0 +1,56 @@ + +40 +Goodwill + +Our goodwill totaled $2.9 billion as of February 3, 2024. We review goodwill for impairment in the fourth quarter +of each year and also upon the occurrence of triggering events. We perform reviews of each of our operating divisions +and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is +determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the +carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows +on management’s knowledge of the current operating environment and expectations for the future. We recognize +goodwill impairment for any excess of a reporting unit's carrying value over its fair value, not to exceed the total amount +of goodwill allocated to the reporting unit. + +In 2022, we recorded a goodwill impairment charge for Vitacost.com totaling $160 million. The talent and +capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and +growing our digital business to more than $10 billion in annual sales. As our digital strategy has evolved, our primary +focus looking forward will be to effectively utilize our Pickup and Delivery capabilities. This reprioritization resulted in +reduced long-term profitability expectations and a decline in the market value for one underlying channel of business +and led to the impairment charge. Vitacost.com will continue to operate as an online platform providing great value +natural, organic, and eco-friendly products for customers. + +The annual evaluation of goodwill performed in 2023, 2022 and 2021 did not result in impairment for any of our +reporting units other than Vitacost.com described above. Based on current and future expected cash flows, we believe +additional goodwill impairments are not reasonably likely. A 10% reduction in fair value of our reporting units would +not indicate a potential for impairment of our goodwill balance. + +The 2023 fair value of our Kroger Specialty Pharmacy (“KSP”) reporting unit was estimated using multiple +valuation techniques: a discounted cash flow model (income approach), a market multiple model and a comparable +mergers and acquisition model (market approaches), with each method weighted in the calculation. The income +approach relies on management’s projected future cash flows, estimates of revenue growth rates, margin assumptions +and an appropriate discount rate. The market approaches require the determination of an appropriate peer group, which is +utilized to derive estimated fair values based on selected market multiples. Our KSP reporting unit has a goodwill +balance of $243 million. + +For additional information relating to our results of the goodwill impairment reviews performed during 2023, 2022 +and 2021, see Note 2 to the Consolidated Financial Statements. + +The impairment review requires the extensive use of management judgment and financial estimates. Application of +alternative estimates and assumptions could produce significantly different results. The cash flow projections embedded +in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the +market, the economy, market competition and our ability to successfully integrate recently acquired businesses. + +Multi-Employer Pension Plans + +We contribute to various multi-employer pension plans based on obligations arising from collective bargaining +agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to +contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal +number by employers and unions. The trustees typically are responsible for determining the level of benefits to be +provided to participants as well as for such matters as the investment of the assets and the administration of the plans. + +We recognize expense in connection with these plans as contributions are funded or when commitments are +probable and reasonably estimable, in accordance with GAAP. We made cash contributions to these plans of $635 +million in 2023, $620 million in 2022 and $1.1 billion in 2021. The decrease in 2023 and 2022, compared to 2021 is due +to the contractual payments we made in 2021 related to our commitments established for the restructuring of certain +multi-employer pension plan agreements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_145.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1c5983f27c27f3090cc322eda10ae182139e0ee --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_145.txt @@ -0,0 +1,53 @@ + +41 +We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it +relates to our associates who are beneficiaries of these plans. These under-fundings are not our liability. When an +opportunity arises that is economically feasible and beneficial to us and our associates, we may negotiate the +restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and +become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do +not change our debt profile as it relates to our credit rating since these off-balance sheet commitments are typically +considered in our investment grade debt rating. We are currently designated as the named fiduciary of the UFCW +Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and have +sole investment authority over these assets. Significant effects of these restructuring agreements recorded in our +Consolidated Financial Statements are: + +• In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal +liabilities for certain multi-employer pension funds. + +• In 2021, we incurred a $449 million charge, $344 million net of tax, for obligations related to withdrawal +liabilities for a certain multi-employer pension fund. + +As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could +incur withdrawal liabilities for certain funds. + +Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities +in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our +contributions to most of these funds will increase over the next few years. We have attempted to estimate the amount by +which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2023. Because we are +only one of a number of employers contributing to these plans, we also have attempted to estimate the ratio of our +contributions to the total of all contributions to these plans in a year as a way of assessing our “share” of the +underfunding. Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer. + +As of December 31, 2023, we estimate our share of the underfunding of multi-employer pension plans to which we +contribute was approximately $2.5 billion, $1.9 billion net of tax, which remained consistent with the estimated amount +of underfunding as of December 31, 2022. Our estimate is based on the most current information available to us +including actuarial evaluations and other data (that include the estimates of others), and such information may be +outdated or otherwise unreliable. + +We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability +of ours. Rather, we believe the underfunding is likely to have important consequences. In the event we were to exit +certain markets or otherwise cease making contributions to these plans, we could trigger a substantial withdrawal +liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be +reasonably estimated, in accordance with GAAP. + +The amount of underfunding described above is an estimate and could change based on contract negotiations, +returns on the assets held in the multi-employer pension plans, benefit payments or future restructuring agreements. The +amount could decline, and our future expense would be favorably affected, if the values of the assets held in the trust +significantly increase or if further changes occur through collective bargaining, trustee action or favorable legislation. On +the other hand, our share of the underfunding could increase, and our future expense could be adversely affected if the +asset values decline, if employers currently contributing to these funds cease participation or if changes occur through +collective bargaining, trustee action or adverse legislation. We continue to evaluate our potential exposure to under- +funded multi-employer pension plans. Although these liabilities are not a direct obligation or liability of ours, any +commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an +estimate can be made. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_146.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec15a08eec7d7bd040f12f9f94967a1b55682da0 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_146.txt @@ -0,0 +1,54 @@ + +42 +The American Rescue Plan Act ("ARP Act"), which was signed into law on March 11, 2021, established a special +financial assistance program for financially troubled multi-employer pension plans. Under the ARP Act, eligible multi- +employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty +Corporation to pay pension benefits through the plan year ending 2051. At the end of 2023, we expect certain multi- +employer pension plans in which we participate, for which our estimated share of underfunding is approximately $1.1 +billion, $850 million net of tax, to apply for funding in 2024, which may reduce a portion of our share of unfunded +multi-employer pension plan liabilities. + +See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these +multi-employer pension plans. + +NEW ACCOUNTING STANDARDS + +Refer to Note 17 to the Consolidated Financial Statements for recently issued accounting standards not yet adopted +as of February 3, 2024. + +LIQUIDITY AND CAPITAL RESOURCES + +Cash Flow Information + +The following table summarizes our net increase (decrease) in cash and temporary cash investments for 2023 and +2022: + + + Fiscal Year + + 2023 2022 +Net cash provided by (used in) +Operating activities $ 6,788 $ 4,498 +Investing activities (3,750) (3,015) +Financing activities (2,170) (2,289) +Net increase (decrease) in cash and temporary cash investments $ 868 $ (806) + +Net cash provided by operating activities + +We generated $6.8 billion of cash from operations in 2023, compared to $4.5 billion in 2022. Net earnings including +noncontrolling interests, adjusted for non-cash items, generated approximately $6.0 billion of operating cash flow in +2023 compared to $7.7 billion in 2022. The change in operating assets and liabilities, including working capital, was +$808 million in 2023 compared to $(3.2) billion in 2022. The change in operating assets and liabilities, including +working capital, was primarily due to the following: + +• Cash flows for FIFO inventory were more favorable for 2023, compared to 2022, primarily due to a smaller +effect of inflation in the current year on inventory balances and maintaining inventory at optimal levels through +improved inventory management planning; + +• An increase in long-term liabilities at the end of 2023, compared to the end of 2022, primarily due to an +increase in the noncurrent portion of our accrued opioid settlement charges; + +• Cash flows for accounts payable were more favorable in 2023, compared to 2022, due to increased accounts +payable at the end of 2023, compared to the end of 2022, primarily due to timing of payments and +management’s focus on working capital improvements; + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_147.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a8ae0b32510314428bfd5e028dec05a786d887a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_147.txt @@ -0,0 +1,55 @@ + +43 +• A decrease in income taxes receivable at the end of 2023, compared to the end of 2022, primarily due to +applying our overpayment in 2022 to our estimated tax payments for 2023; and + +• Cash flows for accounts receivable were more favorable in 2023, compared to 2022, due to decreased pharmacy +receivables at the end of 2023, compared to the end of 2022, primarily due to timing of cash receipts and the +termination of our agreement with Express Scripts. + +Net cash used by investing activities + +Investing activities used cash of $3.8 billion in 2023, compared to $3.0 billion in 2022. The amount of cash used by +investing activities increased in 2023, compared to 2022, primarily due to increased payments for property and +equipment in 2023. + +Net cash used by financing activities + +We used $2.2 billion of cash for financing activities in 2023, compared to $2.3 billion in 2022. The amount of cash +used for financing activities decreased in 2023, compared to 2022, primarily due to decreased treasury stock purchases, +partially offset by increased payments on long-term debt including obligations under finance leases. + +Capital Investments + +Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased +facilities, totaled $3.6 billion in 2023 and $3.3 billion in 2022. Capital investments for the purchase of leased facilities +totaled $21 million in 2022. We did not purchase any leased facilities in 2023. Our capital priorities align directly with +our value creation model and our target to consistently grow net earnings. Our capital program includes initiatives to +enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through +technology developments. Capital investments increased in 2023, compared to 2022, due to increasing our store capital +investments compared to prior years. These investments are expected to drive sales growth and improve operating +efficiency by removing cost and waste from our business. + +The table below shows our supermarket storing activity and our total supermarket square footage for 2023, 2022 and +2021: + +Supermarket Storing Activity + + + 2023 2022 2021 +Beginning of year 2,719 2,726 2,742 +Opened 5 3 4 +Opened (relocation) 2 1 4 +Closed (operational) (1) (10) (20) +Closed (relocation) (3) (1) (4) +End of year 2,722 2,719 2,726 + +Total supermarket square footage (in millions) 180 179 179 + +Debt Management + +Total debt, including both the current and long-term portions of obligations under finance leases, decreased $1.2 +billion to $12.2 billion as of year-end 2023 compared to 2022. This decrease resulted primarily from the payment of +$600 million of senior notes bearing an interest rate of 3.85% and the payment of $500 million of senior notes bearing an +interest rate of 4.00%. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_148.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9eb63aeae4968f201ad9537c5f23aa6d06e5425 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,46 @@ + +44 +Common Share Repurchase Programs + +We maintain share repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as +amended (the “Exchange Act”) and allow for the orderly repurchase of our common shares, from time to time. The +share repurchase programs do not have an expiration date but may be suspended or terminated by our Board of Directors +at any time. We made open market purchases of our common shares totaling $821 million in 2022. During the third +quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the proposed merger with +Albertsons. + +In addition, we also repurchase common shares under a program announced on December 6, 1999 to repurchase +common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which +repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith +(“1999 Repurchase Program”). This program is solely funded by proceeds from stock option exercises, and the tax +benefit from these exercises. We repurchased approximately $62 million in 2023 and $172 million in 2022 of our +common shares under the 1999 Repurchase Program. + +On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares +via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply +with Rule 10b5-1 under the Exchange Act (the “September 2022 Repurchase Program”). No shares have been +repurchased under the September 2022 authorization. During the third quarter of 2022, we paused our share repurchase +program to prioritize de-leveraging following the proposed merger with Albertsons. As of February 3, 2024, there was +$1.0 billion remaining under the September 2022 Repurchase Program. + +Dividends + +The following table provides dividend information for 2023 and 2022 ($ in millions, except per share amounts): + + + 2023 2022 +Cash dividends paid $ 796 $ 682 +Cash dividends paid per common share $ 1.10 $ 0.94 + +Liquidity Needs + +We held cash and temporary cash investments of $1.9 billion, as of the end of 2023, which reflects our elevated +operating performance over the last few years and paused share repurchase program. We actively manage our cash and +temporary cash investments in order to internally fund operating activities, support and invest in our core businesses, +make scheduled interest and principal payments on our borrowings and return cash to shareholders through cash +dividend payments and share repurchases. Our current levels of cash, borrowing capacity and balance sheet leverage +provide us with the operational flexibility to adjust to changes in economic and market conditions. We remain +committed to our dividend, and growing our dividend over time, subject to board approval, as well as share repurchase +programs and we will evaluate the optimal use of any excess free cash flow, consistent with our capital allocation +strategy. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_149.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0623f227f22d5cccd1d3051b835c5059c113f3a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,58 @@ + +45 +The table below summarizes our short-term and long-term material cash requirements, based on year of maturity or +settlement, as of February 3, 2024 (in millions of dollars): + + + 2024 2025 2026 2027 2028 Thereafter Total +Contractual Obligations(1)(2) +Long-term debt(3) $ 25 $ 92 $ 1,305 $ 611 $ 642 $ 7,512 $ 10,187 +Interest on long-term debt(4) 450 446 418 387 375 4,163 6,239 +Finance lease obligations 243 240 240 242 238 1,359 2,562 +Operating lease obligations 961 898 838 784 722 5,738 9,941 +Self-insurance liability(5) 281 159 108 68 40 105 761 +Construction commitments(6) 1,374 — — — — — 1,374 +Opioid settlement +commitments(7) 296 154 143 143 143 568 1,447 +Purchase obligations(8) 827 391 360 307 267 1,752 3,904 +Total $ 4,457 $ 2,380 $ 3,412 $ 2,542 $ 2,427 $ 21,197 $ 36,415 + +(1) The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which +totaled approximately $65 million in 2023. For additional information about these obligations, see Note 14 to the +Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension +plans, which totaled $635 million in 2023. For additional information about these multi-employer pension plans, see +Note 15 to the Consolidated Financial Statements. +(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a +reasonable estimate of the timing of future tax settlements cannot be determined. +(3) As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our credit facility. +(4) Amounts include contractual interest payments using the interest rate as of February 3, 2024 and stated fixed and +swapped interest rates, if applicable, for all other debt instruments. +(5) The amounts included for self-insurance liability related to workers’ compensation claims have been stated on a +present value basis. +(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected +in “Accounts payable” in our Consolidated Balance Sheets. +(7) Amounts include scheduled opioid settlement commitments related to the nationwide opioid settlement framework +and the State of West Virginia. For additional information about our opioid settlement charges, see Note 12 to the +Consolidated Financial Statements. +(8) Amounts include commitments, many of which are short-term in nature, to be utilized in the normal course of +business, such as several contracts to purchase raw materials utilized in our food production plants and several +contracts to purchase energy to be used in our stores and food production plants. Our obligations also include +management fees for facilities operated by third parties and outside service contracts. Any upfront vendor +allowances or incentives associated with outstanding purchase commitments are recorded as either current or long- +term liabilities in our Consolidated Balance Sheets. We included our future commitments for customer fulfillment +centers for which we have placed an order as of February 3, 2024. We did not include our commitments associated +with additional customer fulfillment centers that have not yet been ordered. We expect our future commitments for +customer fulfillment centers will continue to grow as we place orders for additional customer fulfillment centers. + +We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand +as of February 3, 2024, cash flows from our operating activities and other sources of liquidity, including borrowings +under our commercial paper program and bank credit facility. Our short-term and long-term liquidity needs include +anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments +and scheduled principal payments of debt and commercial paper, servicing our lease obligations, self-insurance +liabilities, capital investments, scheduled opioid settlement payments and other purchase obligations. We may also +require additional capital in the future to fund organic growth opportunities, additional customer fulfillment centers, joint +ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In +addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and +because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants +to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_15.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e2822d17c7f284fabfb1d4ea9aad23866d0cb0a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,32 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_150.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f92707fc6bd3d5187371a74b0ba5f55b4d55060 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_150.txt @@ -0,0 +1,56 @@ + +46 +As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons. We expect to +meet our liquidity needs for the proposed merger with cash and temporary cash investments on hand as of the merger +closing date, cash flows from our operating activities and other sources of liquidity, including borrowings under our +commercial paper program, senior notes issuances, bank credit facility and other sources of financing. In connection +with the proposed merger, we entered into a commitment letter for a bridge term loan facility and executed a term loan +credit agreement. For additional information about the proposed merger with Albertsons, see Note 16 to the +Consolidated Financial Statements. + +For additional information about our debt activity in 2023, see Note 5 to the Consolidated Financial Statements. + +Factors Affecting Liquidity + +We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program. At +February 3, 2024, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit +facility and reduce the amount we can borrow under the credit facility. If our short-term credit ratings fall, the ability to +borrow under our current commercial paper program could be adversely affected for a period of time and increase our +interest cost on daily borrowings under our commercial paper program. This could require us to borrow additional funds +under the credit facility, under which we believe we have sufficient capacity. However, in the event of a ratings decline, +we do not anticipate that our borrowing capacity under our commercial paper program would be any lower than $500 +million on a daily basis. Factors that could affect our credit rating include changes in our operating performance and +financial position, the state of the economy, conditions in the food retail industry and changes in our business model. +Further information on the risks and uncertainties that can affect our business can be found in the “Risk Factors” section +set forth in Item 1A of Part I of this Annual Report on Form 10-K. Although our ability to borrow under the credit +facility is not affected by our credit rating, the interest cost and applicable margin on borrowings under the credit facility +could be affected by a downgrade in our Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that +has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced +long-term senior unsecured debt issued by Kroger. As of March 27, 2024, we had no commercial paper borrowings +outstanding. + +Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain +our financial covenant would impair our ability to borrow under the credit facility. This financial covenant is described +below: + +• Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.10 to 1 +as of February 3, 2024. If this ratio were to exceed 3.50 to 1, we would be in default of our revolving credit +facility and our ability to borrow under the facility would be impaired. + +Our credit facility is more fully described in Note 5 to the Consolidated Financial Statements. We were in +compliance with our financial covenant at February 3, 2024. + +As of February 3, 2024, we maintained a $2.75 billion (with the ability to increase by $1.25 billion), unsecured +revolving credit facility that, unless extended, terminates on July 6, 2026. Outstanding borrowings under the credit +facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit +facility. As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our revolving credit +facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $2 million as of +February 3, 2024. + +In connection with the proposed merger with Albertsons, on October 13, 2022, we entered into a commitment letter +with certain lenders pursuant to which the lenders have committed to provide a 364-day $17.4 billion senior unsecured +bridge term loan facility. The commitments are intended to be drawn to finance the proposed merger with Albertsons +only to the extent we do not arrange for alternative financing prior to closing. As alternative financing for the proposed +merger is secured, the commitments with respect to the bridge term loan facility under the commitment letter will be +reduced. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_151.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_151.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c65f5a30a822970ebf7d5ddc06ad074b0163bbb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_151.txt @@ -0,0 +1,52 @@ + +47 +On November 9, 2022, we executed a term loan credit agreement with certain lenders pursuant to which the lenders +committed to provide, contingent upon the completion of the proposed merger with Albertsons and certain other +customary conditions to funding, (1) senior unsecured term loans in an aggregate principal amount of $3.0 billion +maturing on the third anniversary of the proposed merger closing date and (2) senior unsecured term loans in an +aggregate principal amount of $1.75 billion maturing on the date that is 18 months after the proposed merger closing +date (collectively, the “Term Loan Facilities”). Borrowings under the Term Loan Facilities will be used to pay a portion +of the consideration and other amounts payable in connection with the proposed merger with Albertsons. The duration of +the Term Loan Facilities will allow us to achieve our net total debt to adjusted EBITDA ratio target range of 2.30 to 2.50 +within the first 18 to 24 months after the proposed merger closing date. The entry into the term loan credit agreement +reduced the commitments under our bridge facility commitment letter from $17.4 billion to $12.65 billion. Borrowings +under the Term Loan Facilities will bear interest at rates that vary based on the type of loan and our debt rating. + +In addition to the available credit mentioned above, as of February 3, 2024, we had authorized for issuance $5 +billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 20, 2022. + +We maintain surety bonds related primarily to our self-insured workers’ compensation claims. These bonds are +required by most states in which we are self-insured for workers’ compensation and are placed with predominately third- +party insurance providers to insure payment of our obligations in the event we are unable to meet our claim payment +obligations up to our self-insured retention levels. These bonds do not represent liabilities of ours, as we already have +reserves on our books for the claims costs. Market changes may make the surety bonds more costly and, in some +instances, availability of these bonds may become more limited, which could affect our costs of, or access to, such +bonds. Although we do not believe increased costs or decreased availability would significantly affect our ability to +access these surety bonds, if this does become an issue, we would issue letters of credit, in states where allowed, to meet +the state bonding requirements. This could increase our cost or decrease the funds available under our credit facility if +the letters of credit were issued against our credit facility. We had $473 million of outstanding surety bonds as of +February 3, 2024. These surety bonds expire during fiscal year 2024 and are expected to be renewed. + +We have standby letters of credit outstanding as part of our insurance program and for other business purposes. The +letters of credit for our insurance program collateralize obligations to our insurance carriers in connection with the +settlement of potential claims. We have also provided a letter of credit which supports our commitment to build a certain +number of fulfillment centers. The balance of this letter of credit reduces primarily upon the construction of each +fulfillment center. If we do not reach our total purchase commitment, we will be responsible for the balance remaining +on the letter of credit. We had $314 million of outstanding standby letters of credit as of February 3, 2024. These +standby letters of credit expire during fiscal year 2024 or early fiscal year 2025 and most are expected to be renewed. +Letters of credit do not represent liabilities of ours and are not reflected in our Consolidated Balance Sheets. + +We also are contingently liable for leases that have been assigned to various third parties in connection with facility +closings and dispositions. We could be required to satisfy obligations under the leases if any of the assignees are unable +to fulfill their lease obligations. Due to the wide distribution of our assignments among third parties, and various other +remedies available to us, we believe the likelihood that we will be required to assume a material amount of these +obligations is remote. We have agreed to indemnify certain third-party logistics operators for certain expenses, including +multi-employer pension plan obligations and withdrawal liabilities. + +In addition to the above, we enter into various indemnification agreements and take on indemnification obligations +in the ordinary course of business. Such arrangements include indemnities against third-party claims arising out of +agreements to provide services to us; indemnities related to the sale of our securities; indemnities of directors, officers +and employees in connection with the performance of their work; and indemnities of individuals serving as fiduciaries +on benefit plans. While our aggregate indemnification obligation could result in a material liability, we are not aware of +any current matter that could result in a material liability. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_152.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_152.txt new file mode 100644 index 0000000000000000000000000000000000000000..f04a751f639151704aaa4b0a47d7e4305cdb03ac --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_152.txt @@ -0,0 +1,56 @@ + +48 +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. + +FINANCIAL RISK MANAGEMENT + +In addition to the risks inherent in our operations, we are exposed to market risk from a variety of sources, including +changes in interest rates, commodity prices, the fair value of certain equity investments and defined benefit pension and +other post-retirement benefit plans. Our market risk exposures are discussed below. + +Interest Rate Risk + +We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the +strategic use of our commercial paper program, variable and fixed rate debt, and interest rate swaps. Our current program +relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt +attributable to changes in interest rates. To do this, we use the following guidelines: (i) use average daily outstanding +borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount +subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the +carrying value of our debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit +motive or sensitivity to current mark-to-market status. + +When we use derivative financial instruments, it is primarily to manage our exposure to fluctuations in interest rates. +We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative +positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation +between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are +offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are +straightforward instruments with liquid markets. + +As of February 3, 2024 and January 28, 2023, we maintained five forward-starting interest rate swap agreements +with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5.4 billion. A forward-starting +interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments +attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. We entered into these forward- +starting interest rate swaps in order to lock in fixed interest rates on our forecasted issuances of debt. The fixed interest +rates for these forward-starting interest rate swaps range from 3.00% to 3.78%. The variable rate component on the +forward-starting interest rate swaps is the Secured Overnight Financing Rate (“SOFR”). + +A notional amount of $2.4 billion of these forward-starting interest rate swaps was designated as a cash-flow hedge +as defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to +other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings. As of +February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets” +for $125 million and accumulated other comprehensive income for $95 million, net of tax. As of January 28, 2023, the +fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other long-term liabilities” for +$116 million and accumulated other comprehensive loss for $89 million, net of tax. + +The remainder of the notional amount of $3.0 billion of the forward-starting interest rate swaps was not designated +as a cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not +designated as cash-flow hedges are recognized through net earnings. As of February 3, 2024, the fair value of these +swaps was recorded in “Other Assets” for $35 million and “Other long-term liabilities” for $3 million. In 2023, we +recognized an unrealized gain of $174 million that is included in “Gain (loss) on investments” in our Consolidated +Statements of Operations. As of January 28, 2023, the fair value of these swaps was recorded in “Other long-term +liabilities” for $142 million. In 2022, we recognized an unrealized loss of $142 million related to these swaps that is +included in “Gain (loss) on investments” in our Consolidated Statements of Operations. + +Annually, we review with the Finance Committee of our Board of Directors compliance with the guidelines +described above. The guidelines may change as our business needs dictate. +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_153.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_153.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3b478e24897723c35e5cca167a8ccc07dfc8c6b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_153.txt @@ -0,0 +1,59 @@ + +49 +The tables below provide information about our underlying debt portfolio as of February 3, 2024 and January 28, +2023. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases, +as of February 3, 2024 and January 28, 2023. Interest rates reflect the weighted average rate for the outstanding +instruments. The variable rate debt is based on a reference rate using the forward yield curve as of February 3, 2024 and +January 28, 2023. The Fair Value column includes the fair value of our debt instruments as of February 3, 2024 and +January 28, 2023. We had no outstanding interest rate derivatives classified as fair value hedges as of February 3, 2024 +or January 28, 2023. See Notes 5, 6 and 7 to the Consolidated Financial Statements. + + + February 3, 2024 + Expected Year of Maturity + 2024 2025 2026 2027 2028 Thereafter Total Fair Value + (in millions) +Debt +Fixed rate principal payments(1) $ (23) $ (19) $ (1,311) $ (616) $ (625) $ (7,521) $ (10,115) $ (9,256) +Average interest rate(1) 2.41 % 3.03 % 3.00 % 3.68 % 4.50 % 4.56 % +Variable rate principal payments $ (9) $ (81) $ — $ — $ (22) $ (33) $ (145) $ (145) +Average interest rate 7.19 % 3.07 % — — 7.94 % 7.19 % + +(1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $73 million, of which $7 +million is current and $66 million is long-term. The weighted average interest rate calculation excludes the effects of +debt discounts and deferred financing costs. + + + January 28, 2023 + Expected Year of Maturity + 2023 2024 2025 2026 2027 Thereafter Total Fair Value + (in millions) +Debt +Fixed rate principal payments(1) $ (1,127) $ (10) $ (10) $ (1,392) $ (612) $ (8,085) $ (11,236) $ (10,455) +Average interest rate(1) 3.89 % 2.67 % 2.68 % 3.04 % 3.68 % 4.56 % +Variable rate principal payments $ (35) $ (22) $ (81) $ — $ — $ — $ (138) $ (138) +Average interest rate 6.32 % 7.07 % 1.70 % — — — + +(1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $82 million, of which $9 +million is current and $73 million is long-term. The weighted average interest rate calculation excludes the effects of +debt discounts and deferred financing costs. + +Based on our year-end 2023 variable rate debt levels, a 10 percent change in interest rates would be immaterial. See +Note 6 to the Consolidated Financial Statements for further discussion of derivatives and hedging policies. + +Commodity Price Risk + +We are subject to commodity price risk generated by our purchases of meat, seafood and dairy products, among +other food items. We purchase, manufacture and sell various commodity related food products and risk arises from the +price volatility of these commodities. The price and availability of these commodities directly affects our results of +operations. To help manage or minimize the effect of commodity price risk exposure on our operations, we use a +combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts, +and have the ability to increase or decrease retail prices to our customers as commodity prices change. + +We are exposed to changes in the prices of diesel and unleaded fuel. The majority of our fuel contracts utilize index- +based pricing formulas plus or minus a fixed locational/supplier differential. We expect to take delivery of these +commitments in the normal course of business, and, as a result, these contracts qualify as normal purchases. While many +of the indices are aligned, each index may fluctuate at a different pace, driving variability in the prices paid for fuel. +Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant +amount, which can affect our operating results either positively or negatively in the short-term. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_154.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_154.txt new file mode 100644 index 0000000000000000000000000000000000000000..49245247edb180be848a2563826fbd87a66b1deb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_154.txt @@ -0,0 +1,45 @@ + +50 +We manage our exposure to diesel fuel price changes through the strategic use of diesel fuel hedge contracts. When +we use fuel hedge contracts, it is primarily to manage our exposure to fluctuations in diesel fuel prices for our logistics +operations. We do not enter into fuel hedge arrangements for trading purposes. As a matter of policy, all of our hedge +positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation +between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are +offset by reciprocal changes in the value of the underlying exposure. The diesel fuel hedge contracts we use are +straightforward instruments with liquid markets. As of February 3, 2024, our outstanding diesel fuel hedge contracts had +a total notional amount of $48 million. The fair value and effect to the Consolidated Statement of Operations of these +contracts is insignificant. + +We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs. +We expect to take delivery of these commitments in the normal course of business, and, as a result, these contracts +qualify as normal purchases. + +As of February 3, 2024, we had no commodity derivative contracts outstanding other than the diesel fuel hedge +contracts described above. As of January 28, 2023, we had no commodity derivative contracts outstanding. + +Equity Investment Risk + +We are exposed to market price volatility for our equity investments in certain financial instruments, measured +using Level 1 inputs, which are measured at fair value through net earnings. Fair value adjustments flow through “Gain +(loss) on investments” in our Consolidated Statements of Operations. The change in fair value of certain Level 1 +investments resulted in an unrealized loss of $66 million in 2023, $586 million in 2022 and $821 million in 2021. As of +February 3, 2024, the fair value of our investments in certain Level 1 financial instruments was $578 million. As of +January 28, 2023, the fair value of our investment in certain Level 1 financial instrument was $401 million. As of +February 3, 2024, a 10% change in the fair value of these investments would be approximately $58 million. For +additional details on these investments, see Note 7 to the Consolidated Financial Statements. + +Company-Sponsored Benefit Plans + +We sponsor defined benefit pension plans and post-retirement healthcare plans for certain eligible employees. +Changes in interest rates affect our liabilities associated with these retirement plans, as well as the amount of expense +recognized for these retirement plans. Increased interest rates could result in a lower fair value of plan assets and +increased pension expense in the following years. The target plan asset allocations are established based on our liability- +driven investment (“LDI”) strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long- +term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments +to more closely match the duration of the plan liability. As of February 3, 2024, our defined benefit pension plans had +total investment assets of $2.4 billion. As of January 28. 2023, our defined benefit pension plans had total investment +assets of $2.5 billion. Declines in the fair value of plan assets could diminish the funded status of our defined benefit +pension plans and potentially increase our requirement to make contributions to these plans. For additional details, see +Note 14 to the Consolidated Financial Statements. + +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_155.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_155.txt new file mode 100644 index 0000000000000000000000000000000000000000..92e90bb16b21d821a8d83027c72fc04566f2168e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_155.txt @@ -0,0 +1,20 @@ + +51 +ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. + +Consolidated Financial Statements of The Kroger Co. +For the Fiscal Year Ended February 3, 2024 +Table of Contents + + + Page +Report of Independent Registered Public Accounting Firm 52 +Consolidated Balance Sheets 55 +Consolidated Statements of Operations 56 +Consolidated Statements of Comprehensive Income 57 +Consolidated Statements of Cash Flows 58 +Consolidated Statements of Changes in Shareholders’ Equity 59 +Notes to Consolidated Financial Statements 60 + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_156.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_156.txt new file mode 100644 index 0000000000000000000000000000000000000000..69b8a7cd929aca91bbf807bef47d3610a45737f7 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_156.txt @@ -0,0 +1,46 @@ + +52 +Report of Independent Registered Public Accounting Firm + +To the Board of Directors and Shareholders of The Kroger Co. +Opinions on the Financial Statements and Internal Control over Financial Reporting +We have audited the accompanying consolidated balance sheets of The Kroger Co. and its subsidiaries (the +“Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of +operations, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in +the period ended February 3, 2024, including the related notes (collectively referred to as the “consolidated +financial statements”). We also have audited the Company's internal control over financial reporting as of +February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by +the Committee of Sponsoring Organizations of the Treadway Commission (COSO). +In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, +the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its +operations and its cash flows for each of the three years in the period ended February 3, 2024 in conformity +with accounting principles generally accepted in the United States of America. Also in our opinion, the +Company maintained, in all material respects, effective internal control over financial reporting as of +February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by +the COSO. +Basis for Opinions +The Company's management is responsible for these consolidated financial statements, for maintaining +effective internal control over financial reporting, and for its assessment of the effectiveness of internal +control over financial reporting, included in Management’s Report on Internal Control over Financial +Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated +financial statements and on the Company's internal control over financial reporting based on our audits. We +are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) +(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal +securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the +PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we +plan and perform the audits to obtain reasonable assurance about whether the consolidated financial +statements are free of material misstatement, whether due to error or fraud, and whether effective internal +control over financial reporting was maintained in all material respects. +Our audits of the consolidated financial statements included performing procedures to assess the risks of +material misstatement of the consolidated financial statements, whether due to error or fraud, and +performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also +included evaluating the accounting principles used and significant estimates made by management, as well as +evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over +financial reporting included obtaining an understanding of internal control over financial reporting, assessing +the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of +internal control based on the assessed risk. Our audits also included performing such other procedures as we +considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our +opinions. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_157.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_157.txt new file mode 100644 index 0000000000000000000000000000000000000000..e85d8335564b18e5ef58b02ce708bff9d9a9aa80 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_157.txt @@ -0,0 +1,47 @@ + +53 +Definition and Limitations of Internal Control over Financial Reporting +A company’s internal control over financial reporting is a process designed to provide reasonable assurance +regarding the reliability of financial reporting and the preparation of financial statements for external +purposes in accordance with generally accepted accounting principles. A company’s internal control over +financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, +in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the +company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation +of financial statements in accordance with generally accepted accounting principles, and that receipts and +expenditures of the company are being made only in accordance with authorizations of management and +directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of +unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the +financial statements. +Because of its inherent limitations, internal control over financial reporting may not prevent or detect +misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that +controls may become inadequate because of changes in conditions, or that the degree of compliance with the +policies or procedures may deteriorate. +Critical Audit Matters +The critical audit matter communicated below is a matter arising from the current period audit of the +consolidated financial statements that was communicated or required to be communicated to the audit +committee and that (i) relates to accounts or disclosures that are material to the consolidated financial +statements and (ii) involved our especially challenging, subjective, or complex judgments. The +communication of critical audit matters does not alter in any way our opinion on the consolidated financial +statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a +separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. +Goodwill Impairment Assessment – Kroger Specialty Pharmacy (“KSP”) Reporting Unit +As described in Notes 1 and 2 to the consolidated financial statements, the Company’s consolidated goodwill +balance was $2.9 billion as of February 3, 2024 and the goodwill associated with the KSP reporting unit was +$243 million. Management reviews goodwill annually for impairment in the fourth quarter of each year, and +also upon the occurrence of triggering events. The fair value of a reporting unit is compared to its carrying +value for purposes of identifying potential impairment. Goodwill impairment is recognized for any excess of +the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to +the reporting unit. The fair value of the Company's KSP reporting unit was estimated using multiple valuation +techniques, a discounted cash flow model (income approach), a market multiple model and comparable +mergers and acquisition model (market approaches), with each method weighted in the calculation. The +income approach relies on management’s estimates of revenue growth rates, margin assumptions, and +discount rate to estimate future cash flows. The market approaches require the determination of an +appropriate peer group, which is utilized to derive estimated fair values based on selected market multiples. +The principal considerations for our determination that performing procedures relating to the goodwill +impairment assessment of the KSP reporting unit is a critical audit matter are (i) the significant judgment by +management when developing the fair value measurement of the reporting unit; (ii) the high degree of auditor +judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections +and significant assumptions related to revenue growth rates, margin assumptions, discount rate, peer group +determination, and market multiple selection; and (iii) the audit effort involved the use of professionals with +specialized skill and knowledge. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_158.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..136799a66bee45f0012b98179ffa052fb4fa410b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,27 @@ + +54 +Addressing the matter involved performing procedures and evaluating audit evidence in connection with +forming our overall opinion on the consolidated financial statements. These procedures included testing the +effectiveness of controls relating to management’s goodwill impairment assessment, including controls over +the valuation of the Company’s KSP reporting unit. These procedures also included, among others, testing +management’s process for developing the fair value estimate, evaluating the appropriateness of the income +and market approach models, testing the completeness, accuracy, and relevance of the underlying data used +in the models and evaluating the significant assumptions used by management related to the revenue growth +rates, margin assumptions, discount rate, peer group determination, and market multiple selection. +Evaluating management’s assumptions relating to revenue growth rates and margin assumptions involved +evaluating whether the assumptions used by management were reasonable considering (i) the current and +past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) +whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating the +Company’s peer group determinations included evaluating the appropriateness of the identified peer +companies. Professionals with specialized skill and knowledge were used to assist in the evaluation of the +Company’s discounted cash flow and market models, and certain significant assumptions related to the +discount rate, peer group determination, and market multiples. + + + +/s/ PricewaterhouseCoopers LLP +Cincinnati, Ohio +April 2, 2024 +We have served as the Company’s auditor since 1929. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_159.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a0cfea9ad2590e7ac4473df19016f83471f6fe6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,64 @@ + +55 +THE KROGER CO. +CONSOLIDATED BALANCE SHEETS + + + February 3, January 28, +(In millions, except par amounts) 2024 2023 +ASSETS +Current assets +Cash and temporary cash investments $ 1,883 $ 1,015 +Store deposits in-transit 1,215 1,127 +Receivables 2,136 2,234 +FIFO inventory 9,414 9,756 +LIFO reserve (2,309) (2,196) +Prepaid and other current assets 609 734 +Total current assets 12,948 12,670 + +Property, plant and equipment, net 25,230 24,726 +Operating lease assets 6,692 6,662 +Intangibles, net 899 899 +Goodwill 2,916 2,916 +Other assets 1,820 1,750 + +Total Assets $ 50,505 $ 49,623 + +LIABILITIES +Current liabilities +Current portion of long-term debt including obligations under finance leases $ 198 $ 1,310 +Current portion of operating lease liabilities 670 662 +Accounts payable 10,381 10,179 +Accrued salaries and wages 1,323 1,746 +Other current liabilities 3,486 3,341 +Total current liabilities 16,058 17,238 + +Long-term debt including obligations under finance leases 12,028 12,068 +Noncurrent operating lease liabilities 6,351 6,372 +Deferred income taxes 1,579 1,672 +Pension and postretirement benefit obligations 385 436 +Other long-term liabilities 2,503 1,823 + +Total Liabilities 38,904 39,609 + +Commitments and contingencies see Note 12 + +SHAREOWNERS’ EQUITY + +Preferred shares, $100 par per share, 5 shares authorized and unissued — — +Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2023 and 2022 1,918 1,918 +Additional paid-in capital 3,922 3,805 +Accumulated other comprehensive loss (489) (632) +Accumulated earnings 26,946 25,601 +Common shares in treasury, at cost, 1,198 shares in 2023 and 1,202 shares in 2022 (20,682) (20,650) + +Total Shareowners’ Equity - The Kroger Co. 11,615 10,042 +Noncontrolling interests (14) (28) + +Total Equity 11,601 10,014 + +Total Liabilities and Equity $ 50,505 $ 49,623 + + +The accompanying notes are an integral part of the consolidated financial statements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_16.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..27230a9e5cdae0e7a4ac3c3f539199a473c2384f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,54 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_160.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5b1a3c305bf35b3981865dfdbcb2efaec270e99 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,48 @@ + +56 +THE KROGER CO. +CONSOLIDATED STATEMENTS OF OPERATIONS + +Years Ended February 3, 2024, January 28, 2023 and January 29, 2022 + + + + 2023 2022 2021 +(In millions, except per share amounts) (53 weeks) (52 weeks) (52 weeks) +Sales $ 150,039 $ 148,258 $ 137,888 + +Operating expenses +Merchandise costs, including advertising, warehousing, and transportation, +excluding items shown separately below 116,675 116,480 107,539 +Operating, general and administrative 26,252 23,848 23,203 +Rent 891 839 845 +Depreciation and amortization 3,125 2,965 2,824 + +Operating profit 3,096 4,126 3,477 + +Other income (expense) +Interest expense (441) (535) (571) +Non-service component of company-sponsored pension plan benefits +(costs) 30 39 (34) +Gain (loss) on investments 151 (728) (821) + +Net earnings before income tax expense 2,836 2,902 2,051 + +Income tax expense 667 653 385 + +Net earnings including noncontrolling interests 2,169 2,249 1,666 +Net income attributable to noncontrolling interests 5 5 11 + +Net earnings attributable to The Kroger Co. $ 2,164 $ 2,244 $ 1,655 + +Net earnings attributable to The Kroger Co. per basic common share $ 2.99 $ 3.10 $ 2.20 + +Average number of common shares used in basic calculation 718 718 744 + +Net earnings attributable to The Kroger Co. per diluted common share $ 2.96 $ 3.06 $ 2.17 + +Average number of common shares used in diluted calculation 725 727 754 + + +The accompanying notes are an integral part of the consolidated financial statements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_161.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..0863c14fa1b8ce7e9d6ce314dfe236057dba5ace --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,33 @@ + +57 +THE KROGER CO. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME + +Years Ended February 3, 2024, January 28, 2023 and January 29, 2022 + + + + 2023 2022 2021 +(In millions) (53 weeks) (52 weeks) (52 weeks) +Net earnings including noncontrolling interests $ 2,169 $ 2,249 $ 1,666 + +Other comprehensive (loss) income +Change in pension and other postretirement defined benefit plans, net of income +tax(1) (46) (83) 156 +Unrealized gains and losses on cash flow hedging activities, net of income tax(2) 183 (89) — +Amortization of unrealized gains and losses on cash flow hedging activities, net +of income tax(3) 6 7 7 + +Total other comprehensive income (loss) 143 (165) 163 + +Comprehensive income 2,312 2,084 1,829 +Comprehensive income attributable to noncontrolling interests 5 5 11 +Comprehensive income attributable to The Kroger Co. $ 2,307 $ 2,079 $ 1,818 + + +(1) Amount is net of tax (benefit) expense of $(14) in 2023, $(26) in 2022 and $48 in 2021. +(2) Amount is net of tax expense (benefit) of $56 in 2023 and $(27) in 2022. +(3) Amount is net of tax expense of $2 in 2023, $2 in 2022 and $3 in 2021. + +The accompanying notes are an integral part of the consolidated financial statements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_162.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..08dcd842520bd45e0d3141dd4948a6e853709bca --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,67 @@ +58 +THE KROGER CO. +CONSOLIDATED STATEMENTS OF CASH FLOWS +Years Ended February 3, 2024, Januar y 28, 2023 and January 29, 2022 + +2 023 2022 2021 +(In millions) (53 weeks) (52 weeks) (52 weeks) +Cash Flows from Operating Activities: +Net earnings including noncontrolling interests $ 2,169 $ 2,249 $ 1,666 +Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: +De +preciation and amortization 3,125 2,965 2,824 +Asset impairment charges 69 68 64 +Goodw +ill and fixed asset impairment charges related to Vitacost.com — 164 — +Operating lease asset amortization 625 614 605 +LIFO + charge 113 626 197 +Share-based employee compensation 172 190 203 +Comp +any-sponsored pension plans (benefit) expense (9) (26) 50 +Deferred income taxes (155) 161 (31) +Gain on the sale of assets (56) (40) (44) +(Gain) loss on investments (151) 728 821 +Other 78 (8) 64 +Changes in operating assets and liabilities: +Store deposits in-transit (88) (45) 13 +Receivables 14 (222) (61) +Inventories 342 (1,370) 80 +Prepaid and other current assets 72 (36) 232 +Acco +unts payable 545 44 903 +Accrued expenses (222) (167) (134) +Income taxes receivable and payable 68 (190) 16 +Operating lease liabilities (695) (622) (618) +Other 772 (585) (660) +Net cash provided by operating activities 6,788 4,498 6,190 +Cash Flows from Investing Activities: +Payments for property and equipment, including payments for lease buyouts (3,904) (3,078) (2,614) +Proceeds from sale of assets 101 78 153 +Other 53 (15) (150) +Net cash used by investing activities (3,750) (3,015) (2,611) +Cash Flows from Financing Activities: +Procee +ds from issuance of long-term debt 15 — 56 +Payments on long-term debt including obligations under finance leases (1,301) (552) (1,442) +Dividends paid (796) (682) (589) +Financing fees paid — (84) (5) +Proceeds from issuance of capital stock 50 134 172 +Treasury stock purchases (62) (993) (1,647) +Proceeds from financing arrangement — — 166 +Other (76) (112) (156) +Net cash used by financing activities (2,170) (2,289) (3,445) +Net increase (decrease) in cash and temporary cash investments 868 (806) 134 +Cash and temporary cash investments: +Beginning of year 1,015 1,821 1,687 +End of year $ 1,883 $ 1,015 $ 1,821 +Reconciliation of capital investments: +Payments for property and equipment, including payments for lease buyouts $ (3,904) $ (3,078) $ (2,614) +Payments for lease buyouts — 21 — +Changes in construction-in-progress payables 344 (281) (542) +Total capital investments, excluding lease buyouts $ (3,560) $ (3,338) $ (3,156) +Disclosure of cash flow information: +Cash paid during the year for interest $ 488 $ 545 $ 607 +Cash paid during the year for income taxes $ 751 $ 698 $ 513 +The accompanying notes are an integral part of the consolidated financial statements. +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_163.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..77d97e4ad39ae5e6c8a39a69552c036cd386c266 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,46 @@ +THE KROGER CO. +CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY +Years Ended February 3, 2024, January 28, 2023 and January 29, 2022 + +Accumulated + Additional Other +Common Stock Paid-In Treasur y Stock Comprehensive Accumulated Noncontrollin g +(In millions, except per share amounts) Shares Amount Ca pital Shares Amount Income (Loss) Earnin gs Interest Total +Balances at January 30, 2021 1,918 $ 1,918 $ 3,461 1,160 $ (18,191) $ (630) $ 23,018 $ (26) $ 9,550 +Issuance of common stock: +Stock options exercised — — — (7) 172 — — — 172 +Restricted stock issued — — (137) (3) 73 — — — (64) +Treasury stock activity: +Treasury stock purchases, at cost — — — 35 (1,422) — — — (1,422) +Stock options exchanged — — — 6 (225) — — — (225) +Share-based employee compensation — — 203 — — — — — 203 +Other comprehensive income net of tax of $51 — — — — — 163 — — 163 +Other — — 130 — (129) — — (8) (7) +Cash dividends declared ($0.81 per common share) — — — — — — (607) — (607) +Net earnings including non-controlling interests — — — — — — 1,655 11 1,666 +Balances at January 29, 2022 1,918 $ 1,918 $ 3,657 1,191 $ (19,722) $ (467) $ 24,066 $ (23) $ 9,429 +Issuance of common stock: +Stock options exercised — — — (4) 134 — — — 134 +Restricted stock issued — — (173) (4) 62 — — — (111) +Treasury stock activity: +Treasury stock purchases, at cost — — — 16 (821) — — — (821) +Stock options exchanged — — — 3 (172) — — — (172) +Share-based employee compensation — — 190 — — — — — 190 +Other comprehensive loss net of tax of $(51) — — — — — (165) — — (165) +Other — — 131 — (131) — — (10) (10) +Cash dividends declared ($0.99 per common share) — — — — — — (709) — (709) +Net earnings including non-controlling interests — — — — — — 2,244 5 2,249 +Balances at January 28, 2023 1,918 $ 1,918 $ 3,805 1,202 $ (20,650) $ (632) $ 25,601 $ (28) $ 10,014 +Issuance of common stock: +Stock options exercised — — — (2) 50 — — — 50 +Restricted stock issued — — (163) (3) 88 — — — (75) +Treasury stock activity: +Stock options exchanged — — — 1 (62) — — — (62) +Share-based employee compensation — — 172 — — — — — 172 +Other comprehensive income net of tax of $44 — — — — — 143 — — 143 +Other — — 108 — (108) — — 9 9 +Cash dividends declared ($1.13 per common share) — — — — — — (819) — (819) +Net earnings including non-controlling interests — — — — — — 2,164 5 2,169 +Balances at February 3, 2024 1,918 $ 1,918 $ 3,922 1,198 $ (20,682) $ (489) $ 26,946 $ (14) $ 11,601 +The accompanying notes are an integral part of the consolidated financial statements. +59 \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_164.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..47c5788f035d45b84d17eff9dc2fd4f14348844a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,55 @@ + +60 +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS + +All amounts in the Notes to Consolidated Financial Statements are in millions except per share amounts. + +1. ACCOUNTING POLICIES + +The following is a summary of the significant accounting policies followed in preparing these financial statements. + +Description of Business, Basis of Presentation and Principles of Consolidation + +The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. The Company is a food and drug +retailer that operates 2,722 supermarkets, 2,257 pharmacies and 1,665 fuel centers in 35 states and the District of +Columbia while also operating online through a digital ecosystem to offer customers an omnichannel shopping +experience. The Company also manufactures and processes food for sale by its supermarkets and online. The +accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries +and other consolidated entities. Intercompany transactions and balances have been eliminated. + +Reclassifications + +The Company reclassified $3.1 billion of liabilities from other current liabilities to accounts payable on the +Consolidated Balance Sheet for the year ended January 28, 2023 to conform to the current year presentation. This +reclassification was made to better align the presentation of liabilities associated with our third-party financing +arrangements and other current liabilities on the Consolidated Balance Sheet with management’s internal reporting. A +similar reclassification was made to the Consolidated Statement of Cash Flows resulting in a change to accounts payable +and accrued expenses within net cash provided by operating activities for the years ended February 3, 2024, January 28, +2023, and January 29, 2022. The reclassification did not affect total current liabilities on the Company’s Consolidated +Balance Sheet or total operating cash flows on the Consolidated Statement of Cash Flows. + +Fiscal Year + +The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 53- +week period ended February 3, 2024 and the 52-week periods ended January 28, 2023 and January 29, 2022. + +Pervasiveness of Estimates + +The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) +requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. +Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported +amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ +from those estimates. + +Cash, Temporary Cash Investments and Book Overdrafts + +Cash and temporary cash investments represent store cash and short-term investments with original maturities of +less than three months. Book overdrafts are included in “Accounts payable” and “Accrued salaries and wages” in the +Consolidated Balance Sheets. + +Deposits In-Transit + +Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year +related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does +not have immediate access but settle within a few days of the sales transaction. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_165.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dc26bc88e82a2c15e34b48e470e5c258e1cc399 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,50 @@ + +61 +Inventories + +Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, +approximately 91% of inventories in 2023 and 89% of inventories in 2022 were valued using the LIFO method. The +remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net +realizable value. Replacement cost was higher than the carrying amount by $2,309 at February 3, 2024 and $2,196 at +January 28, 2023. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its +LIFO charge. + +The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for +substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in +inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash +discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more +accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In +addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs +(net of vendor allowances and cash discounts). + +The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities. +Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages +as of the financial statement date. + +Property, Plant and Equipment + +Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at +fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance +leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. +Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of +store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the +shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the +asset. Food production plant, fulfillment center and distribution center equipment is depreciated over lives varying from +three to 15 years. Information technology assets are generally depreciated over three to five years. Depreciation and +amortization expense was $3,125 in 2023, $2,965 in 2022 and $2,824 in 2021. + +Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of +the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and +amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 3 for +further information regarding the Company’s property, plant and equipment. + +Leases + +The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and +equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and +liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present +value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and +are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To +determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents +the rate used for a secured borrowing of a similar term as the lease. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_166.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d085d6223d65d81915875dab8a8f32eec28d3e9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,52 @@ + +62 +Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole +discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is +reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not +recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property +taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent +expense over the lease term and finance lease payments are charged to interest expense and depreciation and +amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s +normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not +contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 9 +to the Consolidated Financial Statements. + +Goodwill + +The Company reviews goodwill for impairment during the fourth quarter of each year, or earlier upon the +occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other +consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined +using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a +reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s +knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for +any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated +to the reporting unit. Results of the goodwill impairment reviews performed during 2023, 2022 and 2021 are +summarized in Note 2. + +Impairment of Long-Lived Assets + +The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on +whether certain triggering events have occurred. These events include current period losses combined with a history of +losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering +event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing +current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. +If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ +current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash +flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned +property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable +values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized +for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. +The Company recorded asset impairments totaling $69, $68 and $64 in 2023, 2022 and 2021, respectively. Costs to +reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated +Statements of Operations as Operating, general and administrative (“OG&A”) expense. + +Accounts Payable Financing Arrangement + +The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates +participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial +institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations +of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The +Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by +suppliers’ decisions to finance amounts under this arrangement. As of February 3, 2024, and January 28, 2023, the +Company had $325 and $314 in “Accounts payable,” respectively, associated with financing arrangements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_167.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..4042f0fa2372872204d88f94a580c1e1771e0b6c --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,57 @@ + +63 +Contingent Consideration + +The Company’s Home Chef business combination involved potential payment of future consideration that is +contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at +fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability- +weighted future cash flows, discounted back to present value using a discount rate determined in accordance with +accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting +period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in +earnings until the contingency is resolved. In 2022, adjustments to increase the contingent consideration liability as of +year-end were recorded for $20 in OG&A expense. The Company made the final contingent consideration payment in +the second quarter of 2023, which was based on the fair value of the outstanding year-end 2022 liability. + +Store Closing Costs + +The Company regularly evaluates the performance of its stores and periodically closes those stores that are +underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with +store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is +incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs +differing from original estimates. Adjustments are made for changes in estimates in the period in which the change +becomes known. + +Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying +values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s +policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are +classified in the Consolidated Statements of Operations as “Merchandise costs.” Costs to transfer inventory and +equipment from closed stores are expensed as incurred. + +Interest Rate Risk Management + +The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The +Company’s current program relative to interest rate protection and the methods by which the Company accounts for its +derivative instruments are described in Note 6. + +Benefit Plans and Multi-Employer Pension Plans + +The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial +gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net +periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income +(“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is +the month-end that is closest to its fiscal year-ends. + +The determination of the obligation and expense for company-sponsored pension plans and other post-retirement +benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those +amounts. Those assumptions are described in Note 14 and include, among others, the discount rate, the expected long- +term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual +results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally +affect the recognized expense and recorded obligation in future periods. While the Company believes that the +assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may +materially affect the pension and other post-retirement obligations and future expense. + +The Company also participates in various multi-employer plans for substantially all union employees. Pension +expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably +estimable, in accordance with GAAP. Refer to Note 15 for additional information regarding the Company’s +participation in these various multi-employer pension plans. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_168.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_168.txt new file mode 100644 index 0000000000000000000000000000000000000000..390fddfef9bac72529e3f931eea13a57979af559 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_168.txt @@ -0,0 +1,50 @@ + +64 +The Company administers and makes contributions to the employee 401(k) retirement savings accounts. +Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service +period in the case of automatic contributions. Refer to Note 14 for additional information regarding the Company’s +benefit plans. + +Share Based Compensation + +The Company recognizes compensation expense for all share-based payments granted under fair value recognition +provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the +requisite service period of the award based on the fair value at the date of the grant. The Company grants options for +common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of +the underlying shares on the grant date of the award. Stock options typically expire 10 years from the date of grant. +Stock options vest between one and four years from the date of grant. In addition to stock options, the Company awards +restricted stock to employees and incentive shares to nonemployee directors under various plans. The restrictions on +these restricted stock awards generally lapse between one and four years from the date of the awards. The Company +determines the fair value for restricted stock awards in an amount equal to the fair market value of the underlying shares +on the grant date of the award. + +Deferred Income Taxes + +Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and +liabilities and their financial reporting basis. Refer to Note 4 for the types of differences that give rise to significant +portions of deferred income tax assets and liabilities. + +Uncertain Tax Positions + +The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to +what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 4 for the amount of +unrecognized tax benefits and other related disclosures related to uncertain tax positions. + +Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions +regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of +income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, +including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse +before a particular matter, for which an allowance has been established, is audited and fully resolved. As of February 3, +2024, the years ended February 1, 2020 and forward remain open for review for federal income tax purposes. + +The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures +associated with the Company’s various filing positions. + +Self-Insurance Costs + +The Company is primarily self-insured for costs related to workers’ compensation and general liability +claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims +incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value +basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim +basis. The Company is insured for covered costs in excess of these per claim limits. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_169.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_169.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd057e849c8f71ab137dd0f8827261e21f541a33 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_169.txt @@ -0,0 +1,56 @@ + +65 +The following table summarizes the changes in the Company’s self-insurance liability through February 3, 2024: + + + 2023 2022 2021 +Beginning balance $ 712 $ 721 $ 731 +Expense(1) 330 227 226 +Claim payments (281) (236) (236) +Ending balance 761 712 721 +Less: Current portion (281) (236) (236) +Long-term portion $ 480 $ 476 $ 485 + +(1) The increase in 2023, compared to 2022 and 2021, was the result of higher claim costs. + +The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is +included in “Other long-term liabilities” in the Consolidated Balance Sheets. + +The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are +required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party +insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its +claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the +Company, as the Company has recorded reserves for the claim costs. + +The Company also maintains insurance coverages for certain risks, including cyber exposure and property-related +losses. The Company’s insurance coverage begins for these exposures ranging from $25 to $30. + +Revenue Recognition + +Sales + +The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy +sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either +upon pickup in store or upon delivery to the customer. Amounts billed to a customer related to shipping and delivery +represent revenues earned for the goods provided and are classified as sales. When shipping is discounted, it is recorded +as an adjustment to sales. Discounts provided to customers by the Company at the time of sale, including those provided +in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by +vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at +any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and +cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale. +The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually +simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy +sales, collection of third-party receivables is typically expected within three months or less from the time of purchase. +The third-party receivables from pharmacy sales are recorded in “Receivables” in the Company’s Consolidated Balance +Sheets and were $616 as of February 3, 2024 and $867 as of January 28, 2023. + +Gift Cards and Gift Certificates + +The Company does not recognize revenue when it sells its own gift cards and gift certificates (collectively “gift +cards”). Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the +gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards +are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card breakage +under the proportional method, where recognition of breakage income is based upon the historical run-off rate of +unredeemed gift cards. The Company’s gift card deferred revenue liability was $228 as of February 3, 2024 and $200 +as of January 28, 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_17.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..6dcfd2fa23c4cc9c9e6b6ff1a667da4bc50f0f37 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,43 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_170.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..402c163cbf59d108d736dd9f96802c05d404f180 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,57 @@ + +66 +Disaggregated Revenues + +The following table presents sales revenue by type of product for the year-ended February 3, 2024, January 28, 2023, +and January 29, 2022: + + 2023 2022 2021 + Amount % of total Amount % of total Amount % of total +Non Perishable(1) $ 76,903 51.3 % $ 74,121 50.0 % $ 69,648 50.6 % +Fresh(2) 35,686 23.8 % 35,433 23.9 % 33,972 24.6 % +Supermarket Fuel 16,621 11.1 % 18,632 12.6 % 14,678 10.6 % +Pharmacy 14,259 9.5 % 13,377 9.0 % 12,401 9.0 % +Other(3) 6,570 4.3 % 6,695 4.5 % 7,189 5.2 % + +Total Sales $ 150,039 100 % $ 148,258 100 % $ 137,888 100 % + +(1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. +(2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. +(3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party +media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, Kroger Personal Finance, +digital coupon services and other online sales not included in the categories above. The decrease in 2022, compared +to 2021, is primarily due to discontinued patient therapies at Kroger Specialty Pharmacy. + +Merchandise Costs + +The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of +discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, +including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, +transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, +purchasing management salaries and administration costs are included in the “OG&A” line item along with most of the +Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s +digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent +expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations. + +Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs +and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs +are recognized in the periods the related expenses are incurred. + +The Company believes the classification of costs included in merchandise costs could vary widely throughout the +industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring +products and making them available to customers. The Company believes this approach most accurately presents the +actual costs of products sold. + +The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is +sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the +carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not +possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are +recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold. + +Advertising Costs + +The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in +the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs +totaled $1,089 in 2023, $1,030 in 2022 and $984 in 2021. The Company does not record vendor allowances for co- +operative advertising as a reduction of advertising expense. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_171.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f16dfdd3217a946e0b7b955b1f467883e14f315 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,59 @@ + +67 +Operating, General and Administrative Expenses + +OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan +costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings +originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the +Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are +shown separately in the Consolidated Statement of Operations. + +Consolidated Statements of Cash Flows + +For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt +instruments purchased with an original maturity of three months or less to be temporary cash investments. + +Segments + +The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. +The Company’s retail operations, which represent 97% of the Company’s consolidated sales, are its only reportable +segment. The Company aggregates its operating divisions into one reportable segment due to the operating divisions +having similar economic characteristics with similar long-term financial performance. In addition, the Company’s +operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory +environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) +vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital +from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating +division management team can be responsive to local needs of the operating division and can execute company strategic +plans and initiatives throughout the locations in their operating division. This geographical separation is the primary +differentiation between these retail operating divisions. The geographical basis of organization reflects how the business +is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision +maker, assesses performance internally. All of the Company’s operations are domestic. + + + +2. GOODWILL AND INTANGIBLE ASSETS + +The following table summarizes the changes in the Company’s net goodwill balance through February 3, 2024: + + + 2023 2022 +Balance beginning of year +Goodwill $ 5,737 $ 5,737 +Accumulated impairment losses (2,821) (2,661) +Subtotal 2,916 3,076 + +Activity during the year +Impairment charge related to Vitacost.com — (160) + + +Balance end of year +Goodwill 5,737 5,737 +Accumulated impairment losses (2,821) (2,821) +Total Goodwill $ 2,916 $ 2,916 + +Testing for impairment is performed annually, or on an interim basis upon the occurrence of a triggering event or a +change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying +amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth +quarter of 2023, 2022 and 2021. The evaluation did not result in impairment in 2023 or 2021. The evaluation resulted in +an impairment in 2022. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_172.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c17bca64c0d016ff21618481eceb58c45782cf5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,62 @@ + +68 +Based on the results of the Company’s impairment assessment in the fourth quarter of 2022, Vitacost.com recorded +a $160 goodwill impairment. In the fourth quarter of 2022, as the Company’s digital strategy evolved, the Company’s +primary focus was to effectively utilize its Pickup and Delivery capabilities. This reprioritization resulted in reduced +long-term profitability expectations and a decline in the market value for one underlying channel of business and led to +the pre-tax and after-tax impairment charge of $160. The pre-impairment goodwill balance for Vitacost.com was $160 +as of the fourth quarter 2022. There is no goodwill remaining for Vitacost.com as of January 28, 2023. + +The following table summarizes the Company’s intangible assets balance through February 3, 2024: + + + 2023 2022 + Gross carrying Accumulated Gross carrying Accumulated + amount amortization(1) amount amortization (1) +Definite-lived pharmacy prescription files $ 360 $ (259) $ 325 $ (230) +Definite-lived customer relationships 186 (179) 186 (173) +Definite-lived other 118 (103) 112 (96) +Indefinite-lived trade name 685 — 685 — +Indefinite-lived liquor licenses 91 — 90 — + +Total $ 1,440 $ (541) $ 1,398 $ (499) + +(1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to +depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and +amortization expense. + +Amortization expense associated with intangible assets totaled approximately $42, $52 and $59, during fiscal years +2023, 2022 and 2021, respectively. Future amortization expense associated with the net carrying amount of definite- +lived intangible assets for the years subsequent to 2023 is estimated to be approximately: + + +2024 $ 42 +2025 38 +2026 17 +2027 8 +2028 8 +Thereafter 10 + +Total future estimated amortization associated with definite-lived intangible assets $ 123 + + +3. PROPERTY, PLANT AND EQUIPMENT, NET + +Property, plant and equipment, net consists of: + + + 2023 2022 +Land $ 3,512 $ 3,442 +Buildings and land improvements 15,137 14,539 +Equipment 19,375 17,328 +Leasehold improvements 12,394 11,435 +Construction-in-progress 3,574 4,044 +Leased property under finance leases 2,701 2,580 + +Total property, plant and equipment 56,693 53,368 +Accumulated depreciation and amortization (31,463) (28,642) + +Property, plant and equipment, net $ 25,230 $ 24,726 + +Accumulated depreciation and amortization for leased property under finance leases was $730 at February 3, 2024 +and $562 at January 28, 2023. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_173.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6a538db0d62719946e47a04021524fa781a2290 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,58 @@ + +69 +Approximately $104 and $124, net book value, of property, plant and equipment collateralized certain mortgages at +February 3, 2024 and January 28, 2023, respectively. + +Capitalized implementation costs associated with cloud computing arrangements of $257, net of accumulated +amortization of $65, and $193, net of accumulated amortization of $36, are included in “Other assets” in the Company’s +Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023, respectively. The corresponding cash flows +related to these arrangements are included in “Net cash provided by operating activities” in the Company’s Consolidated +Statements of Cash Flows. + +4. TAXES BASED ON INCOME + +The provision for taxes based on income consists of: + + + 2023 2022 2021 +Federal +Current $ 707 $ 401 $ 349 +Deferred (130) 162 (46) + +Subtotal federal 577 563 303 + +State and local +Current 114 91 67 +Deferred (24) (1) 15 + +Subtotal state and local 90 90 82 + +Total $ 667 $ 653 $ 385 + +A reconciliation of the statutory federal rate and the effective rate follows: + + + 2023 2022 2021 +Statutory rate 21.0 % 21.0 % 21.0 % +State income taxes, net of federal tax benefit 2.5 2.5 3.2 +Credits (1.1) (0.8) (1.3) +Resolution of tax audit examinations — (0.2) (3.1) +Excess tax benefits from share-based payments (0.7) (1.9) (1.3) +Impairment of goodwill related to Vitacost.com — 1.2 — +Non-deductible legal settlements 1.4 — — +Non-deductible executive compensation 0.3 0.5 0.6 +Other changes, net 0.1 0.2 (0.3) + +Effective income tax rate 23.5 % 22.5 % 18.8 % + +The 2023 tax rate differed from the federal statutory rate due to the effect of state income taxes and the +nondeductible portion of opioid settlement charges, partially offset by the benefit from share-based payments and the +utilization of tax credits. + +The 2022 tax rate differed from the federal statutory rate due to the effect of state income taxes and non-deductible +goodwill impairment charges related to Vitacost.com, partially offset by the benefits from share-based payments and the +utilization of tax credits. + +The 2021 tax rate differed from the federal statutory rate primarily due to a discrete benefit of $47 which was +primarily from the favorable outcome of income tax audit examinations covering multiple years, the benefit from share- +based payments and the utilization of tax credits, partially offset by the effect of state income taxes. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_174.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..651787db52cc8c2ffbfeefa0bc6127160a6aa9fa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,58 @@ + +70 +The tax effects of significant temporary differences that comprise tax balances were as follows: + + + 2023 2022 +Deferred tax assets: +Compensation related costs $ 361 $ 409 +Lease liabilities 2,100 1,892 +Closed store reserves 51 51 +Unrealized losses on hedging instruments — 74 +Net operating loss and credit carryforwards 76 101 +Deferred income 102 104 +Legal settlements 313 — +Allowance for uncollectible receivables 30 26 +Other — 13 + +Subtotal 3,033 2,670 +Valuation allowance (55) (83) + +Total deferred tax assets 2,978 2,587 + +Deferred tax liabilities: +Depreciation and amortization (2,038) (1,954) +Operating lease assets (1,985) (1,759) +Insurance related costs (241) (257) +Inventory related costs (259) (281) +Equity investments in excess of tax basis — (8) +Other (16) — + +Total deferred tax liabilities (4,539) (4,259) + +Deferred income taxes $ (1,561) $ (1,672) + +As of February 3, 2024, deferred tax assets of $18 are included in “Other assets” in the Company’s Consolidated +Balance Sheets. At February 3, 2024, the Company had net operating loss carryforwards for state income tax purposes +of $1,499. These net operating loss carryforwards expire from 2024 through 2043. The utilization of certain of the +Company’s state net operating loss carryforwards may be limited in a given year. Further, based on the analysis +described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from +its state net operating losses. + +At February 3, 2024, the Company had state credit carryforwards of $7 which expire from 2024 through 2037. The +utilization of certain of the Company’s credits may be limited in a given year. Further, based on the analysis described +below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state +credits. + +The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether +these assets are more likely than not to be realized based on all available evidence. This evidence includes historical +taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences +and the implementation of tax planning strategies. Projected future taxable income is based on expected results and +assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing +temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax +assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the +deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these +valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of +February 3, 2024, January 28, 2023, and January 29, 2022, the total valuation allowance was $55, $83, and $72, +respectively. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_175.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..48d1a66932d73f05afac6c7e60f1cd61e4c98c6f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,47 @@ + +71 +A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions effecting +only the timing of tax benefits, is as follows: + + + 2023 2022 2021 +Beginning balance $ 93 $ 100 $ 193 +Additions based on tax positions related to the current year 10 8 10 +Additions for tax positions of prior years 3 6 9 +Reductions for tax positions of prior years (9) (4) (108) +Settlements (1) (9) — +Lapse of statute (6) (8) (4) +Ending balance $ 90 $ 93 $ 100 + +As of February 3, 2024, January 28, 2023, and January 29, 2022 the amount of unrecognized tax benefits that, if +recognized, would affect the effective tax rate was $62, $66, and $73 respectively. + +To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, +such amounts have been accrued and classified as a component of income tax expense. During the years ended February +3, 2024, January 28, 2023, and January 29, 2022, the Company recognized approximately $1, $(6), and $(15), +respectively, in interest and penalties (recoveries). The Company had accrued approximately $15, $14, and $22 for the +payment of interest and penalties as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively. + +As of February 3, 2024, the years ended February 1, 2020 and forward remain open for review for federal income +tax purposes. + +5. DEBT OBLIGATIONS + +Long-term debt consists of: + + + February 3, January 28, + 2024 2023 +1.70% to 8.00% Senior Notes due through 2049 $ 9,123 $ 10,215 +Other 1,064 1,077 + +Total debt, excluding obligations under finance leases 10,187 11,292 +Less current portion (25) (1,153) + +Total long-term debt, excluding obligations under finance leases $ 10,162 $ 10,139 + +In 2023, the Company repaid $600 of senior notes bearing an interest rate of 3.85% and $500 of senior notes bearing +an interest rate of 4.00%, all using cash on hand. + +In 2022, the Company repaid $400 of senior notes bearing an interest rate of 2.80% using cash on hand. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_176.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..9594e8bb0c02fac488f40f60ba19e878e0f396a4 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,56 @@ + +72 +Additionally in 2021, the Company acquired 28, previously leased, properties for a purchase price of $455. +Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of +$621. Total cash proceeds received as a result of the transactions was $166. The sale transaction did not qualify for sale- +leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price +paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five +years each. The Company has the option to purchase the individual properties for fair market value at the end of the base +term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base +term for $300 if the lessor exercises its put option. + +On July 6, 2021, the Company entered into an amended and restated credit agreement, which credit agreement was +further amended on November 9, 2022 (as so amended, the “Credit Agreement”) providing for a $2,750 unsecured +revolving credit facility (the “Revolving Credit Facility”), with a termination date of July 6, 2026, unless extended as +permitted under the Credit Agreement. The Company has the ability to increase the size of the Revolving Credit Facility +by up to an additional $1,250, subject to certain conditions. + +Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) adjusted Term SOFR +plus a market spread, based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the +Federal Funds Rate plus 0.5%, (b) Bank of America’s prime rate, and (c) one-month Term SOFR plus 1.0%, plus a +market rate spread based on the Company’s Public Debt Rating. The Company will also pay a Commitment Fee based +on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt +Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or +Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the +Company. + +The Credit Agreement contains a covenant, which, among other things, requires the maintenance of a Leverage +Ratio of not greater than (i) 3.50:1.00 or (ii) upon the consummation of the proposed merger with Albertsons, 4.50 to +1.00, with step downs to 4.25:1.00, 4.00:1.00, 3.75:1.00 and 3.50:1.00 effective at the end of the third, fifth, seventh and +ninth, full fiscal quarters after the consummation of the proposed merger, respectively. The Company may repay the +Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed +by the Company’s subsidiaries. + +On October 13, 2022, the Company entered into a merger agreement with Albertsons Companies, Inc. +(“Albertsons”). For additional information about the Company’s unsecured bridge term loan facility and term loan credit +agreement associated with the merger agreement, see Note 16 to the Consolidated Financial Statements. + +As of February 3, 2024, and January 28, 2023, the Company had no commercial paper borrowings and no +borrowings under the Credit Agreement. + +As of February 3, 2024, the Company had outstanding letters of credit in the amount of $314, of which $2 reduces +funds available under the Credit Agreement. As of January 28, 2023, the Company had outstanding letters of credit in +the amount of $310, of which $2 reduces funds available under the Credit Agreement. The letters of credit are +maintained primarily to support performance, payment, deposit or surety obligations of the Company. + +Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the +option of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt is subject +to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less +than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified +premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group, together with +any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or +group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of Directors, +in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a change of +control and a below investment grade rating. + +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_177.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..b757d99f3c23b56b41a9501206ed76301269a352 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,54 @@ + +73 +The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2023, and for the years +subsequent to 2023 are: + + +2024 $ 25 +2025 92 +2026 1,305 +2027 611 +2028 642 +Thereafter 7,512 + +Total debt $ 10,187 + + +6. DERIVATIVE FINANCIAL INSTRUMENTS + +GAAP requires that derivatives be carried at fair value on the balance sheet and provides for hedge accounting when +certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair +value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are +highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective cash flow hedges, if any, +are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period +earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as +“fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded +in current period earnings. Ineffective fair value hedges, if any, are recognized in current period earnings. Changes in +fair value of derivative instruments not designated as hedges are recognized in current period earnings and included in +“Gain (loss) on investments” in the Company’s Consolidated Statements of Operations. + +The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as +hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it +is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company +discontinues hedge accounting prospectively. + +Interest Rate Risk Management + +The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to +interest rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and +forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate +protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in +interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to +determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest +rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of +the Company’s debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive +or sensitivity to current mark-to-market status. + +The Company reviews compliance with these guidelines annually with the Finance Committee of the Board of +Directors. These guidelines may change as the Company’s needs dictate. + +Fair Value Interest Rate Swaps + +The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of February 3, +2024 and January 28, 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_178.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_178.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b2be793ec6f50d3f0da9c858a75203b8d2b3071 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_178.txt @@ -0,0 +1,52 @@ + +74 +Cash Flow Forward-Starting Interest Rate Swaps + +As of February 3, 2024 and January 28, 2023, the Company had five forward-starting interest rate swap agreements +with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5,350. A forward-starting interest +rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to +changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting +interest rate swaps in order to lock in fixed interest rates on its forecasted issuances of debt. + +A notional amount of $2,350 of these forward-starting interest rate swaps was designated as a cash-flow hedge as +defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to +accumulated other comprehensive income and reclassified into net earnings when the hedged transaction affects net +earnings. As of February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in +“Other Assets” for $125 and accumulated other comprehensive income for $95, net of tax. As of January 28, 2023, the +fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other long-term liabilities” for +$116 and accumulated other comprehensive loss for $89, net of tax. + +The remainder of the notional amount of $3,000 of the forward-starting interest rate swaps was not designated as a +cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not designated +as cash-flow hedges are recognized through net earnings. As of February 3, 2024, the fair value of these swaps was +recorded in “Other Assets” for $35 and “Other long-term liabilities” for $3. In 2023, the Company recognized an +unrealized gain of $174 related to these swaps that is included in “Gain (loss) on investments” in the Company’s +Consolidated Statements of Operations. As of January 28, 2023, the fair value of these swaps was recorded in “Other +long-term liabilities” for $142. In 2022, the Company recognized an unrealized loss of $142 related to these swaps that is +included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations. + +The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges +for 2023, 2022 and 2021: + + + Year-To-Date + Amount of Gain/(Loss) in Amount of Gain/(Loss) + AOCI on Derivative Reclassified from AO CI into Income Location of Gain/(Loss) +Derivatives in Cash Flow Hedging Relationships 2023 2022 2021 2023 2022 2021 Reclassified into Income +Forward-Starting Interest Rate Swaps, net of tax(1) $ 60 $ (129) $ (47) $ (6) $ (7) $ (7) Interest expense + + +(1) The amounts of Gain/(Loss) reclassified from AOCI into income on derivatives include unamortized proceeds and +payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior +to the end of 2020. + +For the above cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives +Association master netting agreements that permit the net settlement of amounts owed under their respective derivative +contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to +determine the net amount payable for contracts due on the same date and in the same currency for similar types of +derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding +contracts with a counterparty in the case of an event of default or a termination event. + +Collateral is generally not required of the counterparties or of the Company under these master netting agreements. +As of February 3, 2024, no cash collateral was received or pledged under the master netting agreements. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_179.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_179.txt new file mode 100644 index 0000000000000000000000000000000000000000..68226a79f29d76c11d4f18a70ca3115f9f015bc1 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_179.txt @@ -0,0 +1,40 @@ + +75 +The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances +upon an event of default or termination event is as follows as of February 3, 2024 and January 28, 2023: + + + Gross Amounts Not Offset in the + Net Amount Balance Sheet + Gross Amount Gross Amounts Offset Presented in the Financial +February 3, 2024 Recognized in the Balance Sheet Balance Sheet Instruments Cash Collateral Net Amount +Assets +Cash Flow Forward-Starting +Interest Rate Swaps $ 160 $ — $ 160 $ — $ — $ 160 +Liabilities +Cash Flow Forward-Starting +Interest Rate Swaps $ 3 $ — $ 3 $ — $ — $ 3 + + + Gross Amounts Not Offset in the + Net Amount Balance Sheet + Gross Amount Gross Amounts Offset Presented in the Financial +January 28, 2023 Recognized in the Balance Sheet Ba lance Sheet Instruments Ca sh Collateral Net Amount +Liabilities +Cash Flow Forward-Starting +Interest Rate Swaps $ 258 $ — $ 258 $ — $ — $ 258 + + +7. FAIR VALUE MEASUREMENTS + +GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of +the fair value hierarchy defined in the standards are as follows: + +Level 1 - Quoted prices are available in active markets for identical assets or liabilities; + +Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly +or indirectly observable; + +Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to +develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_18.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e78742c4bd31a4c229732dc322409a577cc3b71a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_180.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_180.txt new file mode 100644 index 0000000000000000000000000000000000000000..948c3c1074aec473fef39a2d63602f73954fbdaa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_180.txt @@ -0,0 +1,55 @@ + +76 +For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables +summarize the fair value of these instruments at February 3, 2024 and January 28, 2023: + +February 3, 2024 Fair Value Measurements Using + + + Quoted Prices in + Active Markets + for Identical Significant Other + Assets Observable Inputs + (Level 1) (Level 2) Total +Marketable Securities $ 646 $ — $ 646 +Forward-Starting Interest Rate Swaps and +Commodity Contracts — 155 155 +Total $ 646 $ 155 $ 801 + +January 28, 2023 Fair Value Measurements Using + + + Quoted Prices in + Active Markets + for Identical Significant Other + Assets Observable Inputs + (Level 1) (Level 2) Total +Marketable Securities $ 463 $ — $ 463 +Forward-Starting Interest Rate Swaps — (258) (258) +Total $ 463 $ (258) $ 205 + +The Company values interest rate hedges using observable forward yield curves. These forward yield curves are +classified as Level 2 inputs. + +Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment +analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The +Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of +each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to +the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a +nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the +Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2023, long-lived +assets with a carrying amount of $72 were written down to their fair value of $3, resulting in an impairment charge of +$69. In 2022, long-lived assets with a carrying amount of $69 were written down to their fair value of $1, resulting in an +impairment charge of $68. + +Fair Value of Other Financial Instruments + +Current and Long-term Debt + +The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted +market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market +prices were not available, the fair value was based upon the net present value of the future cash flow using the forward +interest rate yield curve in effect at respective year-ends. At February 3, 2024, the fair value of total debt excluding +obligations under finance leases was $9,401 compared to a carrying value of $10,187. At January 28, 2023, the fair +value of total debt excluding obligations under finance leases was $10,593 compared to a carrying value of $11,292. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_181.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_181.txt new file mode 100644 index 0000000000000000000000000000000000000000..77dfb000d7eb76926d628deb460b992a2de6910e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_181.txt @@ -0,0 +1,53 @@ + +77 +Contingent Consideration + +As a result of the Home Chef merger in 2018, the Company recognized a contingent liability of $91 on the +acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in +“Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the +earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating +results for both the online and offline businesses related to the Home Chef merger and the estimated probability of +achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used +to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout +liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and +the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is +resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones +to align with the Company’s current business strategies. In 2022, the Company recorded adjustments to increase the +contingent consideration liability for $20 in OG&A. During 2023, the Company made the final contingent consideration +payment of $83 which was based on the fair value of the outstanding year-end 2022 liability. + +Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, +Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities + +The carrying amounts of these items approximated fair value due to their short-term nature. + +Other Assets + +The fair value of certain financial instruments, measured using Level 1 inputs, was $578 and $401 as of February 3, +2024 and January 28, 2023, respectively, and is included in “Other assets” in the Company’s Consolidated Balance +Sheets. The unrealized loss for these Level 1 investments was approximately $66 and $586 for 2023 and 2022, +respectively, and is included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations. + +The Company held other equity investments without a readily determinable fair value. These investments are +measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of +these investments was $92 and $320 as of February 3, 2024 and January 28, 2023, respectively, and is included in +“Other assets” in the Company’s Consolidated Balance Sheets. The decrease in the value of these other equity +investments without a readily determinable fair value was the result of one of the Company’s investments now being +measured using Level 1 inputs. There were no other observable price changes or impairments for these investments +without a readily determinable fair value during 2023 or 2022, and as such, they are excluded from the fair value +measurements table above for February 3, 2024 and January 28, 2023. + +The following table presents the Company’s remaining other assets as of February 3, 2024 and January 28, 2023: + + + + February 3, 2024 January 28, 2023 +Other Assets +Equity method and other long-term investments $ 290 $ 274 +Notes receivable 78 169 +Prepaid deposits under certain contractual arrangements 193 199 +Implementation costs related to cloud computing arrangements 257 193 +Forward-starting interest rate swaps 160 — +Funded asset status of pension plans 44 69 +Other 128 125 +Total $ 1,150 $ 1,029 \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_182.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_182.txt new file mode 100644 index 0000000000000000000000000000000000000000..a54599ccd52292f06ed81609fbe42539c29ebf19 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_182.txt @@ -0,0 +1,84 @@ + +78 + +8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) + +The following table represents the changes in AOCI by component for the years ended February 3, 2024 and +January 28, 2023: + + + Pension and + Cash Flow Postretirement + Hedging Defined Benefit + Activities (1) Plans (1) Total (1) +Balance at January 29, 2022 $ (47) $ (420) $ (467) +OCI before reclassifications(2) (89) (88) (177) +Amounts reclassified out of AOCI(3) 7 5 12 +Net current-period OCI (82) (83) (165) +Balance at January 28, 2023 $ (129) $ (503) $ (632) + +Balance at January 28, 2023 $ (129) $ (503) $ (632) +OCI before reclassifications(2) 183 (35) 148 +Amounts reclassified out of AOCI(3) 6 (11) (5) +Net current-period OCI 189 (46) 143 +Balance at February 3, 2024 $ 60 $ (549) $ (489) + +(1) All amounts are net of tax. +(2) Net of tax of $(28) and $(27) for pension and postretirement defined benefit plans and cash flow hedging activities, +respectively, as of January 28, 2023. Net of tax of $(11) and $56 for pension and postretirement defined benefit +plans and cash flow hedging activities, respectively, as of February 3, 2024. +(3) Net of tax of $2 and $2 for pension and postretirement defined benefit plans and cash flow hedging activities, +respectively, as of January 28, 2023. Net of tax of $(3) and $2 for pension and postretirement defined benefit plans +and cash flow hedging activities, respectively, as of February 3, 2024. + +The following table represents the items reclassified out of AOCI and the related tax effects for the years ended +February 3, 2024, January 28, 2023 and January 29, 2022: + + + +For the year ended For the year ended For the year ended + + February 3, 2024 January 28, 2023 January 29, 2022 + + +Cash flow hedging activity items + + +Amortization of gains and losses on cash flow hedging +activities(1) + +$ 8 $ 9 $ 10 +Tax expense + + (2) (2) (3) +Net of tax + + 6 7 7 + + + +Pension and postretirement defined benefit plan items + + +Amortization of amounts included in net periodic +pension cost(2) + + (14) 7 97 +Tax expense + + 3 (2) (23) +Net of tax + + (11) 5 74 +Total reclassifications, net of tax + +$ (5) $ 12 $ 81 + +(1) Reclassified from AOCI into interest expense. +(2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components +are included in the computation of net periodic pension expense. + + + + +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_183.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_183.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4e6f82d6f65f72d6106ff78f2ddfbcbd13e320e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_183.txt @@ -0,0 +1,55 @@ + +79 +9. LEASES AND LEASE-FIN ANCED TRANSACTIONS + +The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and +equipment. The Company operates in leased facilities in approximately half of its store locations. Lease terms generally +range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also +include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the +balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or +insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for +on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value +guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods +generally ranging from one to 20 years. + +The following table provides supplemental balance sheet classification information related to leases: + + February 3, January 28, + Classification 2024 2023 +Assets +Operating Operating lease assets $ 6,692 $ 6,662 +Finance Property, plant and equipment, net(1) 1,971 2,018 + +Total leased assets $ 8,663 $ 8,680 + +Liabilities +Current +Operating Current portion of operating lease liabilities $ 670 $ 662 +Finance + +Current portion of long-term debt including obligations +under finance leases 173 157 + +Noncurrent +Operating Noncurrent operating lease liabilities 6,351 6,372 +Finance Long-term debt including obligations under finance leases 1,866 1,929 + +Total lease liabilities $ 9,060 $ 9,120 + +(1) Finance lease assets are recorded net of accumulated amortization of $730 and $562 as of February 3, 2024 and +January 28, 2023. + +The following table provides the components of lease cost: + + Year-To-Date Year-To-Date +Lease Cost Classification February 3, 2024 January 28, 2023 +Operating lease cost(1) Rent Expense $ 1,006 $ 950 +Sublease and other rental income Rent Expense (115) (111) +Finance lease cost +Amortization of leased assets Depreciation and Amortization 195 161 +Interest on lease liabilities Interest Expense 78 66 + +Net lease cost $ 1,164 $ 1,066 + +(1) Includes short-term leases and variable lease costs, which are immaterial. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_184.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_184.txt new file mode 100644 index 0000000000000000000000000000000000000000..b5c4ad782ae7035852f68424147e0aef78f38d33 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_184.txt @@ -0,0 +1,56 @@ + +80 +Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend +lease terms that are reasonably certain of being exercised. + + + Operating Finance + Leases Leases Total +2024 $ 961 $ 243 $ 1,204 +2025 898 240 1,138 +2026 838 240 1,078 +2027 784 242 1,026 +2028 722 238 960 +Thereafter 5,738 1,359 7,097 + +Total lease payments 9,941 2,562 $ 12,503 + +Less amount representing interest 2,920 523 + +Present value of lease liabilities(1) $ 7,021 $ 2,039 + +(1) Includes the current portion of $670 for operating leases and $173 for finance leases. + +Total future minimum rentals under non-cancellable subleases at February 3, 2024 were $212. + +The following table provides the weighted-average lease term and discount rate for operating and finance leases: + + + February 3, 2024 January 28, 2023 +Weighted-average remaining lease term (years) +Operating leases 13.9 14.3 +Finance leases 11.8 12.7 +Weighted-average discount rate +Operating leases 4.4 % 4.2 % +Finance leases 3.8 % 3.5 % + + +The following table provides supplemental cash flow information related to leases: + + + Year-To-Date Year-To-Date + February 3, 2024 January 28, 2023 +Cash paid for amounts included in the measurement of lease liabilities +Operating cash flows from operating leases $ 984 $ 903 +Operating cash flows from finance leases $ 78 $ 66 +Financing cash flows from finance leases $ 173 $ 132 +Leased assets obtained in exchange for new operating lease liabilities $ 700 $ 602 +Leased assets obtained in exchange for new finance lease liabilities $ 168 $ 656 +Net gain recognized from sale and leaseback transactions(1) $ 37 $ 30 +Impairment of operating lease assets $ 15 $ 1 +Impairment of finance lease assets $ — $ 2 + +(1) In 2023, the Company entered into sale leaseback transactions related to nine properties, which resulted in total +proceeds of $52. In 2022, the Company entered into sale leaseback transactions related to five properties, +which resulted in total proceeds of $44. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_185.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_185.txt new file mode 100644 index 0000000000000000000000000000000000000000..4849765323630b9075e35f19c7e7c82f8254ded5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_185.txt @@ -0,0 +1,63 @@ + +81 +On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International +Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will +partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its +distribution networks. In 2023, the Company opened one additional Kroger Delivery customer fulfillment center in +Frederick, Maryland. The Company determined the arrangement with Ocado contains a lease of the robotic equipment +used to fulfill customer orders. As a result, the Company establishes a finance lease when each facility begins fulfilling +orders to customers. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The +Company elected to combine the lease and non-lease elements in the contract. As a result, the Company will account for +all payments to Ocado as lease payments. In 2023, the Company recorded finance lease assets of $147 and finance lease +liabilities of $135 related to the Company’s agreement with Ocado. In 2022, the Company recorded finance lease assets +of $629 and finance lease liabilities of $583 related to the Company’s agreement with Ocado. As of February 3, 2024 +and January 28, 2023, the Company had $960 and $928, respectively, of net finance lease assets included within +“Property, plant and equipment, net” in the Company’s Consolidated Balance Sheets related to the Company's agreement +with Ocado. As of February 3, 2024 and January 28, 2023, the Company had $100 and $88, respectively, of current +finance lease liabilities recorded within “Current portion of long-term debt including obligations under finance leases" +and $814 and $785, respectively, of non-current finance lease liabilities recorded within “Long-term debt including +obligations under finance leases” in the Company’s Consolidated Balance Sheets. + +10. EARNINGS PER COMMON SHARE + +Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to The Kroger +Co. less income allocated to participating securities divided by the weighted average number of common shares +outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals net earnings attributable to +The Kroger Co. less income allocated to participating securities divided by the weighted average number of common +shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net +earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per +basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share: + + + For the year ended For the year ended For the year ended + February 3, 2024 January 28, 2023 January 29, 2022 + Per Per Per + Earnings Shares Share Earnings Shares Share Earnings Shares Share +(in millions, except per share amounts) (Num erator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount +Net earnings attributable to The Kroger Co. per +basic common share $ 2,146 718 $ 2.99 $ 2,224 718 $ 3.10 $ 1,639 744 $ 2.20 +Dilutive effect of stock options 7 9 10 + +Net earnings attributable to The Kroger Co. per +diluted common share $ 2,146 725 $ 2.96 $ 2,224 727 $ 3.06 $ 1,639 754 $ 2.17 + + +The Company had combined undistributed and distributed earnings to participating securities totaling $18, $20 and +$16 in 2023, 2022 and 2021, respectively. + +The Company had stock options outstanding for approximately 2.8 million, 1.7 million and 2.4 million shares, +respectively, for the years ended February 3, 2024, January 28, 2023 and January 29, 2022, which were excluded from +the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive +effect on net earnings per diluted share. + +11. STOCK-BASED COMPENSATION + +The Company recognizes compensation expense for all share-based payments granted. The Company recognizes +share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award +based on the fair value at the date of the grant. + +The Company grants options for common shares (“stock options”) to employees under various plans at an option +price equal to the fair market value of the underlying shares on the grant date of the award. The Company accounts for +stock options under the fair value recognition provisions. Stock options typically expire 10 years from the date of grant. +Stock options vest between one and four years from the date of grant. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_186.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_186.txt new file mode 100644 index 0000000000000000000000000000000000000000..473bfcf1a49b74e10fd92b5737263981ad8aa31d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_186.txt @@ -0,0 +1,59 @@ + +82 +In addition to the stock options described above, the Company awards restricted stock to employees and incentive +shares to nonemployee directors under various plans. The restrictions on the restricted share awards generally lapse +between one and four years from the date of the awards. The Company determines the fair value for restricted stock +awards in an amount equal to the fair market value of the underlying shares on the grant date of the award. + +At February 3, 2024, approximately 40 million common shares were available for future options or restricted stock +grants under the 2019 Amended and Restated Long-Term Incentive Plan. Options granted reduce the shares available +under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of +2.83 to one. + +Equity awards granted are based on the aggregate value of the award on the grant date. This can affect the number +of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the +provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring +shortly after the Company’s release of quarterly earnings. The 2023 primary grants were made in conjunction with the +March and June meetings of the Company’s Board of Directors. + +All awards become immediately exercisable upon certain changes of control of the Company. + +Stock Options + +Changes in options outstanding under the stock option plans are summarized below: + + + Shares Weighted- + subject average + to option exercise + (in millions) price +Outstanding, year-end 2020 26.8 $ 26.65 +Granted 2.1 $ 35.45 +Exercised (7.1) $ 24.70 +Canceled or Forfeited (0.7) $ 28.88 + +Outstanding, year-end 2021 21.1 $ 28.15 +Granted 1.2 $ 56.13 +Exercised (5.4) $ 26.02 +Canceled or Forfeited (0.3) $ 31.54 + +Outstanding, year-end 2022 16.6 $ 30.81 +Granted 1.3 $ 47.23 +Exercised (2.4) $ 24.04 +Canceled or Forfeited (0.1) $ 39.45 + +Outstanding, year-end 2023 15.4 $ 33.11 + +A summary of options outstanding, exercisable and expected to vest at February 3, 2024 follows: + + + Weighted-average Aggregate + remaining Weighted-average intrinsic + Number of shares contractual life exercise price value + (in millions) (in years) (in millions) +Options Outstanding 15.4 4.78 $ 33.11 $ 214 +Options Exercisable 11.8 3.84 $ 30.01 $ 194 +Options Expected to Vest 3.5 7.87 $ 43.24 $ 20 + + +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_187.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_187.txt new file mode 100644 index 0000000000000000000000000000000000000000..d26d9145f8493687be46641904d73117c5aad436 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_187.txt @@ -0,0 +1,60 @@ + +83 +Restricted stock + +Changes in restricted stock outstanding under the restricted stock plans are summarized below: + + + Restricted + shares Weighted-average + outstanding grant-date + (in millions) fair value +Outstanding, year-end 2020 7.8 $ 28.46 +Granted 3.9 $ 37.29 +Lapsed (4.0) $ 29.58 +Canceled or Forfeited (0.5) $ 31.31 + +Outstanding, year-end 2021 7.2 $ 32.52 +Granted 3.0 $ 50.50 +Lapsed (4.0) $ 32.16 +Canceled or Forfeited (0.4) $ 38.32 + +Outstanding, year-end 2022 5.8 $ 41.76 +Granted 3.5 $ 47.06 +Lapsed (3.1) $ 40.37 +Canceled or Forfeited (0.3) $ 45.32 + +Outstanding, year-end 2023 5.9 $ 45.49 + +The weighted-average grant date fair value of stock options granted during 2023, 2022 and 2021 was $15.17, $15.91 +and $8.54, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black- +Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes +accounting judgment and financial estimates, including the term option holders are expected to retain their stock options +before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the +term and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the +calculation of fair value would produce fair values for stock option grants that could be different than those used to +record stock-based compensation expense in the Consolidated Statements of Operations. The decrease in the fair value +of the stock options granted during 2023, compared to 2022, resulted primarily from decreases in the Company’s share +price, partially offset by an increase in the weighted-average risk-free interest rate. The increase in the fair value of the +stock options granted during 2022, compared to 2021, resulted primarily from increases in the Company’s share price, +the weighted-average expected volatility, and an increase in the weighted-average risk-free interest rate. + +The following table reflects the weighted-average assumptions used for grants awarded to option holders: + + + 2023 2022 2021 +Weighted average expected volatility 31.14 % 30.47 % 28.52 % +Weighted average risk-free interest rate 4.09 % 2.09 % 1.21 % +Expected dividend yield 2.11 % 1.82 % 2.00 % +Expected term (based on historical results) 7.1 years 7.2 years 7.2 years + +The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date, +continuously compounded, which matures at a date that approximates the expected term of the options. The dividend +yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon +historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon +historical exercise and cancellation experience. + +Total stock compensation recognized in 2023, 2022 and 2021 was $172, $190 and $203, respectively. Stock option +compensation recognized in 2023, 2022 and 2021 was $17, $19 and $20, respectively. Restricted shares compensation +recognized in 2023, 2022 and 2021 was $155, $171 and $183, respectively. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_188.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f5e7945f1a404d34906e378fcbd1507e73dff55 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,59 @@ + +84 +The total intrinsic value of stock options exercised was $55, $159 and $121 in 2023, 2022 and 2021, respectively. +The total amount of cash received in 2023 by the Company from the exercise of stock options granted under share-based +payment arrangements was $50. As of February 3, 2024, there was $212 of total unrecognized compensation expense +remaining related to non-vested share-based compensation arrangements granted under the Plans. This cost is expected +to be recognized over a weighted-average period of approximately two years. The total fair value of options that vested +was $16, $19 and $20 in 2023, 2022 and 2021, respectively. + +Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds +received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common +shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2023, the Company +repurchased approximately one million common shares in such a manner. + +12. COMMITMENTS AND CONTINGENCIES + +The Company continuously evaluates contingencies based upon the best available evidence. + +The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of +contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the +Company’s estimates, future earnings will be charged or credited. + +The principal contingencies are described below: + +Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other +workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium +plans, deductible plans and self-insured retention plans. The liability for workers’ compensation risks is accounted for +on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for +loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance +companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss +allowances, based upon actuarially determined estimates. + +Litigation — Various claims and lawsuits arising in the norm al course of business, including personal injury, +contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the +Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. +Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of +success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s +financial position, results of operations, or cash flows. + +The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation +and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is +probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial +uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not +material to the Company. It remains possible that despite management’s current belief, material differences in actual +outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on +the Company’s financial condition, results of operations, or cash flows. + +The Company is one of dozens of companies that have been named in various lawsuits alleging that defendants +contributed to create a public nuisance through the distribution and dispensing of opioids. + +On September 8, 2023, the Company announced that it reached an agreement in principle with plaintiffs to settle the +majority of opioid claims that have been or could be brought against Kroger by states in which they operate, +subdivisions, and Native American tribes. Along with the execution of certain non-monetary conditions that remain +under discussion, the Company has agreed to pay up to $1,200 to states and subdivisions and $36 to Native American +tribes in funding for abatement efforts, and approximately $177 to cover attorneys’ fees and costs. States, subdivisions, +and the Native American tribes will have an opportunity to opt-in to participate in the settlement, and the Company will +have full discretion to determine whether there is sufficient participation for the settlement to become effective. If all +conditions are satisfied, the settlement would allow for the full resolution of all claims on behalf of participating states, +subdivisions and Native American tribes and is not an admission of any wrongdoing or liability. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_189.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..83b5b43ae98f81daa364f79f457adb9950faa148 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,38 @@ + +85 +As a result, the Company concluded that the agreement in principle for the settlement of opioid claims was +probable, and for which the related loss was reasonably estimable. Accordingly, in 2023, the Company recognized +opioid settlement charges of $1,413, $1,113 net of tax, relating to the nationwide opioid settlement framework. This +charge is included in “Operating, general and administrative” in the Company’s Consolidated Statement of Operations. + +The agreement in principle described above includes payments of approximately $1,236 and $177, in equal +installments over 11 years and 6 years, respectively. As of February 3, 2024, the Company recorded $284 and $1,129 of +the estimated settlement liability in “Other current liabilities” and “Other long-term liabilities,” respectively, in the +Company’s Consolidated Balance Sheets. The current portion of the estimated settlement liability is recorded in +“Accrued expenses” and the long-term portion of the estimated settlement liability is recorded in “Other” within +“Changes in operating assets and liabilities” in the Company’s Consolidated Statement of Cash Flows for fiscal year +2023. + +Because of the conditions remaining to satisfy, the Company cannot predict if the agreement will become effective, +and whether unfavorable developments may occur. The amount of the actual loss may differ materially from the accrual +estimate recorded as of February 3, 2024. + +Additionally, in 2023, the Company recorded a charge of $62 relating to a settlement of opioid litigation claims with +the State of West Virginia. The agreed upon settlement framework resolves all opioid lawsuits and claims by the West +Virginia Attorney General. + +In 2022, the Company recorded a charge of $85 relating to a settlement of opioid litigation claims with the State of +New Mexico. The agreed upon settlement framework allocates $85 among various constituents related to the state of +New Mexico. This settlement agreement resolved all opioid lawsuits and claims by the state of New Mexico against the +Company. + +The foregoing settlements are not admissions of wrongdoing or liability by the Company and the Company will +continue to vigorously defend against any other claims and lawsuits relating to opioids that the settlements do not +resolve. + +Assignments — The Company is contingently liable for leases that have been assigned to various third parties in +connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the +leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s +assignments among third parties, and various other remedies available, the Company believes the likelihood that it will +be required to assume a material amount of these obligations is remote. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_19.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea4932bece5c352482c805a09d4024f046e46ffa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,48 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_190.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_190.txt new file mode 100644 index 0000000000000000000000000000000000000000..c93a7052de357a9f9489f69bd257e84cc6067231 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_190.txt @@ -0,0 +1,44 @@ + +86 +13. STOCK + +Preferred Shares + +The Company has authorized five million shares of voting cumulative preferred shares; two million shares were +available for issuance at February 3, 2024. The shares have a par value of $100 per share and are issuable in series. + +Common Shares + +The Company has authorized two billion common shares, $1 par value per share. + +Common Stock Repurchase Program + +The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act +of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made +no open market purchases in 2023. The Company made open market purchases totaling $821 and $1,422 under these +repurchase programs in 2022 and 2021, respectively. + +In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common +shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds +from stock option exercises and the related tax benefit. The Company repurchased approximately $62, $172 and $225 +under the stock option program during 2023, 2022 and 2021, respectively. + +14. COMPANY- SPONSORED BENEFIT PLANS + +The Company administers non-contributory defined benefit retirement plans for some non-union employees and +union-represented employees as determined by the terms and conditions of collective bargaining agreements. These +include several qualified pension plans (the “Qualified Plans”) and non-qualified pension plans (the “Non-Qualified +Plans”). The Non-Qualified Plans pay benefits to any employee that earns in excess of the maximum allowed for the +Qualified Plans by Section 415 of the Internal Revenue Code. The Company only funds obligations under the Qualified +Plans. Funding for the company-sponsored pension plans is based on a review of the specific requirements and on +evaluation of the assets and liabilities of each plan. + +In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. +Based on an employee’s age, years of service and position with the Company, the employee may be eligible for retiree +health care benefits. Funding of retiree health care benefits occurs as claims or premiums are paid. + +The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial +gains or losses and prior service credits that have not yet been recognized as part of net periodic benefit cost are required +to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and +obligations as of January 31, which is the month-end that is closest to its fiscal year-ends. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_191.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_191.txt new file mode 100644 index 0000000000000000000000000000000000000000..3265123334fcf667fcdb93c41738584f07ec7b24 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_191.txt @@ -0,0 +1,60 @@ + +87 +Amounts recognized in AOCI as of February 3, 2024 and January 28, 2023 consist of the following (pre-tax): + + + Pension Benefits Other Benefits Total + 2023 2022 2023 2022 2023 2022 +Net actuarial loss (gain) $ 817 $ 785 $ (92) $ (108) $ 725 $ 677 +Prior service credit — — (11) (23) (11) (23) + +Total $ 817 $ 785 $ (103) $ (131) $ 714 $ 654 + +Other changes recognized in other comprehensive income (loss) in 2023, 2022 and 2021 were as follows (pre-tax): + + + Pension Benefits Other Benefits Total + 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Incurred net actuarial loss (gain) $ 42 $ 101 $ (109) $ 4 $ 15 $ 2 $ 46 $ 116 $ (107) +Amortization of prior service credit — — — 11 13 12 11 13 12 +Amortization of net actuarial gain (loss) (10) (31) (126) 13 11 17 3 (20) (109) +Total recognized in other comprehensive +income (loss) $ 32 $ 70 $ (235) $ 28 $ 39 $ 31 $ 60 $ 109 $ (204) + +Total recognized in net periodic benefit cost +and other comprehensive income (loss) $ 36 $ 58 $ (164) $ 15 $ 25 $ 10 $ 51 $ 83 $ (154) + +Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans +recorded in the Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted-average +assumptions and components of net periodic benefit cost follow: + + + Pension Benefits + Qualified Plans Non-Qualified Plans Other Benefits + 2023 2022 2023 2022 2023 2022 +Change in benefit obligation: +Benefit obligation at beginning of fiscal year $ 2,463 $ 2,977 $ 271 $ 325 $ 165 $ 150 +Service cost 17 8 — — 4 5 +Interest cost 116 92 13 10 8 5 +Plan participants’ contributions 4 4 — — 9 12 +Actuarial (gain) loss (42) (421) (3) (40) — 8 +Plan settlements (11) (33) (1) (2) — — +Benefits paid (165) (159) (24) (22) (21) (22) +Other (14) (5) — — 3 7 + +Benefit obligation at end of fiscal year $ 2,368 $ 2,463 $ 256 $ 271 $ 168 $ 165 + +Change in plan assets: +Fair value of plan assets at beginning of fiscal year $ 2,496 $ 3,096 $ — $ — $ — $ — +Actual return on plan assets 65 (409) — — — — +Employer contributions 27 2 26 24 12 10 +Plan participants’ contributions 4 4 — — 9 12 +Plan settlements (11) (33) (2) (2) — — +Benefits paid (165) (159) (24) (22) (21) (22) +Other (17) (5) — — — — + +Fair value of plan assets at end of fiscal year $ 2,399 $ 2,496 $ — $ — $ — $ — +Funded (unfunded) status and net asset and liability +recognized at end of fiscal year $ 31 $ 33 $ (256) $ (271) $ (168) $ (165) + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_192.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_192.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1db795f3353615d5afa2bd7e2a8f4bc94e92559 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_192.txt @@ -0,0 +1,52 @@ + +88 +As of February 3, 2024, other assets and other current liabilities include $44 and $36, respectively, of the net asset +and liability recognized for the above benefit plans. As of January 28, 2023, other assets and other current liabilities +include $69 and $36, respectively, of the net asset and liability recognized for the above benefit plans. Pension plan +assets do not include common shares of The Kroger Co. + +The following table outlines the weighted average assumptions associated with pension and other benefit costs for +2023, 2022 and 2021: + + + Pension Benefits Other Benefits +Weighted average assumptions 2023 2022 2021 2023 2022 2021 +Discount rate — Benefit obligation 5.27 % 4.90 % 3.17 % 5.21 % 4.86 % 3.01 % +Discount rate — Net periodic benefit +cost 4.90 % 3.17 % 2.72 % 4.86 % 3.01 % 2.43 % +Expected long-term rate of return on +plan assets 5.50 % 5.50 % 5.50 % +Rate of compensation increase — Net +periodic benefit cost 2.57 % 3.05 % 3.03 % +Rate of compensation increase — +Benefit obligation 2.52 % 2.57 % 3.05 % +Cash Balance plan interest crediting rate 3.30 % 3.30 % 3.30 % + +The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be +effectively settled. They take into account the timing and amount of benefits that would be available under the plans. +The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from +coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that +produce the same present value of cash flows. The selection of the 5.27% and 5.21% discount rates as of year-end 2023 +for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better +rating constructed with the assistance of an outside consultant. A 100-basis point increase in the discount rate would +decrease the projected pension benefit obligation as of February 3, 2024, by approximately $210. + +The Company’s assumed pension plan investment return rate was 5.50% in 2023, 2022, and 2021. The value of all +investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2023, +net of investment management fees and expenses, increased 8.2% and for fiscal year 2023 investments increased 2.8%. +Historically, the Company’s pension plans’ average rate of return was 4.8% for the 10 calendar years ended December +31, 2023, net of all investment management fees and expenses. For the past 20 years, the Company’s pension plans’ +average annual rate of return has been 7.1%. To determine the expected rate of return on pension plan assets held by the +Company, the Company considers current and forecasted plan asset allocations as well as historical and forecasted rates +of return on various asset categories. + +The Company calculates its expected return on plan assets by using the market-related value of plan assets. The +market-related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on +plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each +plan year. Gains or losses on plan assets are recognized evenly over a five-year period. Using a different method to +calculate the market-related value of plan assets would provide a different expected return on plan assets. + +The pension benefit unfunded status decreased in 2023, compared to 2022, due primarily to an increase in discount +rates, which lowered the benefit obligation more than the plan’s lower actual rate of return versus expected rate of return +on assets. The Company’s Qualified Plans were fully funded as of February 3, 2024 and January 28, 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_193.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_193.txt new file mode 100644 index 0000000000000000000000000000000000000000..7d52b8e043ce48414796a4de156023b9cd1362bf --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_193.txt @@ -0,0 +1,51 @@ + +89 +The following table provides the components of the Company’s net periodic benefit costs for 2023, 2022 and 2021: + + + Pension Benefits + Qualified Plans Non-Qualified Plans Other Benefits + 2023 2022 2021 2023 2022 2021 2023 2022 2021 +Components of net periodic benefit +cost: +Service cost $ 17 $ 8 $ 12 $ — $ — $ — $ 4 $ 5 $ 4 +Interest cost 116 92 92 13 10 9 8 5 4 +Expected return on plan assets (150) (153) (168) — — — — — — +Amortization of: +Prior service credit — — — — — — (11) (13) (12) +Actuarial (gain) loss 5 22 33 4 5 6 (13) (11) (17) +Settlement loss recognized 1 4 87 — — — — — — +Other — — (1) (2) — 1 (1) — — +Net periodic benefit cost $ (11) $ (27) $ 55 $ 15 $ 15 $ 16 $ (13) $ (14) $ (21) + +The following table provides the projected benefit obligation (“PBO”) and the fair value of plan assets for those +company-sponsored pension plans with projected benefit obligations in excess of plan assets: + + + Qualified Plans Non-Qualified Plans + 2023 2022 2023 2022 +PBO at end of fiscal year $ 159 $ 176 $ 256 $ 271 +Fair value of plan assets at end of year $ 150 $ 141 $ — $ — + +The following table provides the accumulated benefit obligation (“ABO”) and the fair value of plan assets for those +company-sponsored pension plans with accumulated benefit obligations in excess of plan assets: + + + Qualified Plans Non-Qualified Plans + 2023 2022 2023 2022 +ABO at end of fiscal year $ 159 $ 176 $ 256 $ 271 +Fair value of plan assets at end of year $ 150 $ 141 $ — $ — + +The following table provides information about the Company’s estimated future benefit payments: + + + Pension Other + Benefits Benefits +2024 $ 210 $ 13 +2025 $ 210 $ 14 +2026 $ 211 $ 15 +2027 $ 210 $ 16 +2028 $ 208 $ 16 +2029 — 2033 $ 982 $ 80 + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_194.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_194.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc0ae9ab2978ec08383f62d20c0fb1d93440afeb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_194.txt @@ -0,0 +1,47 @@ + +90 +The following table provides information about the target and actual pension plan asset allocations as of February 3, +2024: + + + Actual + Target allocations Allocations + 2023 2023 2022 +Pension plan asset allocation +Global equity securities 5.0 % 5.4 % 4.9 % +Investment grade debt securities 78.0 78.9 75.8 +High yield debt securities 3.0 3.1 2.9 +Private equity 10.0 8.5 9.8 +Hedge funds 2.0 2.4 2.3 +Real estate 2.0 1.7 1.8 +Other — — 2.5 + +Total 100.0 % 100.0 % 100.0 % + +Investment objectives, policies and strategies are set by the Retirement Benefit Plan Management Committee (the +“Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants +and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of +the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the +investment objectives is long-term in nature and plan assets are managed on a going-concern basis. + +Investment objectives and guidelines specifically applicable to each manager of assets are established and reviewed +annually. Derivative instruments may be used for specified purposes, including rebalancing exposures to certain asset +classes. Any use of derivative instruments for a purpose or in a manner not specifically authorized is prohibited, unless +approved in advance by the Committee. + +The target allocations shown for 2023 were established at the beginning of 2023 based on the Company’s liability- +driven investment (“LDI”) strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long- +term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments +to more closely match the duration of the plan liability. + +The Company did not make any significant contributions to its company-sponsored pension plans in 2023, and the +Company is not required to make any contributions to these plans in 2024. If the Company does make any contributions +in 2024, the Company expects these contributions will decrease its required contributions in future years. Among other +things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations +and future changes in legislation, will determine the amounts of any contributions. The Company expects 2024 net +periodic benefit costs for company-sponsored pension plans to be approximately $(2). + +Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The +Company used a 6.90% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.00% +ultimate health care cost trend rate in 2046, to determine its expense. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_195.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_195.txt new file mode 100644 index 0000000000000000000000000000000000000000..bc9575e1816f34905cdadf613311f0a27f336b29 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_195.txt @@ -0,0 +1,47 @@ + +91 +The following tables, set forth by level within the fair value hierarchy, present the Qualified Plans’ assets at fair +value as of February 3, 2024 and January 28, 2023: + +Assets at Fair Value as of February 3, 2024 + + + Quoted Prices in Significant + Active Markets for Significant Othe r Unobservable Assets + Identical Assets Observable Inputs Inputs Measured + (Level 1) (Level 2) (Level 3) at NAV Total +Cash and cash equivalents $ 151 $ — $ — $ — $ 151 +Corporate Stocks 2 — — — 2 +Corporate Bonds — 1,092 — — 1,092 +U.S. Government Securities — 140 — — 140 +Mutual Funds 108 — — — 108 +Collective Trusts — — — 513 513 +Hedge Funds — — 29 29 58 +Private Equity — — — 203 203 +Real Estate — — 24 15 39 +Other — 93 — — 93 +Total $ 261 $ 1,325 $ 53 $ 760 $ 2,399 + +Assets at Fair Value as of January 28, 2023 + + + Quoted Prices in Significant + Active Markets for Significant Othe r Unobservable Assets + Identical Assets Observable Inputs Inputs Measured + (Level 1) (Level 2) (Level 3) at NAV Total +Cash and cash equivalents $ 178 $ — $ — $ — $ 178 +Corporate Stocks 4 — — — 4 +Corporate Bonds — 1,113 — — 1,113 +U.S. Government Securities — 115 — — 115 +Mutual Funds 124 — — — 124 +Collective Trusts — — — 514 514 +Hedge Funds — — 31 28 59 +Private Equity — — — 248 248 +Real Estate — — 28 16 44 +Other — 97 — — 97 +Total $ 306 $ 1,325 $ 59 $ 806 $ 2,496 + +Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been +classified in the fair value hierarchy. The fair value amounts presented for these investments in the preceding tables are +intended to permit reconciliation of the fair value hierarchies to the total fair value of plan assets. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_196.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_196.txt new file mode 100644 index 0000000000000000000000000000000000000000..0700d2a958d5100c4fe88f398348558ad150c201 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_196.txt @@ -0,0 +1,59 @@ + +92 +For measurements using significant unobservable inputs (Level 3) during 2023 and 2022, a reconciliation of the +beginning and ending balances is as follows: + + + Hedge Funds Real Estate +Ending balance, January 29, 2022 $ 39 $ 37 +Contributions into Fund — 1 +Realized gains — 12 +Unrealized gains (3) (6) +Distributions (5) (16) + +Ending balance, January 28, 2023 31 28 +Contributions into Fund — 1 +Realized gains 1 — +Unrealized gains 1 (3) +Distributions (4) (2) + +Ending balance, February 3, 2024 $ 29 $ 24 + +See Note 7 for a discussion of the levels of the fair value hierarchy. The assets’ fair value measurement level above +is based on the lowest level of any input that is significant to the fair value measurement. + +The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in +the above tables: + +• Cash and cash equivalents: The carrying value approximates fair value. + +• Corporate Stocks: The fair values of these securities are based on observable market quotations for identical +assets and are valued at the closing price reported on the active market on which the individual securities are +traded. + +• Corporate Bonds: The fair values of these securities are primarily based on observable market quotations for +similar bonds, valued at the closing price reported on the active market on which the individual securities are +traded. When such quoted prices are not available, the bonds are valued using a discounted cash flow approach +using current yields on similar instruments of issuers with similar credit ratings, including adjustments for +certain risks that may not be observable, such as credit and liquidity risks. + +• U.S. Government Securities: Certain U.S. Government securities are valued at the closing price reported in the +active market in which the security is traded. Other U.S. government securities are valued based on yields +currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not +available for similar securities, the security is valued under a discounted cash flow approach that maximizes +observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that +may not be observable, such as credit and liquidity risks. + +• Mutual Funds: The fair values of these securities are based on observable market quotations for identical assets +and are valued at the closing price reported on the active market on which the individual securities are traded. + +• Collective Trusts: The collective trust funds are public investment vehicles valued using a Net Asset Value +(NAV) provided by the manager of each fund. These assets have been valued using NAV as a practical +expedient. + +• Hedge Funds: The Hedge funds classified as Level 3 include investments that are not readily tradeable and have +valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based +on information provided by the fund managers or the general partners. Therefore, these assets are classified as +Level 3. Certain other hedge funds are private investment vehicles valued using a NAV provided by the +manager of each fund. These assets have been valued using NAV as a practical expedient. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_197.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_197.txt new file mode 100644 index 0000000000000000000000000000000000000000..aced865f569c95eece2cbd0fd7ddf5961144b82d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_197.txt @@ -0,0 +1,52 @@ + +93 +• Private Equity: Private Equity investments are valued based on the fair value of the underlying securities within +the fund, which include investments both traded on an active market and not traded on an active market. For +those investments that are traded on an active market, the values are based on the closing price reported on the +active market on which those individual securities are traded. For investments not traded on an active market, +or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, +including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund +manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on +audits of the private equity fund financial statements; such adjustments are reflected in the fair value of the +plan’s assets. + +• Real Estate: Real estate investments include investments in real estate funds managed by a fund manager. +These investments are valued using a variety of unobservable valuation methodologies, including discounted +cash flow, market multiple and cost valuation approaches. The valuations for these investments are not based +on readily observable inputs and are classified as Level 3 investments. Certain other real estate investments are +valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a +practical expedient. + +The methods described above may produce a fair value calculation that may not be indicative of net realizable value +or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and +consistent with other market participants, the use of different methodologies or assumptions to determine the fair value +of certain financial instruments could result in a different fair value measurement. + +The Company contributed and expensed $322, $315 and $289 to employee 401(k) retirement savings accounts in +2023, 2022 and 2021, respectively. The 401(k) retirement savings account plans provide to eligible employees both +matching contributions and automatic contributions from the Company based on participant contributions, compensation +as defined by the plan and length of service. + +15. MULTI-EMPLOYER PENSION PLANS + +The Company contributes to various multi-employer pension plans based on obligations arising from collective +bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their +service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are +appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of +benefits to be provided to participants as well as for such matters as the investment of the assets and the administration +of the plans. + +The Company recognizes expense in connection with these plans as contributions are funded or when commitments +are probable and reasonably estimable, in accordance with GAAP. The Company made cash contributions to these plans +of $635 in 2023, $620 in 2022 and $1,109 in 2021. The decrease in 2023 and 2022, compared to 2021, is due to the +contractual payments the Company made in 2021 related to its commitments established for the restructuring of certain +multi-employer pension plan agreements. + +The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans +as it relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of +the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its +associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to +help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The +commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since +these off-balance sheet commitments are typically considered in the Company’s investment grade debt rating. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_198.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..af44ed90eceac1d85dc30bb5d427f5ad92e75433 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,41 @@ + +94 +The Company is currently designated as the named fiduciary of the United Food and Commercial Workers +(“UFCW”) Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension +Fund and has sole investment authority over these assets. Due to opportunities arising, the Company has restructured +certain multi-employer pension plans. The significant effects of these restructuring agreements recorded in our +Consolidated Financial Statements are: + +• In 2022, the Company incurred a $25 charge, $19 net of tax, for obligations related to withdrawal liabilities for +certain multi-employer pension funds. + +• In 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities +from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company transferred $449, +$344 net of tax, in net accrued pension liabilities and prepaid escrow funds to fulfill obligations for past service +for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW +Consolidated Pension Plan and will be paid evenly over seven years. + +The risks of participating in multi-employer pension plans are different from the risks of participating in single- +employer pension plans in the following respects: + +• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees +of other participating employers. + +• If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such +withdrawing employer may be borne by the remaining participating employers. + +• If the Company stops participating in some of its multi-employer pension plans, the Company may be required +to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to +as a withdrawal liability. + +The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan +Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The +most recent Pension Protection Act Zone Status available in 2023 and 2022 is for the plan’s year-end at December 31, +2022 and December 31, 2021, respectively. Among other factors, generally, plans in the red zone are less than 65 +percent funded, plans in the yellow zone are less than 80 percent funded and plans in the green zone are at least 80 +percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement +plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the +information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2022 and +December 31, 2021. The multi-employer contributions listed in the table below are the Company’s multi-employer +contributions made in fiscal years 2023, 2022 and 2021. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_199.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f001de9165d6bfdc1c39a434d34503bd3225464 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,47 @@ + +95 +The following table contains information about the Company’s multi-employer pension plans: + + + FIP/RP + Pension Protection Status + EIN / Pension Act Zone Status Pending / Multi-Employer Contributions Surcharge +Pension Fund Plan Number 2023 2022 Implemented 2023 2022 2021 Imposed (5) +SO CA UFCW Unions & Food +Employers Joint Pension Trust Fund(1)(2) 95-1939092 - 001 Red Red Implemented $ 83 $ 84 $ 83 No +Desert States Employers & UFCW +Unions Pension Plan(1) 84-6277982 - 001 Green Green No 19 20 22 No +Sound Variable Annuity Pension +Trust(1)(3) 86-3278029 - 001 Green Green No 15 14 24 No +Rocky Mountain UFCW Unions and +Employers Pension Plan(1) 84-6045986 - 001 Green Green No 27 27 29 No +Oregon Retail Employees Pension Plan(1) 93-6074377 - 001 Green Red Implemented 10 9 10 No +Bakery and Confectionary Union & +Industry International Pension Fund(1) 52-6118572 - 001 Red Red Implemented 7 7 8 No +Retail Food Employers & UFCW Local +711 Pension(1) 51-6031512 - 001 Red Red Implemented 11 11 11 No +UFCW International Union — Industry +Variable Annuity Pension Plan(4) 51-6055922 - 001 Green Green No 263 282 550 No +Western Conference of Teamsters +Pension Plan 91-6145047 - 001 Green Green No 39 40 37 No +Central States, Southeast & Southwest +Areas Pension Plan 36-6044243 - 001 Red Red Implemented 40 34 37 No +UFCW Consolidated Pension Plan(1) 58-6101602 – 001 Green Green No 98 56 243 No +IBT Consolidated Pension Plan(1)(6) 82-2153627 - 001 N/A N/A No 7 7 29 No +Other 16 29 26 +Total Contributions $ 635 $ 620 $ 1,109 + +(1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total +contributions received by the pension funds. +(2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2023 and +March 31, 2022. +(3) The 2022 information for this fund was obtained from the Form 5500 filed for the plan’s year-end at September 30, +2021. +(4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2022 and +June 30, 2021. +(5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a +collective bargaining agreement that is not in compliance with a rehabilitation plan. As of February 3, 2024, the +collective bargaining agreements under which the Company was making contributions were in compliance with +rehabilitation plans adopted by the applicable pension fund. +(6) The plan was formed after 2006, and therefore is not subject to zone status certifications. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_2.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6922b8ec516685f824b70d70b4b4adf1a53e0 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_20.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a869a85dc1168de632937464371498311a50f03 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,50 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_200.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f1efd29ab0bfa18447d186a0199db688c5e0527 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,65 @@ + +96 +The following table describes (a) the expiration date of the Company’s collective bargaining agreements and (b) the +expiration date of the Company’s most significant collective bargaining agreements for each of the material multi- +employer funds in which the Company participates: + + + Expiration Date + of Collective Most Significant Collective + Bargaining Bargaining Agreements(1) +Pension Fund Agreements Count Expiration +SO CA UFCW Unions & Food Employers Joint Pension Trust +Fund June 2024 to March 2025 1 March 2025 +UFCW Consolidated Pension Plan February 2024 to August 2027 3 February 2024 to March 2026 +Desert States Employers & UFCW Unions Pension Plan June 2025 to March 2026 1 March 2026 +Sound Variable Annuity Pension Trust January 2024 (2) to April 2026 4 May 2025 +Rocky Mountain UFCW Unions and Employers Pension Plan January 2025 1 January 2025 +Oregon Retail Employees Pension Plan August 2024 to March 2026 2 August 2024 to July 2025 +Bakery and Confectionary Union & Industry International +Pension Fund April 2024 to September 2025 4 May 2024 to October 2024 +Retail Food Employers & UFCW Local 711 Pension January 2024 (2) to April 2026 1 March 2025 +UFCW International Union — Industry Variable Annuity +Pension Plan June 2025 1 June 2025 +Western Conference of Teamsters Pension Plan April 2024 to May 2027 4 April 2024 to September 2025 +IBT Consolidated Pension Plan September 2024 to September 2027 2 September 2024 to September 2027 + +(1) This column represents the number of significant collective bargaining agreements and their expiration date for each +of the Company’s pension funds listed above. For the purposes of this table, the “significant collective bargaining +agreements” are the largest based on covered employees that, when aggregated, cover the majority of the employees +for which we make multi-employer contributions for the referenced pension fund. +(2) Certain collective bargaining agreements are operating under an extension. + +Based on the most recent information available to it, the Company believes the present value of actuarial accrued +liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits. Moreover, +if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could +trigger a withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a +liability exists and it can be reasonably estimated. + +The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits +to active and retired participants. Total contributions made by the Company to these other multi-employer health and +welfare plans were approximately $1,182 in 2023, $1,129 in 2022 and $1,197 in 2021. + +16. PROPOSED MERGER WITH ALBERTSONS COMPANIES, INC. + +As previously disclosed, on October 13, 2022, the Company entered into a merger agreement with Albertsons +Companies, Inc. (“Albertsons”) pursuant to which all of the outstanding shares of Albertsons common and preferred +stock (on an as converted basis) automatically will be converted into the right to receive $34.10 per share, subject to +certain reductions described below. + +The per share cash purchase price of $34.10 payable to Albertsons shareholders in the merger would be reduced by +an amount equal to $6.85, which is the per share amount of a special pre-closing cash dividend that was paid on January +20, 2023 to Albertsons shareholders of record as of October 24, 2022. The adjusted per share cash purchase price is +expected to be $27.25. + +In connection with obtaining the requisite regulatory clearance necessary to consummate the transaction, the +Company and Albertsons expect to make store divestitures. Subject to the outcome of the divestiture process and as +described in the merger agreement, Albertsons was prepared to establish an Albertsons subsidiary (“SpinCo”). SpinCo +would be spun-off to Albertsons shareholders immediately prior to the closing of the merger and operate as a standalone +public company. As described in more detail below, on September 8, 2023, the Company and Albertsons announced that +they entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC (“C&S”). As a result of the +comprehensive divestiture plan announced with C&S, the Company has exercised its right under the merger agreement +to sell what would have been the SpinCo business to C&S. Consequently, the spin-off previously contemplated by the +Company and Albertsons is no longer a requirement under the merger agreement and will no longer be pursued by the +Company and Albertsons. +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_21.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bad8a31ff37c391201c0c6451d5352a0fc746f8 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,7 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_22.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6d013aaf7bc5f381384cd5a591daa0b1aa884a1 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,9 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_23.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..68d5990e7cabefc135000d005149ecd9f0428db9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,75 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_24.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..9003669563d5a34e56c53b6e25b47133955f27eb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,60 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_25.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..502a7ddaf381a05cbc0a7c5c4ddf6737f483c3a2 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,45 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_26.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc4bccc7ec99b2e10807543d5dcae31123c35213 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,53 @@ +24 + + +Elaine L. Chao +Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017 +until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor +from January 2001 until January 2009, and was the first woman of Asian +American & Pacific Islander heritage to serve in a President’s cabinet in history. +Previously, Ms. Chao was President and CEO of United Way of America, +Director of the Peace Corps, and a banker with Citicorp and BankAmerica +Capital Markets Group. She earned her M.B.A. from Harvard Business School +and has served on a number of Fortune 500 boards. She currently serves on the +Board of Directors of ChargePoint Holdings, Inc., which is a new economy +technology company in the mobile sector focusing on sustainable and +environmentally friendly transportation. In the past five years, she also served as +a director of Embark Technology, Inc. and Hyliion Holdings Corp. Recognized +for her extensive record of accomplishments and public service, she is also the +recipient of 38 honorary doctorate degrees. In her capacity as a director on +numerous public boards while out of government, she has advocated for +innovation and business transformations. She has also been a director on many +private and nonprofit boards, including Harvard Business School Board of +Dean’s Advisors and Global Advisory Board, Los Angeles Organizing +Committee for the Olympic and Paralympic Games 2028, and a trustee of the +Kennedy Center for the Performing Arts. +Ms. Chao brings to the Board extensive experience in the public, private , and +non-profit sectors. In her two cabinet positions, she led high-profile +organizations, navigating complex regulatory and public policy environments, +and she provides the Board with valuable insight on strategy, logistics, +transportation, and workforce issues. Under her leadership, the Department of +Labor set up a record number of health and safety partnerships with labor +unions. While she was Director of the Peace Corps, she launched the first Peace +Corps programs in the newly independent Baltic states and the former republics +of the former Soviet Union, including Ukraine. This experience leading social +impact at scale is of value to the Board in her role as an independent director +and member of the Public Responsibilities Committee. Ms. Chao’s leadership +and governance expertise gained from her government service, nonprofits, and +public company boards is of value to the Board. +Age +71 + Director Since +2021 +Committees: +Corporate Governance +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_27.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..b172b37a5e8c3bef1002795205a64a9c9d41d4df --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +25 + + +Anne Gates +Ms. Gates was President of MGA Entertainment, Inc., a privately-held +developer, manufacturer, and marketer of toy and entertainment products for +children, from 2014 until her retirement in 2017. Ms. Gates held roles of +increasing responsibility with The Walt Disney Company from 1992 -2012. Her +roles included Chief Financial Officer for Disney Consumer Products (DCP) +and Managing Director, DCP, Europe, and emerging markets. She is currently a +director of Tapestry, Inc., where she serves as Chair of the Governance +Committee, serves on the Audit Committee, and is on the Tapestry Foundation +Board. She is also a director of Raymond James Financial, Inc., where she is the +Chair of the Corporate Governance ESG Committee. She is also a member of +the Boards of the Salzburg Global Seminar, PBS SoCal, Save the Children, and +the Packard Foundation, one of the largest global foundations focused on +environmental and other key ESG issues. +Ms. Gates has over 25 years of experience in the retail and consumer products +industry. She brings to Kroger financial expertise gained while serving as +President of MGA and CFO of a division of The Walt Disney Company. +Ms. Gates has a broad business background in finance, marketing, strategy, and +business development, including international business. As the chair of the +Corporate Governance and ESG Committee at Raymond James Financial, Inc., +she oversees their code of ethics, Board composition, including diversity, +environmental policies and programs, sustainability targets and ESG reporting +which are aligned with SASB, shareholder proposals, and shareholder +engagements efforts, including social justice, community relations, and +charitable giving. Ms. Gates is also Chair of the Tapestry Governance +Committee, which also includes oversight of ESG responsibilities. These +experiences are of particular value to the Board in her role as an independent +director and member of the Corporate Governance Committee. Her financial +leadership and consumer products expertise is of particular value to the Board. +Ms. Gates has been designated an Audit Committee financial expert and serves +as Chair of the Audit Committee. +Age +64 + Director Since +2015 +Committees: +Audit1 +Corporate Governance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_28.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe6bf1aea53ff50da7437a5167e7cdd6c64449ee --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,78 @@ +26 + + +Karen M. Hoguet +Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from +October 1997 until July 2018 when she became a strategic advisor to the Chief +Executive Officer until her retirement in 2019. Previously, she served on the +boards of Nielsen Holdings plc, The Chubb Corporation, and Cincinnati Bell as +the chairman of the Audit Committee and a member of the Finance Committee, +member of the Audit and Finance Committee, and the Audit Committee, +respectively. She also serves on the board of UCHealth. +Ms. Hoguet has over 35 years of broad financial and operational leadership +experience within the omnichannel retail sector. She has a proven track record +of success in driving transformations, delivering strong financial performance, +and forming strong relationships with investors and industry analysts. She has +extensive knowledge across all areas of finance, including financial planning, +investor relations, M&A, accounting, treasury and tax, as well as strategic +planning, credit card services and real estate. Ms. Hoguet played a critical role +in the successful turnaround of Federated Department Stores, from bankruptcy +to an industry leading omnichannel retailer, which was accomplished through +acquisitions, divestiture and other strategic changes including building an +omnichannel model and developing a new strategic approach to real estate. Her +long tenure as a senior executive of a publicly traded company with financial, +audit, strategy, and risk oversight experience is of value to the Board as is her +public company experience, both as a long serving executive, and as a board +member. In addition, her strong business acumen, understanding of diverse +cross-functional issues, and ability to identify potential risks and opportunities +are also of value to the Board. Ms. Hoguet has been designated an Audit +Committee financial expert and serves as Chair of the Finance Committee. +Age +67 + Director Since +2019 +Committees: +Audit +Finance1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +ESG + + +W. Rodney McMullen +Mr. McMullen was elected Chairman of the Board in January 2015 and Chief +Executive Officer of Kroger in January 2014. He served as Kroger’s President +and Chief Operating Officer from August 2009 to December 2013. Prior to that, +Mr. McMullen was elected to various roles at Kroger including Vice Chairman +in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999, +Senior Vice President in 1997, Group Vice President and Chief Financial +Officer in June 1995, and Vice President, Planning and Capital Management in +1989. He is a director of VF Corporation. In the past five years, he also served +as a director of Cincinnati Financial Corporation. +Mr. McMullen has broad experience in the supermarket business, having spent +his career spanning over 40 years with Kroger. He has a strong background in +finance, operations, and strategic partnerships, having served in a variety of +roles with Kroger, including as our CFO, COO, and Vice Chairman. His +previous service as chair of Cincinnati Financial Corporation’s Compensation +Committee and on its Executive and Investment Committees, as well as his +service on the Audit and Governance and Corporate Responsibilities +Committees of VF Corporation, adds depth to his extensive retail experience. +Age +63 + Director Since +2003 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_29.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1177bd292deac3d601633ba7eb160decd8b8ff6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,91 @@ +27 + + +Clyde R. Moore +Mr. Moore was Chairman and Chief Executive Officer of First Service +Networks, a national provider of facility and maintenance repair services, from +2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore +was President and CEO of Thomas & Betts, a global manufacturer of electric +connectors and components, and President and COO of FL Industries, Inc., an +electrical component manufacturing company. Mr. Moore is currently President +and CEO of Gliocas LLC, a management consulting firm serving small +businesses and non-profits. Mr. Moore was a leader in the founding of the +Industry Data Exchange Association (IDEA), which standardized product +identification data for the electrical industry, allowing the industry to make the +successful transition to digital commerce. Mr. Moore was Chairman of the +National Electric Manufacturers Association and served on the Executive +Committee of the Board of Governors. He served on the advisory board of +Mayer Electrical Supply for over 20 years, including time as lead director, until +the sale of the company in late 2021. +Mr. Moore has over 30 years of general management experience in public and +private companies. He has extensive experience as a corporate leader overseeing +all aspects of a facilities management firm and numerous manufacturing +companies. Mr. Moore’s expertise broadens the scope of the Board’s experience +to provide oversight to Kroger’s facilities, digital, and manufacturing +businesses, and he has a wealth of Fortune 500 experience in implementing +technology transformations. Additionally, his expertise and leadership as Chair +of the Compensation Committee is of particular value to the Board. Mr. Moore +presided over the Compensation Committee during the company’s introduction +of its Framework for Action: Diversity, Equity, & Inclusion plan, and led the +inclusion of talent development into the Committee’s name and charter. +Age +70 + Director Since +1997 +Committees: +Compensation & Talent +Development1 +Corporate Governance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ronald L. Sargent +Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a +business products retailer, where he was employed from 1989 until his +retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with +Kroger in various positions. He is a director of Five Below, Inc. and Wells +Fargo & Company. Previously, he served as a director of The Home Depot, Inc. +and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors +of the Boys & Girls Clubs of America, the board of directors of City of Hope, +and the board of trustees of Northeastern University. He is also chairman of the +board of directors of the John F. Kennedy Library Foundation. +Mr. Sargent has over 35 years of retail experience, first with Kroger and then +with increasing levels of responsibility and leadership at Staples, Inc. His efforts +helped carve out a new market niche for the international retailer. In his role as +Chair of the Wells Fargo Human Resources Committee, he oversees human +capital management, including diversity, equity, and inclusion, human capital +risk, and culture and ethics. In his role as a member of the Five Below +Nominating and Corporate Governance Committee, he oversees social and +environmental governance, including corporate citizenship. These committee +experiences are of value to the Board in his role as a member of the Public +Responsibilities Committee and Lead Director of the Board. His understanding +of retail operations, consumer insights, and e-commerce are also of value to the +Board. Mr. Sargent has been designated an Audit Committee financial expert +and serves as Chair of the Corporate Governance Committee and Lead Director +of the Board. Mr. Sargent’s strong insights into corporate governance and his +executive leadership experience serve as the basis for his leadership role as Lead +Director. +Age +68 + Director Since +2006 +Committees: +Audit +Corporate Governance1 +Public Responsibilities +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_3.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fba412c5522670857e7def297ea2da9842326054 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,60 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_30.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca84f150d8169ca8334520f782e8d8455d667f78 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,55 @@ +28 + + +J. Amanda Sourry Knox (Amanda Sourry) +Ms. Sourry was President of North America for Unilever, a personal care, foods, +refreshment, and home care consumer products company, from 2018 until her +retirement in December 2019. She held leadership roles of increasing +responsibility during her more than 30 years at Unilever, both in the U.S. and +Europe, including president of global foods, executive vice president of global +hair care, and executive vice president of the firm’s UK and Ireland business. +From 2015 to 2017, she served as President of their Global Foods Category. +Ms. Sourry currently serves on the board for PVH Corp., where she chairs the +Compensation Committee and serves on the Nominating, Governance & +Management Development Committee. She is also a non-executive director of +OFI, a provider of on-trend, natural and plant-based products, focused on +delivering sustainable and innovative solutions to consumers across the world, +and a member of their Remuneration and Talent Committee, the Audit and Risk +Committee, and the Sustainability Committee. She is also a supervisory director +of Trivium Packaging B.V., a sustainable packaging company. +Ms. Sourry has over thirty years of experience in the CPG and retail industry. +As a member of PVH Corp.’s Nominating, Governance, & Management +Development Committee, her experience with monitoring issues of corporate +conduct and culture, and providing oversight of diversity, equity and inclusion +policies and programs as it relates to management development, talent +assessment, and succession planning programs and processes is of particular +value to her role as a member of the Compensation & Talent Development +Committee and the Board. She brings to the Board her extensive global +marketing and business experience in consumer-packaged goods as well as +customer development, including overseeing Unilever’s digital efforts. +Ms. Sourry was actively involved in Unilever’s global diversity, gender balance, +and sustainable living initiatives which is of value to the Board and to the +Compensation & Talent Development Committee. She also has a track record of +driving sustainable, profitable growth across scale operating companies and +global categories across both developed and emerging markets. Ms. Sourry’s +history in profit and loss responsibility and oversight, people and ESG +leadership, and capabilities development is of value to the Board. +Age +60 + Director Since +2021 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_31.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9f3bab4cdc92ce26e59260e8c5ff38673254d6b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,86 @@ +29 + + +Mark S. Sutton +Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a +leading global producer of renewable fiber-based packaging, pulp, and paper +products. Prior to becoming CEO in 2014, he served as President and Chief +Operating Officer with responsibility for running International Paper’s global +business. Mr. Sutton joined International Paper in 1984 as an Electrical +Engineer. He held roles of increasing responsibility throughout his career, +including Mill Manager, Vice President of Corrugated Packaging Operations +across Europe, the Middle East and Africa, Vice President of Corporate +Strategic Planning, and Senior Vice President of several business units, +including global supply chain. Mr. Sutton is a member of The Business Council, +serves on the American Forest & Paper Association board of directors, and on +the Business Roundtable. He also serves on the board of directors of Memphis +Tomorrow. +Mr. Sutton has over 30 years of leadership experience with increasing levels of +responsibility and leadership at International Paper. At International Paper, he +oversees their robust ESG disclosures which are aligned with GRI, and their +Vision 2030, which sets forth ambitious forest stewardship targets and plans to +transition to renewable solutions and sustainable operations. He also oversees +International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He +brings to the Board the critical thinking that comes with an electrical +engineering background as well as his experience leading a global company +with labor unions. His strong strategic planning background, manufacturing and +supply chain experience, and his ESG leadership are of value to the Board. +Age +62 + Director Since +2017 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ashok Vemuri +Mr. Vemuri was Chief Executive Officer and a Director of Conduent +Incorporated, a global digital interactions company, from its inception as a +result of the spin-off from Xerox Corporation in January 2017 to 2019. He +previously served as Chief Executive Officer of Xerox Business Services, LLC +and as an Executive Vice President of Xerox Corporation from July 2016 to +December 2016. Prior to that, he was President, Chief Executive Officer, and a +member of the Board of Directors of IGATE Corporation, a New Jersey-based +global technology and services company now part of Capgemini, from 2013 to +2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a +multinational consulting and technology services company, in a variety of +leadership and business development roles and served on the board of Infosys +from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the +investment banking industry at Deutsche Bank and Bank of America. In the past +five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a +member of the Board of Directors of Opal Fuels and is chair of the Audit +Committee. +Mr. Vemuri brings to the Board a proven track record of leading technology +services companies through growth and corporate transformations. His +experience as CEO of global technology companies as well as his experience +with cyber security and risk oversight are of value to the Board as he brings a +unique operational, financial, and client experience perspective. Additionally, +Mr. Vemuri served on our Public Responsibilities Committee which gives him +additional perspectives on risk oversight that he brings to the Audit Committee. +Mr. Vemuri has been designated an Audit Committee financial expert. +Age +56 + Director Since +2019 +Committees: +Audit +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG + + +YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote +“FOR ALL” of Kroger’s director nominees. diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_32.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..a87f2621e3cbb14b60e124cc8f015021204da82d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,54 @@ +30 + +Information Concerning the Board of Directors +Board Leadership Structure and Independent Lead Director +Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight. +The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to +evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance +Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as +appropriate. We believe that Kroger is well-served by this flexible leadership structure. +In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership +includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among +the independent directors. The Lead Director works with the Chairman to share governance responsi bilities, +facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of +roles, consistent with current best practices, including: +• reviewing and approving Board meeting agendas, materials, and schedules to confirm that the +appropriate topics are reviewed, with sufficient information provided to directors on each topic and +appropriate time is allocated to each; +• serving as the principal liaison between the Chairman, management, and the independent directors; +• presiding at the executive sessions of independent directors and at all other meetings of the Board at +which the Chairman is not present; +• calling meetings of independent directors at any time; and +• serving as the Board’s representative for any consultation and direct communication, following a request, +with major shareholders. +The independent Lead Director carries out these responsibilities in numerous ways, including by: +• facilitating communication and collegiality among the Board members; +• soliciting direct feedback from independent directors; +• overseeing the succession planning process, including meeting with a wide range of associates including +corporate and division management associates; +• meeting with the CEO frequently to discuss strategy; +• serving as a sounding board and advisor to the CEO; and +• leading annual CEO evaluation process. + +Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance +Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the +Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018. +Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his: +• independence; +• deep strategic and operational understanding of Kroger obtained while serving as a Kroger director; +• insight into corporate governance; +• experience as the CEO of an international ecommerce and brick and mortar retailer; +• experience on the Boards of other large publicly traded companies; and +• engagement and commitment to carrying out the role and responsibilities of the Lead Director. +With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether +it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this +judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership +structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate +in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong +Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong +background in finance, operations, and strategic collaborations is particularly important to the Board given Kroger’s +current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the +Company are also especially critical in the midst of the rapidly evolving retail and di gital landscape. The Board +believes that the structure of the Chairman and independent Lead Director position should continue to be considered +as part of the succession planning process. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_33.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb3dcb2d2f40ee373eff521a45fe9595c7d6d8c7 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,47 @@ +31 + +Annual Board Evaluation Process +The Board and each of its Committees conduct an annual evaluation to determine whether the Board is +functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board +assesses whether the current leadership structure and function continues to be appropriate for Kroger and its +shareholders, including in consideration of director succession planning. +Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations +are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong +corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees +an annual evaluation process led by either the Lead Independent Director or an independent third party. +Each director completes a detailed annual evaluation of the Board and the Committees on which he or she +serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year, +the annual evaluation was conducted by the Lead Director. +Topics covered include, among others: +• The effectiveness of the Board and Board Committees and the active participation of all directors +• The Board and Committees’ skills and experience and whether additional skills or experience are needed +• The effectiveness of Board and Committee meetings, including the frequency of the meetings +• Board interaction with management, including the level of access to management, and the responsiveness +of management +• The effectiveness of the Board’s evaluation of management performance +• Additional subject matters the Board would like to see presented at their meetings or Committee meetings +• Board’s governance procedures +• The culture of the Board to promote participation in a meaningful and constructive way +The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and +changes to the Board’s and its Committees’ practices are implemented as appropriate. +Over the past several years, this evaluation process has contributed to various enhancements in the way the +Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its +members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and +provide adequate time for director discussion and input. +Board Succession Planning and Refreshment Mechanisms +Board succession planning is an ongoing, year-round process. The Corporate Governance Committee +recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying +attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and +Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall +Board and Committee effectiveness, as well as the future needs of the Board and it s Committees in light of Kroger’s +current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in +the future including as a result of our Board retirement policy, under which directors retire at the annual meeting +following their 72nd birthday. +Outside Board Service +No director who is an officer of the Company may serve as a director of another company without the approval +of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director +of another company if in so doing such service would interfere with the director’s ability to properly perform his or +her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance +Committee. Currently, our CEO serves on one other public company board. None of our current directors serve on +more than three total public company Boards, including Kroger’s Board. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_34.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a19b4aad8aff875575270d0a3670cb350f9a93a7 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,26 @@ +32 + +Board Diversity +Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually +qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and +independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our +Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional +knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this +blend of qualifications, attributes, and tenure enables highly effective Board leadership. +The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements +in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential +nominees to our Board, the Corporate Governance Committee considers director candidates who would help the +Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate, +including by considering their geographic locations to align directors’ physical locations with Kroger’s operating +areas where possible. In connection with the use of a third-party search firm to identify candidates for Board +positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list +qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self -identify as +racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and +Mr. Vemuri self-identify as Asian. Five of our 11 directors are women. +The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and +ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the +Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and +Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of +different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively +oversees the Company’s strategy and management. The charts below show the diversity of our director nominees: +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_35.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0fce219d07f01ecd0aa0a8f669499dc61de2329 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,75 @@ +33 + +Director Onboarding and Engagement +All directors are expected to invest the time and energy required to gain an in -depth understanding of our +business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans +for each new director. We arrange meetings for each new director with appropriate officers and associates in order to +familiarize him or her with the Company’s strategic plans, financial s tatements, and key policies and practices. We +also provide training on fiduciary obligations of board members and corporate governance topics, as well as +committee-specific onboarding. From time to time, the Company will provide Board members with presentations +from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of +the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings +are periodically held at a location away from our home office in a geography in which we operate. In connection +with these Board meetings, our directors learn more about the local business environment through meetings with our +regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities, +and/or customer fulfillment centers. +Committees of the Board of Directors +To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of +company oversight, the Board has established five standing Committees: Audit, Compensation and Talent +Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are +composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee +has the responsibilities set forth in its respective charter, each of which has bee n approved by the Board. The current +charter of each Board Committee is available on our website at ir.kroger.com under Investors  — Governance — +Corporate Governance Guidelines. +The current membership, 2023 meetings, and responsibilities of each Committee are summarized below : + +Name of Committee, Number of +Meetings, and Current Members Primary Committee Responsibilities +Audit Committee +Meetings in 2023: 5 +Members: +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + + + +• Oversees the Company’s financial reporting and accounting +matters, including review of the Company’s financial +statements and the audit thereof, the Company’s financial +reporting and accounting process, and the Company’s +systems of internal control over financial reporting +• Selects, evaluates, and oversees the compensation and work +of the independent registered public accounting firm and +reviews its performance, qualifications, and independence +• Oversees and evaluates the Company’s internal audit +function, including review of its audit plan, policies and +procedures, and significant findings +• Oversees enterprise risk assessment and risk management, +including review of cybersecurity risks and regular reports +received from management and independent third parties +• Reviews significant legal and regulatory matters +• Reviews and monitors the Company’s operational and third- +party compliance programs and updates thereto +• Reviews Ethics Hotline reports and discusses material +matters +• Reviews and approves related party transactions +• Conducts executive sessions with independent registered +public accounting firm and Vice President, Internal Audit at +each meeting +• Conducts executive sessions with the Senior Vice President, +General Counsel, and Secretary, Vice President and Chief +Ethics & Compliance Officer, and Senior Vice President and +Chief Financial Officer individually at least once per year + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_36.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee334dbd93d8c64af2a87bb09d1ee824a9e96b9e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,87 @@ +34 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Compensation Committee +Meetings in 2023: 4 +Members: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark S. Sutton + + + + +• Recommends for approval by the independent directors the +compensation of the CEO and approves the compensation of +senior officers +• Administers the Company’s executive compensation policies +and programs, including determining grants of equity awards +under the plans +• Reviews annual incentive plans and long-term incentive plan +metrics and plan design +• Reviews emerging legislation and governance issues and +retail compensation trends +• Reviews the Company’s executive compensation peer group +• Reviews CEO pay analysis +• Reviews Human Capital Management, including Diversity, +Equity, & Inclusion +• Has sole authority to retain and direct the Committee’s +compensation consultant +• Assists the full Board with senior management succession +planning +• Conducts executive sessions with the Senior Vice President +and Chief People Officer and independent compensation +consultant + + + + + + + + + + +Corporate Governance Committee +Meetings in 2023: 2 +Members: +Ronald L. Sargent, Chair +Elaine L. Chao +Anne Gates +Clyde R. Moore + + + + +• Oversees the Company’s corporate governance policies and +procedures +• Develops criteria for selecting and retaining directors, +including identifying and recommending qualified +candidates to be director nominees +• Designates membership and Chairs of Board Committees +• Oversees and administers Board evaluation process +• Reviews the Board’s performance +• Establishes and reviews the practices and procedures by +which the Board performs its functions +• Reviews director independence, financial literacy, and +designation of financial expertise +• Administers director nomination process +• Interviews and nominates candidates for director election +• Reviews compliance with share ownership guidelines +• Reviews and participates in shareholder engagement +• Reviews and establishes independent director compensation +• Oversees the annual CEO evaluation process conducted by +the full Board + + + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_37.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..b699997b31e727bb3125fff7e0345119b916776c --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,89 @@ +35 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Finance Committee +Meetings in 2023: 4 +Members: +Karen M. Hoguet, Chair +Nora A. Aufreiter +Amanda Sourry +Mark Sutton +Ashok Vemuri + + + + +• Oversees the Company’s financial affairs and management +of the Company’s financial resources +• Reviews the Company’s annual and long-term financial +plans, capital spending plans, capital allocation strategy, and +use of cash +• Approves and recommends for approval to the Board certain +capital expenditures +• Reviews the Company’s dividend policy and share buybacks +• Reviews strategic transactions, capital structure, including +potential issuance of debt or equity securities, credit +agreements, and other financing transactions +• Monitors the investment management of assets held in +pension and profit-sharing plans administered by the +Company +• Oversees the Company’s policies and procedures on +hedging, swaps, risk management, and other derivative +transactions +• Oversees the Company’s engagement and relationships with, +and standing in, the financial community + + + + + + + +Public Responsibilities Committee +Meetings in 2023: 3 +Members: +Nora A. Aufreiter, Chair +Kevin M. Brown +Elaine L. Chao +Ronald L. Sargent + + + + +• Reviews the practices of the Company affecting its +responsibility as a corporate citizen +• Examines and reviews the Company’s practices related to +environmental sustainability, and social impact, including +but not limited to +✓ climate impacts +✓ packaging +✓ food and operational waste +✓ food access +✓ responsible sourcing +✓ supplier diversity +✓ people safety, food safety, and pharmacy safety +• Examines and reviews the Company’s Sustainability and +Social Impact strategy +• Reviews the Company’s community engagement and +philanthropy +• Reviews the Company’s advocacy and public policy +• Reviews the Company’s communications and Corporate +Brand stewardship +• Assesses the Company’s effort in evaluating and responding +to changing public expectations and public issues that affect +the business + + + + + + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_38.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f48f1e7e36fd30cad3d7356b933e9cdb29339d7 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,33 @@ +36 + +Shareholder Engagement +Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a +priority for both our Board and management team. We have a longstanding history of engaging with our +shareholders through our investor relations program and our year-round governance outreach program, including +participation for our independent directors. In 2023, under the direction of the Board, we requested engagement +meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16 +shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once). +Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time. + +We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important +to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed +Board discussions and decisions, including but not limited to: +Business Strategy +• Kroger’s growth strategy, priorities, and value drivers +• Our strong value creation model and recent performance +ESG Practices & Disclosures +• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic +management approach, and long-term sustainability and social impact goals +• Board oversight of ESG strategy and updated Committee responsibilities +• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting +frameworks +• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry -leading platform for collective +action and systems change to end hunger in our communities and eliminate waste across our Company +Human Capital Management +• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities +we serve +• Our focus on our associates’ well-being, including increasing our average hourly associate wage, +comprehensive benefits, and opportunities for internal progression and leadership development training +• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies +• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_39.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d654b51474a5c55ea74de8e92c9d6b6fd81817c --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,49 @@ +37 + +Compensation Structure +• Overview of compensation program design and alignment of pay and performance +• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG +metrics +• The balance of equity and cash compensation, as well as fixed versus at risk compensation +Board and Board Oversight +• Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of +board skills and experience with Kroger’s current and long-term business strategies +• Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management +• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double +materiality, and discussions with environmentally and socially conscious investors and NGOs helped +inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the +opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices. +Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving +Together, and how our Board oversees this strategy, including our goals and initiatives. These +conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared +with our full Board. +Board’s Response to Shareholder Proposals +Accountability to our shareholders continues to be an important component of our success. We actively engage +with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate +Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate +Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the +voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our +shareholders. +In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay +Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay- +Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into +this proxy statement. +Director Nominee Selection Process +The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for +election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for +Board membership through its own efforts and through recommendations from other directors and shareholders. In +addition, the Corporate Governance Committee retains an independent, third -party search firm to assist in +identifying and recruiting director candidates who meet the criteria established by the Corporate Governance +Committee. +These criteria are: +• demonstrated ability in fields considered to be of value to the Board, including business management, +retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education, +science, law, and government; +• experience in high growth companies and nominees whose business experience can help the Company +innovate and derive new value from existing assets; +• highest standards of personal character and conduct; +• willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable, +including regular attendance and participation at Board and Committee meetings, and preparation for all +meetings, including review of all meeting materials provided in advance of the meeting; and +• ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our +customers, including regional and geographic differences. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_4.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d3945853a200410c0c2df449b0e9347c854080b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_4.txt @@ -0,0 +1,60 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_40.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..3292c344510e77d9cddb8ab08795534276b2429b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +38 + +The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity” +above, and the specific experience and abilities of director candidates in light of our current business, strategy , and +structure, and the current or expected needs of the Board in its identification and recruitment of director candidates. +The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of +potential Board members does not vary based on whether a candidate is recommended by our directors, a third -party +search firm, or shareholders. + +Candidates Nominated by Shareholders +The Corporate Governance Committee will consider shareholder recommendations for director nominees for +election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 202 5 +annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in +accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age, +business address, and residence address of such person, the principal occupation or employment of such person, the +number of Kroger common shares owned of record or beneficially by such person and any other information relating +to the person that would be required to be included in a proxy statement relating to the election of directors. The +Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate +Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in +evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director +Nominee Selection Process.” +Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of +director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information +required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional +requirements of Rule 14a-19(b). +Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the +2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common +shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Corporate Governance Guidelines +The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of +the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance — +Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a +written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are +summarized below. + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_41.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..81bc299eda75283ca02ddc9417344a26bc3e7e0a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,51 @@ +39 + +Independence +The Board has determined that all of the current independent directors and nominees have no material +relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed +Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE +listing standards. The Board made its determination based on information furnished to the Company by each of the +directors regarding their relationships with Kroger and its management, and other relevant information. The Board +considered, among other things, that +• the value of any business transactions between Kroger and entities with which the directors are affiliated +falls below the thresholds identified by the NYSE listing standards, and +• no directors had any material relationships with Kroger other than serving on our Board. + +The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is +Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The +Board determined that these transactions do no impair independence as they are in the ordinary course of business +on the same terms offered to similar purchases and do not exceed applicable independence thresholds. +Audit Committee Independence and Expertise +The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri, +independent directors, each of whom is a member of the Audit Committee, are “ Audit Committee financial experts” +as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the +Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in +accordance with Rule 10A-3 of the Securities Exchange Act of 1934. +Code of Ethics +The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and +directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics +is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics. +Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s +Secretary at our executive offices. +Communications with the Board +The Board has established two separate mechanisms for shareholders and interested parties to communicate +with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger +assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website +(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice +President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit +Committee as deemed appropriate. +Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s +Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or +companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems +appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for +further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems +appropriate, which may include referral to the full Corporate Governance Committee or the entire Board. +Executive Officer Succession Planning +The Guidelines provide that the Compensation Committee will review Company policies and programs for +talent development and evaluation of executive officers, and will review management succession planning. In +connection with the use of a third-party search firm to identify external candidates for executive officer positions, +including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third -party +search firm to include in its initial list qualified female and racially/ethnically diverse candidates. +Attendance +The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least +75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_42.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7a3951bbc4ebcc02e174fe34e42251fe33637b8 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +40 + +the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members +attended last year’s virtual annual meeting. +Independent Compensation Consultants +The Compensation Committee directly engages a compensation consultant to advise the Compensation +Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn +Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn +Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and +policies. +In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee. +Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 202 3 +for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons, +salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved +Korn Ferry performing these additional services. After taking into consideration th e NYSE’s independence +standards and the SEC rules, the Compensation Committee determined that Korn Ferry was independent, and their +work has not raised any conflict of interest. +The Compensation Committee may engage an additional compensation consultant from time to time as it +deems advisable. +Compensation Committee Interlocks and Insider Participation +No member of the Compensation Committee was an officer or associate of Kroger during fiscal 202 3, and no +member of the Compensation Committee is a former officer of Kroger or was a party to any related person +transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of +our executive officers served on the board of directors or on the compensation committee of any other entity that has +or had executive officers serving as a member of Kroger’s Board of Di rectors or Compensation Committee of the +Board. +The Board’s Role in Risk Oversight +While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible +for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the +material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may +engage advisors and experts from time to time to provide advice and counsel on risk -related matters. +We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the +various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger. +We also believe that our risk oversight structure complements our current Board leadership structure, as it allows +our independent directors, through the five fully independent Board Committees, and in executive sessions of +independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s +identification of risk and implementation of effective risk management policies and controls. +The Board receives presentations throughout the year from various department and business unit leaders that +include discussion of significant risks, including newly identified and evolving high priority risks. When new risks +are identified, management conducts, and either the full Board or the appropriate Board committee reviews and +discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain, +associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss +the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures +of material risks. +At each Board meeting, the CEO addresses matters of particular importance or concern, including any +significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated +sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term +strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their +potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of +particular concern, including significant areas of risk, that warrant further discussion or consideration outside the +presence of Kroger employees. At the committee level, reports are given by management subject matter experts to +each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each +meeting, including any areas of risk discussed by the Committee. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_43.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..45bc4c8717e77e49c957e177856f5f06a3ce5db0 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_43.txt @@ -0,0 +1,57 @@ +41 + +The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial +exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness +of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of +risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit +Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with +management its policies with respect to risk assessment and risk management. + +Cybersecurity Governance + +Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on +our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with +oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our +Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on +cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually, +and inform the Committee immediately if a cybersecurity incident is deemed material. They report to t he Audit +Committee and the Board on compliance and regulatory issues, provide updates concerning continuously -evolving +threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and +CISO discuss and present strategies to address geopolitical threats that may impact operations as well as +technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee +focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates +strategy metrics, third party assessments, and internal audit and controls. An independen t third party also regularly +reports to the Audit Committee and the full Board on cybersecurity, and outside counsel a dvises the Board on best +practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also +reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact . We experience +cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity +threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably +likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially +affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a +material effect on us in the future. +For more information please see Item 1C. Cybersecurity in the Company’s Form 10 -K for the year ended February +3, 2024, filed with the SEC on April 2, 2024. +Board Oversight of ESG Topics +We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and +reduce our impacts on the environment while continuing to create positive economic value over the long -term. +Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of +environmental, social, and governance topics. Key ESG topics our Board Committees oversee are as follows: + +Audit • Legal & Regulatory +• Ethics +• Operational and Third-Party Compliance +• Data Privacy & Cyber Security +• Financial Integrity +Compensation & Talent +Development +• Human Capital Management +• Talent Development +• Executive Compensation +• Diversity, Equity & Inclusion +Corporate Governance • Board recruitment/diversity +• Board succession +• Shareholder engagement program +• Shareholder advisory votes & shareholder proposals +• Independent director compensation +Finance • Capital spending to ensure consistency with strategy and goals +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_44.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e761057ebf4f3bb169034e3566d220c509b5cc3e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,36 @@ +42 + +Public Responsibilities • Environmental Sustainability +✓ Climate Impacts +✓ Resource Conservation +✓ Food Waste (Zero Waste) +• Social Impact +✓ Food Access and Affordability (Zero Hunger) +✓ Health & Nutrition +✓ Philanthropy +✓ Responsible Supply Chain & Sourcing +➢ Human Rights +➢ Animal Welfare +• Safety +✓ Food +✓ People +✓ Pharmacy +• Advocacy & Public Policy +✓ Government Relations +✓ Political action (KroPAC) +• Communications & Brand Stewardship +✓ Associate & External Communications +• Stakeholder Relations + +Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was +established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our +progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit +https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or +incorporated by reference into, this proxy statement. +In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity +and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations +function – with human resources professionals in place across our lines of business and retail divisions – leads our +Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals, +and identifies potential opportunities for improvement. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_45.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f9c484526b13eb1dd47ddaa844853b41639bf2d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,45 @@ +43 + +Director Compensation +2023 Director Compensation +The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does +not receive compensation for his Board service. +Name +Fees Earned or Paid in +Cash Stock Awards(1) +Change in Pension +Value and Nonqualified +Deferred +Compensation(2) Total +Nora A. Aufreiter $122,839 $198,528 $0 $321,367 +Kevin M. Brown $112,626 $198,528 $0 $311,154 +Elaine L. Chao $104,627 $198,528 $0 $303,155 +Anne Gates $140,215 $198,528 $0 $338,743 +Karen M. Hoguet $133,007 $198,528 $0 $331,535 +Clyde R. Moore $124,964 $198,528 — $323,492 +Ronald L. Sargent $172,610 $198,528 $5,762 $376,900 +Amanda Sourry $104,627 $198,528 $0 $303,155 +Mark S. Sutton $104,627 $198,528 $0 $303,155 +Ashok Vemuri $114,794 $198,528 $0 $313,322 + + +(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual +incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each +independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528. +(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation. +For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation +Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value +of his accumulated benefit under the pension plan for independent directors. This change in value of +accumulated pension benefits is not included in the Director Compensation Table be cause the value decreased. +Pension values may fluctuate significantly from year to year depending on a number of factors, including age, +average annual earnings, and the assumptions used to determine the present value, such as the discount rate. +The decrease in the actuarial present value of his accumulated pension benefit for 202 3 is primarily due to the +increase in the discount rate as well as the change in value due to aging , partially offset by the mortality +assumption change. +Annual Compensation +Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an +additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional +annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and +the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent +director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately +$200,000. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_46.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f270848ef6748c39b659f33daee52ef8ca0e1f68 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,30 @@ +44 +The Board has determined that compensation of independent directors must be competitive on an ongoing basis +to attract and retain directors who meet the qualifications for service on the Board. Independent director +compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee +deems appropriate. +Pension Plan +Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the +average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this +benefit. Benefits begin at the later of actual retirement or age 65. +Nonqualified Deferred Compensation +We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of +their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares. +Cash Deferrals +Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either +or both of the following two alternative methods of determining benefits: +• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to +represent Kroger’s cost of ten-year debt; and/or +• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price +of Kroger common shares. +In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant +at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in +quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the +event that deferred compensation is not completely paid out upon the death of the participant. +Incentive Share Deferrals +Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares. +Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months +after the participant’s separation of service. +Director Stock Ownership Guidelines +Independent directors are required to own shares equivalent to five times their annual base cash retainer. For +more details on the Stock Ownership Guidelines, see page 62. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_47.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5cc584df0eafe87f843a5875b1b50ff04cb21b51 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,43 @@ +45 +Beneficial Ownership of Common Stock +The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s +directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on +727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned +include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well +as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial +owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned +by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The +Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202. +Name +Amount and Nature of +Beneficial Ownership(1) +Options Exercisable on +or before June 29, 2024 – +included in column (a) +Stuart W. Aitken(2) 548,627 328,086 +Nora A. Aufreiter(3) 53,016 — +Kevin M. Brown 15,228 — +Elaine L. Chao(3) 12,438 +Yael Cosset 510,663 316,043 +Anne Gates(3) 47,728 — +Karen M. Hoguet(4) 23,776 — +Timothy A. Massa 536,035 305,174 +W. Rodney McMullen 6,551,175 2,801,970 +Gary Millerchip 106,693 11,646 +Clyde R. Moore 122,147 — +Ronald L. Sargent(3) 186,560 — +Amanda Sourry 15,228 — +Mark S. Sutton(3) 42,847 — +Ashok Vemuri 29,124 — +Directors and executive officers as a group (23 persons, including +those named above) +10,177,799 4,429,738 +(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as +a group beneficially owned 1.4% of Kroger common shares. +(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these +shares. +(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for +independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703; +Mr. Sargent, 61,649; Mr. Sutton, 7,080. +(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these +shares. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_48.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a87b2bb4882c4b051e09780043dd74fd712b12d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_48.txt @@ -0,0 +1,40 @@ +46 + +The following table sets forth information regarding the beneficial owners of more than five percent of Kroger +common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC. + +Name Address +Amount and Nature of +Ownership Percentage of Class +BlackRock, Inc. 50 Hudson Yards +New York, NY 10001 59,194,278(1) 8.2% +The Vanguard Group 100 Vanguard Blvd. +Malvern, PA 19355 81,623,904(2) 11.35% + +(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 202 3, as reported on Amendment No. 16 +to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to +53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares. +(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment +No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to +854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of +2,814,856 common shares. + +Related Person Transactions +The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or +continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related +Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive +officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect +material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit +Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the +aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other +company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at +regular committee meetings. +The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with, +the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance +with its business judgment. No director may participate in any review, approval, or ratification of any transaction if +he or she, or an immediate family member, has a direct or indirect material interest in the transaction. +Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for +management to follow in its ongoing dealings with the related person and the Audit Committee will review and +assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person +Transaction remains appropriate. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_49.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1b79ff0b67dd531df4f5715c549df981884a37 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_49.txt @@ -0,0 +1,52 @@ +47 + +Compensation Discussion and Analysis +This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our +executive compensation program as well as how and why the Compensation Committee and our Board of Directors +make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”). +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_5.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ceeff1d873052bbd256bdf23ebd8b49e037cca3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,59 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_50.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b6c00885bc1762a472dc9fc4a7dcb6809248110 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +48 + +Our Named Executive Officers for Fiscal 2023 +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +Fiscal 2023 Financial and Strategic Performance Highlights +Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we +executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022. +Our associates are customer-focused, delivering the products customers want, when and how they want them, with +zero compromise on quality, convenience, and selection. +In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales +without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers +a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery +solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our +customers more deeply engaged with personalized coupons and fuel rewards. +Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, +comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than +$2.4 billion in incremental wage investments. +Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than +$1 billion to balance these investments without compromising food affordability for our customers across our +communities. +As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 202 3, we donated nearly +455 million meals to feed families across America. +Our proven go-to-market strategy enables us to successfully navigate many operating environments. We +believe that by delivering value for our customers, investing in our associates and serving our communities, we will +continue to achieve attractive and sustainable total returns for our shareholders. +2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement +At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91% +of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding +governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding +shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding +shares accepted our invitation to share feedback. Some investors we con tacted either did not respond or confirmed +that a discussion was not needed at that time. +Conversations in these meetings included discussions about our NEOs’ compensation program, with our +shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay +program. The Compensation Committee considers both the general and specific feedback received from +shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay +design. +During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in +executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but +none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to +our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational +priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee +decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation +decisions made for our associates who supervise a team of others, which range from store department leaders + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_51.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..455e93b62d44b95514f9c4ed5eb181a33c0e657b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,30 @@ +49 + +through our NEOs. Specifically, one of several performance goals established for these associates and senior officers +relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual Associate +Insights Survey and active mentorship and development of at least one other associate with a different background. +These performance goals are factored into compensation decisions for these associates and senior officers, including +salary increases and the amount of the annual grant of equity awards, consistent with our program design as +described herein. +2023 Compensation Program Overview +The fixed and at-risk pay elements of the NEO compensation program are reflected in the following table and +charts. + +Fiscal Year 2023 CEO Compensation +The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 8% of his +compensation is fixed. The remaining 92% of target compensation is at-risk, meaning that the actual compensation +Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by +the Compensation Committee, and with respect to all of the equity vehicle s, the future value of Kroger common +shares. +The table below compares fiscal 2023 to 2022 target direct compensation. Target total direct compensation is a +more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than +the disclosure provided in the Summary Compensation Table, which includes a combi nation of actual base salary +and annual incentive compensation earned in the fiscal year, the grant date fair market value of at -risk equity +compensation to be earned in future fiscal years, and the actuarial value of future pension benefits. +Mr. McMullen’s total target direct compensation shown below was based on our independent compensation +consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer +group. Mr. McMullen’s base salary and target annual incentive remained unchanged in fiscal 2023. The only +increase was to his long-term equity compensation to position his total target direct compensation to market median. +Target total compensation, which is the sum of target annual compensatio n and target long- term compensation, is +positioned around market median. + diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_52.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..7978880a370e8ec869b2cfef65116d593e1d0c35 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,49 @@ +50 +($000s) +Annual Long-Term +Year Salary +Target +Annual +Incentive +Total +Annual +Performance +Units +Restricted +Stock +Stock +Options +Total +LTI +Target +TDC Increase +2023 1,400 2,800 4,200 6,250 3,750 2,500 12,500 16,700 +6.4% +2022 1,400 2,800 4,200 5,750 3,450 2,300 11,500 15,700 +CEO and Named Executive Officer Target Pay Mix +The amounts used in the charts below are based on 2023 target total direct compensation for the CEO and the +average of other NEOs. As illustrated below, 92% of the CEO’s target total direct compensation is at-risk. On +average, 84% of the other NEOs’ compensation is at risk. +CEO Pay Mix Average of Other NEOs +Our Compensation Philosophy and Objectives +Our executive compensation philosophy is to attract and retain the best management talent as well as motivate +these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the +actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner +consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a +strong link between our business strategy, the performance metrics in our short-term and long-term incentive +programs, and the business results that drive shareholder value. +To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and +that there is a direct link between pay and performance. To do so, it is guided by the following principles: +• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at +Kroger. +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an NEO’s level of responsibility. +• Compensation should include incentive-based pay to drive performance, providing superior pay for superior +performance, including both a short- and long-term focus. +• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership +to align the interests of NEOs and shareholders. +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy and progress toward our corporate ESG +priorities. +• Compensation plans should provide a direct line of sight to company performance. +• Compensation programs should be aligned with market practices. +• Compensation programs should serve to both motivate and retain talent. diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_53.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..85ba0ef6c89a7b741e4761492e50907e4f3420cd --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +51 +What we do: What we do not do: +✓ Alignment of pay and performance +✓ Stock ownership guidelines for executives +✓ Multiple performance metrics under our short- +and long-term performance-based plans +discourage excessive risk taking and align with +our long-term value creation strategy +✓ Double-trigger change in control provisions in all +equity awards +✓ Double-trigger change in control provisions in +cash severance benefits +✓ All long-term compensation is equity-based +✓ Engagement of an independent compensation +consultant +✓ Robust clawback policy +✓ Ban on hedging, pledging, and short sales of +Kroger securities +✓ Minimal perquisites +× No employment contracts with executive officers +× No special severance or change in control +programs applicable only to executive officers +× No cash component in long-term incentive plans +× No tax gross-up payments for executives +× No special executive life insurance benefit +× No re-pricing or backdating of stock options +without shareholder approval +× No guaranteed salary increases or bonuses +× No payment of dividends or dividend equivalents +until performance units are earned +× No evergreen or reload feature; no shares can be +added to stock plan without shareholder approval +Establishing Each Component of Executive Compensation +The Compensation Committee recommends, and the independent members of the Board determine, each +component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each +component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to +compensation in March of 2023. Equity awards were granted in March and salary and annual incentive plan +increases were effective April 1, 2023. +The Compensation Committee determines the amount of each NEO’s salary, annual cash incentive plan target, +and long-term equity compensation by taking into consideration numerous factors including: +• An assessment of individual contribution and performance; +• Benchmarking with comparable positions at peer group companies; +• Level in organization and tenure in role; and +• Internal equity among executives. +The assessment of individual contribution and performance is a qualitative determination, based on the +following factors: +• Leadership; +• Contribution to the executive officer group; +• Achievement of established performance objectives; +• Decision-making abilities; +• Performance of the areas or groups directly reporting to the NEO; +• Support of company culture; +• Strategic thinking; and +• Demonstrated commitment to Kroger’s Values: Safety, Honesty, Integrity, Respect, Diversity, and Inclusion, +including improvement in the DE&I category score as measured by our annual Associate Insights Survey +and active mentorship and development of at least one other associate with a different background. +Summary of Key Compensation Practices \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_54.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..e12b0fc40fc95b42092ffa23764019efa704d17b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,43 @@ +52 + +At the end of each year, individual performance is evaluated based on the NEO’s performance objectives listed +above, and the results of that evaluation are used in the determination of salary increases and the grant amount of all +annual equity awards: restricted stock and stock options, which are time-based, and performance units granted under +the long-term incentive plan, which are performance-based. +Elements of Compensation +Salary +Our philosophy with respect to salary is to provide a sufficient and stable source of fixed cash compensation +that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April +1, 2022 and April 1, 2023 were as follows: +Name 2022 Base Salary 2023 Base Salary +W. Rodney McMullen $1,400,000 $1,400,000 +Gary Millerchip $825,000 $900,000 +Stuart W. Aitken $925,000 $1,000,000 +Yael Cosset $825,000 $875,000 +Timothy A. Massa $850,000 $900,000 + +2023 Annual Incentive Plan +The NEOs participate in a corporate performance-based annual cash incentive plan. The corporate annual cash +incentive plan is a broad-based plan used across the Kroger enterprise. Approximately 54,000 associates are eligible +to receive incentive payouts based all or in part on the incentive plan described below. The value of annual cash +incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to +goals established by the Compensation Committee based on the business plan adopted by the Board of Directors. +A minimum level of performance must be achieved before any payout is earned, while a payout of up to 200% +of target incentive potential can be achieved for superior performance on the corporate plan metrics. There are no +guaranteed or minimum payouts; if none of the performance goals are achieved, then none of the incentive amount +is earned, and no payout is made. +The annual cash incentive plan is designed to encourage decisions and behavior that drive the annual operating +results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and +accordingly, the Compensation Committee believes that it is important to encourage behavior that supports multiple +elements of our business strategy. +NEO target incentive potentials for fiscal years 2022 and 2023, were as follows: +Name 2022 Target Annual Incentive 2023 Target Annual Incentive +W. Rodney McMullen $2,800,000 $2,800,000 +Gary Millerchip $850,000 $950,000 +Stuart W. Aitken $850,000 $950,000 +Yael Cosset $850,000 $950,000 +Timothy A. Massa $775,000 $850,000 + + + +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_55.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4eb7a3ae8d20a86c33e41473861853656f67a4e4 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,42 @@ +53 + +2023 Annual Incentive Plan Metrics +Metric Rationale for Use +Sales and Profit Grid, Maximum Payout of 200% of Target +ID Sales, excluding Fuel +• Identical Sales (“ID Sales”) represent sales, excluding fuel, at our supermarkets that +have been open without expansion or relocation for five full quarters, excluding +supermarket fuel sales, plus sales growth at all other customer-facing non- +supermarket businesses. +• We believe that ID Sales are the best measure of real growth of our sales across the +enterprise. A key driver of our model is ID Sales growth. +Adjusted FIFO Operating Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to-day +operational effectiveness. It is a useful measure to investors because it reflects the +revenue and expense that a company can control. +Potential payouts under the plan are based on Company performance on two primary metrics, ID Sales, +excluding Fuel, and Adjusted FIFO Operating Profit, including Fuel. The performance objectives are shown in the +grid below, with payouts interpolated for actual performance between levels. +The goals established by the Compensation Committee were as follows: + +ID Sales, excluding Fuel and Adjusted FIFO Operating Profit, including Fuel +ID Sales, excluding Fuel + + + -1.30% 0.95% 3.20% 5.45% 7.70% +Adjusted FIFO Operating +Profit, including fuel ($M) ≥4,983 0% 14% 20% 29% 40% + ≥5,083 10% 25% 45% 60% 75% + ≥5,183 20% 65% 80% 95% 115% + ≥5,283 30% 75% 90% 105% 130% + ≥5,383 40% 85% 100% 115% 160% + ≥5,483 55% 95% 110% 125% 170% + ≥5,583 70% 105% 120% 135% 180% + ≥ 5,683 100% 115% 130% 155% 190% + ≥5,783 110% 125% 140% 170% 200% + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_56.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e75daf150ccd2135fff7a4238b33d195815da26 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_56.txt @@ -0,0 +1,39 @@ +54 + +2023 Annual Incentive Plan – Actual Results and Payout Percentage + +Corporate Plan Metric 2023 Performance(1) Payout +Identical Sales, excluding fuel 0.9% 24.02% Adjusted FIFO Operating Profit, including fuel $5.0B +Total Payout 24.02% +(1) See grid above. +Following the close of the 2023 fiscal year, the Compensation Committee reviewed Kroger’s performance +against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our +performance compared to the goals established by the Compensation Com mittee resulted in a payout of 24.02% of +the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken. +Mr. Aitken’s annual bonus payout equaled 22.71% of his bonus potential because it included the corporate +annual plan described above and a team metric as follows. The merchandising team metric measured supermarket +ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments +excluding pharmacy and fuel. + Payout Percentage Weight +Corporate Annual Bonus Plan 24.02 % 60 % +Merchandising Team Metric 20.75 % 40 % +Total Payout (24.02% x 0.6) + (20.75% x 0.4%) = 22.71% +The Compensation Committee maintains the ability to reduce the annual cash incentive payout for all executive +officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if +they determine for any reason that the incentive payouts were not appr opriate given their assessment of Company or +individual performance. No adjustments were made to the incentive payout amount in 202 3. +As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan +target which is determined by the Compensation Committee, and the independent directors in the case of the CEO. +The actual amounts of performance-based annual incentive paid to the NEOs for 2023 are reported in the Summary +Compensation Table in the “Non-Equity Incentive Plan Compensation” column. +Long-Term Compensation Program +The Compensation Committee believes in the importance of providing an incentive to the NEOs to achieve the +long-term goals established by the Board. As such, a majority of NEO compensation is dependent on the +achievement of those goals. Long-term compensation promotes long-term value creation and discourages the over- +emphasis of attaining short-term goals at the expense of long-term growth. +The long-term incentive program is structured to be a combination of performance- and time-based +compensation that reflects elements of financial and common share performance to provide both retention value and +alignment with company performance. The Compensation Committee determined that all long-term compensation +would be equity-based as follows: 50% of equity granted under the program would be performance -based and the +remaining 50% of equity would be time-based, consisting of 30% in restricted stock and 20% in stock options. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_57.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cb9d0cfe43aac0649a2b9c710c8b2647f3f85bd --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_57.txt @@ -0,0 +1,60 @@ +55 + +Each year, NEOs receive grants under the long-term compensation program, which is structured as follows: +• Performance-Based (50% of NEO long-term target compensation) +• Long-term performance-based compensation is provided under a Long-Term Incentive Plan adopted by +the Compensation Committee. The Committee adopts a new plan every year, measuring improvement +on the Company’s long-term goals over successive three-year periods. Accordingly, at any one time +there are three plans outstanding, which are summarized below. +• Under the Long-Term Incentive Plans, NEOs receive grants of equity called performance units. A target +number of performance units based on level and individual performance is awarded to each participant +at the beginning of the three-year performance period. +• Payouts under the plan are contingent on the achievement of certain strategic performance and financial +measures and incentivize recipients to promote long-term value creation and enhance shareholder +wealth by supporting the Company’s long-term strategic goals. +• The payout percentage, based on the extent to which the performance metrics are achieved, is applied to +the target number of performance units awarded. Then, a modifier based on Relative Total Shareholder +Return compared to the S&P 500 is applied, which can increase or decrease the payout. +• Performance units are paid out in Kroger common shares based on actual performance, along with +dividend equivalents for the performance period on the number of issued common shares. +• Time-Based (50% of NEO long-term target compensation) +• Long-term time-based compensation consists of 20% stock options and 30% restricted stock, which are +linked to common share performance, creating alignment between the NEOs’ and our shareholders’ +interests. Grants vest ratably over four years. +• Stock options have no initial value and recipients only realize benefits if the value of our common +shares increases following the date of grant, further aligning the NEOs’ and our shareholders’ interests. +Amounts of long-term compensation awards issued and outstanding for the NEOs are set forth in the Executive +Compensation Tables section. +Summary of The Three Long-Term Incentive Plans Outstanding During 2023 +With respect to our long-term performance-based compensation, the Compensation Committee designed plan +metrics to align with Kroger’s long-term business plans and growth model. These metrics are the key elements in +driving Kroger’s TSR. +The Compensation Committee adopts a new Long-Term Incentive Plan each year, which provides for +overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below, +and a summary of the design of the plans outstanding during 2023 is as follows: + + 2021 – 2023 LTIP 2022 – 2024 LTIP 2023 – 2025 LTIP +Performance Units and +Dividend Equivalents +Performance units are equity grants which are paid out in Kroger common shares, based on actual performance at +the end of the 3-year performance period, along with dividend equivalents for the performance period on the +number of issued common shares ultimately earned. +Performance Metrics • Total Sales without Fuel + Fuel +Gallons; +• Growth in Adjusted FIFO; +Operating Profit, including Fuel; +• Cumulative Adjusted Free Cash +Flow; +• Fresh Equity metric; and +• Relative Total Shareholder Return +modifier +• Total Sales without Fuel + Fuel Gallons; +• Value Creation Metric (iTSR) Percentage; +• Fresh Equity metric; and +• Relative Total Shareholder Return modifier +Determination of Payout The payout percentage, based on the extent to which the performance metrics are achieved, is applied to number +of performance units awarded. +Maximum Payout 187.5% 187.5% 187.5% +Payout Date March 2024 March 2025 March 2026 + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_58.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e408bfcac53515954224212be55d66ec12542c4 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_58.txt @@ -0,0 +1,50 @@ +56 + +2021-2023 Long-Term Incentive Plan – Metrics +The 2021-2023 Long-Term Incentive Plan has the following components which support our long-term business +plans, each accounting for 25% of the payout calculation: + +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of fuel +gallons sold over the three-year term of the plan. It represents the important +metric of top line growth of the business from all channels. +25% +Growth in Adjusted FIFO Operating +Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to- +day operational effectiveness. It is a useful measure to investors because it +reflects the revenue and expense that a company can control. It is particularly +important to focus on growth of this financial measure over time. +25% +Cumulative Adjusted Free Cash Flow +• Cumulative Adjusted Free Cash Flow is an adjusted free cash flow measure +calculated as net cash provided by operating activities minus payments for +property and equipment, including payments for lease buyout, plus or minus +adjustments for certain items. +• It is an important measure for the business because it reflects the cash left over +after the company pays for operating expenses and capital expenditures. +25% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives trips and +therefore delivers business results. Fresh is the core focus of how we +differentiate and drive great engagement with customers and it will be a key +driver of our growth. +25% + +After the calculation of the four metrics above, a modifier based on Relative Total Shareholder Return +compared to the S&P 500 will be applied which can increase or decrease the payout, as follows, interpolated for +actual results between thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the target number of +performance units granted under the plan to determine the payout amount. The maximum payout under the 2021- +2023 Long-Term Incentive Plan is 187.5% as further described below. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_59.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1336cb9628ecad0dfa66abf6b9ce5d1f4016fcc --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_59.txt @@ -0,0 +1,25 @@ +57 + + +Going into 2021, there were an extraordinary number and degree of unknowns that could have impacted our +financial results. The Compensation Committee considered, among other factors, the course of the pandemic, +including new COVID variants, availability and outcomes of vaccine progr ams, continuing sales trends, food at +home and food away from home trends, inflation/deflation, and other potential market influencing events. To +account for these unknowns, the Compensation Committee designed the 2021-2023 Long-Term Incentive Plan with +an incremental goal setting approach due to our inability to forecast reliable long -term performance targets against +the background of the economic uncertainty at the time. The Committee designed the plan to take into account the +extraordinary uncertainties going into the three-year plan, while aligning to our identical sales and operating profit +growth and productivity improvement goals, all in support of our long -term value creation model. Under the +incremental goal setting approach, the plan was designed with clearly defined financial performance goals for 2021, +and a mechanism for setting the 2022-2023 goals based on actual 2021 results. +For the 2021-2023 Long-Term Incentive Plan, the Compensation Committee aligned the plan with market +practices, increasing the maximum payout potential on the four metrics from 100% to 150%. The highest payout +from the four metrics alone equals 100%. However, the payout may exceed 100%, if for years 2 and 3 of the plan: +(1) the Total Sales without Fuel + Fuel Gallons metric, the Growth in Adjusted FIFO Operating Profit, including +Fuel, metric, and the Cumulative Adjusted Free Cash Flow metric all achieve 100 %, and (2) the 2-year compound +annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will increase +incrementally from 100%, up to 150% maximum if the 2-year compound annual growth rate on the Total Sales +without Fuel + Fuel Gallons metric is 5.0%. With the potential application of the relative TSR modifier, the total +maximum payout would be 187.5%. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_6.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..406f3136a87551145b9915c0612cece6a0ffafff --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_60.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..7778456c38f51786a97bcc287ebbc754a85cbeb3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_60.txt @@ -0,0 +1,76 @@ +58 + +2021-2023 Long-Term Incentive Plan – Results and Payout + +The results and payout of the 2021-2023 Long-Term Incentive Plan are as follows. + +2021 Results +Metric + + +Performance + + +Goal +Payout +Percentage for +2021 + Portion of Plan +Total Sales without Fuel + Fuel Gallons $127.96B $123.99B 100% +Adjusted FIFO Operating Profit $4.31B $3.48B 100% +Adjusted Free Cash Flow $3.94B $1.7B 100% +Fresh Equity Metric N/A + Payout for 2021 Portion of Plan (1/3) 100% + +2022-2023 Results +Metric + + + + + + +Payout +Percentage +For 2022-2023 +Portion of Plan +Total Sales without Fuel + Fuel Gallons $135.61B $135.75B 97.26% +Adjusted FIFO Operating Profit $4.80B $4.75B 100% +Adjusted Cumulative Free Cash Flow $4.9 $4.7B 100% +Fresh Equity Metric 43.2 46.1 0% + Payout for 2022-2023 Portion of Plan (2/3) 74.32% + +Combined Results +Metric + +Calculation + + +Payout +Percentage for +Full 2021-2023 +Plan +Total Sales without Fuel + Fuel Gallons (100% x 1/3) + (97.25% x 2/3) 98.17% +Adjusted FIFO Operating Profit (100% x 1/3) + (100% x 2/3) 100% +Adjusted Cumulative Free Cash Flow (100% x 1/3) + (100% x 2/3) 100% +Fresh Equity Measure 0% + Payout before Modifier (98.17% x 1/4) + (100% x 1/4) + (100% x 1/4) + (0% x 1/4) 74.54% +Relative TSR Modifier* 191st out of 500 in S&P 500 resulting in multiplier +between 100% and 125% 111.8% +Total Payout for 2021-2023 Plan 83.34% + +* The Company ranked 191st in the S&P 500 over the three year period for TSR. Based on this result, the Company +is in the second quartile of TSR results within the S&P 500. Because the Company ranking falls between 125 and +375, the multiplier to be applied in order to calculate the final LTIP payout is calculated based on an interpolation of +payouts between 75% and 125%, illustrated below: +TSR Rank in S&P 500 Payout Multiplier +1 to 125 125% +250 100% +375 to 500 75% +Actual Result = 191 111.8% + +The NEOs were issued the number of Kroger common shares equal to 83.34% of the target number of +performance units awarded to each executive, along with dividend equivalents for the three-year performance period +on the number of issued common shares. +The dividend equivalents paid on common shares earned under the 202 1 – 2023 Long-Term Incentive Plan are +paid at the end of the plan and are reported in the “All Other Compensation” column of the Summary Compensation \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_61.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d15b5538c66f02c19313df5c7a8e85db80614d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_61.txt @@ -0,0 +1,57 @@ +59 + +Table and footnote 5 to that table, and the common shares issued under the plan are reported in the 202 3 Option +Exercises and Stock Vested Table and footnote 2 to that table. +The annual and long-term performance-based compensation awards described herein were made pursuant to +our 2019 Long-Term Incentive Plan, which was approved by our shareholders in June 2019, and the 2019 Amended +and Restated Long-Term Incentive Plan, which was approved by our shareholders in June 2022. + +2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan Metrics + Both the 2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan metrics have been designed to reflect +commitments made to our investors and other stakeholders regarding long -term sales growth, our Value Creation +algorithm (through intrinsic Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic +differentiator. The plan also includes a modifier based on our shareholder return relative to the S&P 500 shareholder +return. +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of +fuel gallons sold over the three-year term of the plan. It represents the +important metric of top line growth of the business from all channels. +25% +Value Creation Metric (iTSR) Percentage • This financial metric equals adjusted earnings per diluted share (EPS) +growth plus dividend yield. 50% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives +trips and therefore delivers business results. Fresh is the core focus of +how we differentiate and drive great engagement with customers and it +will be a key driver of our growth. +25% + +The highest payout from the three metrics alone equals 100%. However, the payout may exceed 100% if: (1) +both the Total Sales without Fuel + Fuel Gallons metric and the iTSR metric achieve 100%, and (2) the 3 -year +compound annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will +increase incrementally from 100%, up to 150% maximum if the 3-year compound annual growth rate on the Total +Sales without Fuel + Fuel Gallons metric is 5.0%. +After the calculation described above, a modifier based on Relative Total Shareholder Return compared to the +S&P 500 will be applied, as follows, interpolated for actual results between the 25 th percentile and 75th percentile +thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of +performance units granted under the plan to determine the payout amount. If all three metrics are achieved at the +maximum level and the Relative Total Shareholder Return modifier is maximized, the total plan payout would be +187.5%. +Stock Options and Restricted Stock +Stock options and restricted stock continue to play an important role in rewarding NEOs for the achievement of +long-term business objectives and providing incentives for the creation of shareholder value. Awards based on +Kroger’s common shares are granted annually to the NEOs. Kroger historically has distributed time-based equity +awards widely, aligning the interests of associates with interests of shareholders. +The options permit the holder to purchase Kroger common shares at an option price equal to the closing price +of Kroger common shares on the date of the grant. Options are granted only on one of the four dates of Board +meetings conducted at least one business day after Kroger’s public release of its quarterly earnings results. +The Compensation Committee determines the vesting schedule for stock options and restricted stock. During +2023, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four -year +ratable vesting schedule. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_62.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..99223b3eddc4b283a25df481a60af542dca81781 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_62.txt @@ -0,0 +1,51 @@ +60 + +Restricted stock awards are reported in the “Stock Awards” column of the Summary Compensation Table and +footnote 1 to the table and the 2023 Grants of Plan Based Awards Table. Stock option awards are reported in the +“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the +2023 Grants of Plan Based Awards Table. +Retirement and Other Benefits +Kroger maintains several defined benefit and defined contribution retirement plans for its associates. The NEOs +participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in +retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly +compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to +the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2023 Pension Benefits +Table and the accompanying narrative. +Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate. +This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation +each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be +found below in the 2023 Nonqualified Deferred Compensation Table and the accompanying narrative. +Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our +management associates who are classified as exempt under the federal Fair Labor Standards Act and certain +administrative or technical support personnel who are not covered by a collective bargaining agreement, with at least +one year of service. KEPP has a double trigger change in control provision, and it provides for severance benefits +and extended Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an +associate is actually or constructively terminated without cause within two years following a change in control of +Kroger (as defined in KEPP). Participants are entitled to severance pay of up to 24 months’ salary and annual +incentive target. The actual amount is dependent upon pay level and years of service. KEPP can be amended or +terminated by the Board at any time prior to a change in control. +Stock option and restricted stock grant agreements with award recipients provide that those awards “vest,” with +options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in control as +described in the grant agreements, but only if an associate is actually or constructively terminated without cause +within two years following a change in control of Kroger (as defined in the grant agreement, and consistent with +KEPP). +None of the NEOs are party to an employment agreement. +Perquisites +Our NEOs receive limited perquisites as the Compensation Committee does not believe that it is necessary for +the attraction or retention of management talent to provide executives with a substantial amount of compensation in +the form of perquisites. +Process for Establishing Executive Compensation +The Compensation Committee of the Board has the primary responsibility for establishing the compensation of +our executive officers, including the NEOs, with the exception of the CEO. The Compensation Committee’s role +regarding the CEO’s compensation is to make recommendations to the independent members of the Board; those +members of the Board establish the CEO’s compensation. +The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the +Compensation Committee in the design of compensation for executive officers and to advise with respect to the +unique circumstances of the 2023 compensation cycle. +Korn Ferry conducted an annual competitive assessment of executive positions at Kroger for the Compensation +Committee. The assessment is one of several factors, as described above, on which the Compensation Committee +determines compensation. The consultant assessed: +• base salary; +• target performance-based annual cash incentive; +• target annual cash compensation (the sum of salary and annual cash incentive potential); +• long-term incentive compensation, comprised of performance units, stock options and restricted stock; and \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_63.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc0fccb56158baeaa436066f4445973707409e12 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_63.txt @@ -0,0 +1,64 @@ +61 + +• total direct compensation (the sum of target annual cash compensation and long -term compensation). +In addition to the factors identified above, the consultant also reviewed actual payout amounts against the +targeted amounts. +The consultant compared these elements against those of other companies in a group of publicly traded +companies selected by the Compensation Committee. For 2023, our peer group consisted of: +Albertsons +Best Buy +Cardinal Health +Cencora, Inc (formerly known as +AmerisourceBergen) +Costco Wholesale +CVS Health +Home Depot +Johnson & Johnson +Lowe’s +Procter & Gamble +Sysco +Target +TJX Companies +Walgreens Boots Alliance +Walmart +The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. In +addition, the Compensation Committee considered supplemental data provided by its independent compensation +consultant from “general industry” companies, a representation of the Fortune 40, excluding financial services +companies. This data provided reference points, particularly for senior executive positions where competition for +talent extends beyond the retail sector. The peer group includes a combina tion of food and drug retailers, other large +retailers based on revenue size, and large consumer-facing companies. Median 2023 revenue for the peer group was +$108 billion, compared to our 2023 revenue of $150 billion. +Considering the size of Kroger in relation to other peer group companies, the Compensation Committee +believes that salaries paid to our NEOs should be competitively positioned relative to amounts paid by peer group +companies for comparable positions. The Compensation Committee also aims to provide an annual cash incentive +potential to our NEOs around the market median. Actual payouts may be as low as zero if performance does not +meet the baselines established by the Compensation Committee while superior fin ancial performance is rewarded +with compensation falling above the median. +The independent members of the Board have the exclusive authority to determine the amount of the CEO’s +compensation. In setting total compensation, the independent directors consider the median compensation of the +peer group’s CEOs. With respect to the annual incentive plan, the independent directors make two determinations: +(1) the annual cash incentive potential that will be multiplied by the corporate annual cash incentive +payout percentage earned that is applicable to the NEOs and (2) the annual cash incentive amount paid to the CEO +by retaining discretion to reduce the annual cash incentive percentage payout the CEO would otherwise receive +under the formulaic plan. The independent directors also retain discretion to determine the form of payout, to +include a portion in equity in place of cash. +The Compensation Committee performs the same function and exercises the same authority as to the other +NEOs. In its annual review of compensation for the NEOs, the Compensation Committee: +• Conducts an annual review of all components of compensation, quantifying total compensation for the NEOs +including a summary for each NEO of salary; performance-based annual cash incentive; and long-term +performance-based equity comprised of performance units, stock options and restricted stock. +• Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The +Compensation Committee has determined that the compensation of the CEO and that of the other NEOs +bears a reasonable relationship to the compensation levels of other executive positions at Kroger taking into +consideration performance and differences in responsibilities. +• Reviews a report from the Compensation Committee’s compensation consultant reflecting a comprehensive +review of each element of pay, both annual and long-term and comparing NEO compensation with that of +other companies, including both our peer group of competitors and a larger general industry group, to ensure +that the Compensation Committee’s objectives of competitiveness are met. +• Takes into account a recommendation from the CEO for salary, annual cash incentive potential and long - +term compensation awards for each of the senior officers including the other NEOs. The CEO’s +recommendation takes into consideration the objectives established by and the reports received by the +Compensation Committee as well as his assessment of individual job performance and contribution to our +management team. +The Compensation Committee does not make use of a formula, but both qualitatively and quantitatively +considers each of the factors identified above in setting compensation. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_64.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..32538bf68d6fbe90b54771484c760f91ea546ea6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_64.txt @@ -0,0 +1,53 @@ +62 +Stock Ownership Guidelines +To more closely align the interests of our officers and directors with your interests as shareholders, the Board +has adopted stock ownership guidelines. These guidelines require independent directors, executive officers, and +other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below: +Position Multiple +Chief Executive Officer 5 times base salary +President and Chief Operating Officer 4 times base salary +Executive Vice Presidents and Senior Vice Presidents 3 times base salary +Independent Directors 5 times annual base cash retainer +All covered individuals are expected to achieve the target level within five years of appointment to their +positions. Until the requirements are met, covered individuals, including the NEOs, must hold 100% of common +shares issued pursuant to performance units earned, shares received upon the exercise of stock options and upon the +vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes, +and must retain all Kroger common shares unless the disposition is approved in advance by the CEO, or by the +Board or Compensation Committee for the CEO. +Executive Compensation Recoupment Policy (Clawback) +Under the 2019 Amended and Restated Long-Term Incentive Plan (the “2019 Plan”), unless an award +agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after +termination the Compensation Committee determines either that (i) prior to termination, the participant engaged in +an act or omission that would have warranted termination for cause or (ii) after termination, the participant violates +any continuing obligation or duty of the participant with respect to Kroger, any gain realized by the participant from +the exercise, vesting or payment of any award may be cancelled, forfeited or recouped in the sole discretion of the +Committee. Under the 2019 Plan, any gain realized by the participant from the exercise, vesting or payment of any +award may also be recouped if, within one year after such exercise, vesting or payment, (i) a participant is +terminated for cause, (ii) the Compensation Committee determines that the participant is subject to recoupment +pursuant to any Kroger policy, or (iii) after a participant’s termination for any reason, the Compensation Committee +determines either that (1) prior to termination the participant engaged in an act or omission that would have +warranted termination for cause, or (2) after termination the participant violates any continuing obligation or duty of +the participant with respect to Kroger. Unless otherwise defined under 2019 Plan award agreement, “cause” has the +meaning as defined in The Kroger Co. Employee Protection Plan, as amended from time to time. +Additionally, if an award based on financial statements that are subsequently restated in a way that would +decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written +request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been +received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy +or applicable law. +We have adopted a +policy on incentive compensation-based recovery, which meets the requirements of +NYSE listing standards and Section 10D of the Exchange Act. The policy requires the recoupment of incentive- +based compensation paid to certain current and former executive officers in the event that the Company is required +to restate its financial results due to the Company’s material non-compliance with any financial reporting +requirement under the securities laws. Under the policy, the Company will seek recovery of erroneously awarded +incentive-based compensation received by current and former executive officers during the three-year fiscal year +period prior to the date the Company is required to prepare an accounting restatement. The Policy is administered b +y +the Compensation Committee of the Board. +Kroger also has an additional recoupment policy, which provides that if a material error of facts results in +the payment to an executive officer at the level of Group Vice President or higher of an annual or a long-term +incentive in an amount higher than otherwise would have been paid, as determined by the Compensation Committee, +then the officer, upon demand from the Compensation Committee, will reimburse Kroger for the amounts that would +not have been paid if the error had not occurred. This recoupment policy applies to those amounts paid by Kroger +within 36 months prior to the detection and public disclosure of the error or restatement. +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_65.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..f15e891f8e62c9bd6508a5e451f7208cf3652b28 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_65.txt @@ -0,0 +1,34 @@ +63 + +Prohibition on Hedging and Pledging +The Board has adopted a policy prohibiting Kroger directors and executive officers from engaging, directly or +indirectly, in the pledging of, hedging transactions in, or short sales of, Kroger securities. +Section 162(m) of the Internal Revenue Code +Prior to the effective date of the Tax Cuts and Jobs Act of 2017, Section 162(m) of the Code generally +disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year +to specified executive officers unless the compensation was “qualified performance-based compensation” under that +section. Pursuant to the Tax Cuts and Jobs Act of 2017, the exception for “qualified performance -based +compensation” under Section 162(m) of the Code was eliminated with respect to all remuneration in excess of +$1 million other than qualified performance-based compensation pursuant to a written binding contract in effect on +November 2, 2017 or earlier which was not modified in any material respect on or after such date (the legisl ation +providing for such transition rule, the “Transition Rule”). +As a result, performance-based compensation that the Compensation Committee structured with the intent of +qualifying as performance-based compensation under Section 162(m) prior to the change in the law may or may not +be fully deductible, depending on the application of the Transition Rule. In addition, compensation arrangements +structured following the change in law will be subject to the Section 162(m) limitation (without any exception for +performance-based compensation). Consistent with its past practice, the Committee will continue to retain flexibility +to design compensation programs that are in the best long-term interests of the Company and our shareholders, with +deductibility of compensation being one of a variety of considerations taken into account . +Compensation Committee Report +The Compensation Committee has reviewed and discussed with Kroger’s management the Compensation +Discussion and Analysis contained in this proxy statement. Based on its review and discussions with management, +the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be +included in Kroger’s proxy statement and incorporated by reference into its Annual Report on Form 10 -K. +Compensation Committee: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark Sutton + + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_66.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..cdc7e70cbb4bee3bf7546132ffec1afeff4a1dfd --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,89 @@ +64 + + Executive Compensation Tables +Summary Compensation Table +The following table and footnotes provide information regarding the compensation of the NEOs for the +fiscal years presented. + +Name and Principal +Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(1) +Option +Awards +($)(2) +Non-Equity +Incentive Plan +Compensation +($)(3) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($)(4) +All Other +Compensation +($)(5) +Total +($) +W. Rodney McMullen +Chairman and Chief +Executive Officer +2023 1,422,581 10,000,038 2,500,632 672,560 193,388 921,373 15,710,572 +2022 1,388,495 10,367,639 2,299,636 4,130,769 175,750 847,554 19,209,843 +2021 1,351,358 8,800,023 2,199,162 4,647,750 159,640 1,010,797 18,168,730 + +Gary Millerchip +Senior Vice President +and Chief Financial Officer +2023 901,411 3,400,063 850,220 224,176 313,928 5,689,798 +2022 809,879 3,358,792 749,879 1,269,231 265,342 6,453,123 +2021 726,815 2,800,022 699,735 1,498,006 261,842 5,986,420 + +Stuart W. Aitken +Senior Vice President and +Chief Merchant & Marketing +Officer +2023 1,003,024 3,400,063 850,220 211,950 325,497 5,790,754 +2022 915,632 3,346,838 749,879 1,269,231 277,694 6,559,274 +2021 878,387 2,800,022 699,735 1,527,013 300,214 6,205,371 + +Yael Cosset +Senior Vice President +and Chief Information Officer +2023 880,376 3,400,063 850,220 224,176 318,427 5,673,262 +2022 809,879 3,358,792 749,879 1,269,231 267,548 6,455,329 +2021 739,685 2,800,022 699,735 1,498,006 265,342 6,002,790 + +Timothy A. Massa +Senior Vice President +and Chief People Officer +2023 905,780 2,400,017 600,162 201,159 234,018 4,341,136 +2022 839,113 2,320,484 499,919 1,133,654 208,794 5,001,964 +2021 780,914 1,760,033 439,836 1,194,114 210,350 4,385,247 +(1) Amounts reflect the grant date fair value of restricted stock and performance units granted each fiscal year, as +computed in accordance with FASB ASC Topic 718. The following table reflects the value of each type of +award granted to the NEOs in 2023: +Name Restricted Stock Performance Units +Mr. McMullen $3,750,044 $6,249,994 +Mr. Millerchip $1,275,041 $2,125,022 +Mr. Aitken $1,275,041 $2,125,022 +Mr. Cosset $1,275,041 $2,125,022 +Mr. Massa $900,018 $1,499,999 + +The Restricted Stock values include the annual grant of restricted stock in 2023. +The grant date fair value of the performance units reflected in the stock awards column and in the table above is +computed 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. The assumptions used in calculating the val uations are set forth in Note 11 to +the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_67.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..c61c971d54919c2efda243441463d2e66143f100 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_67.txt @@ -0,0 +1,52 @@ +65 + +Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 202 3 +performance unit awards at the grant date is as follows: + +Name +Value of Performance Units +Assuming Maximum Performance +Mr. McMullen $11,718,756 +Mr. Millerchip $3,984,404 +Mr. Aitken $3,984,404 +Mr. Cosset $3,984,404 +Mr. Massa $2,812,509 + +(2) These amounts represent the aggregate grant date fair value of option awards computed in accordance with +FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the +consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. +(3) Non-equity incentive plan compensation earned for 2023 consists of amounts earned under the 2023 Annual +Incentive Plan. The 2023 Annual Incentive Plan was calculated at 24.02.% and was applied to each NEO’s +annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 22.71% of his annual incentive +target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. See +“2023 Annual Incentive Plan Results” in the Compensation Discussion and Analysis for more information on +this plan. +(4) The amount reported consists of preferential earnings on nonqualified deferred compensation, which only +applies to Mr. McMullen. The remainder of the NEOs do not participate in a defined benefit pension plan or in +a nonqualified deferred compensation plan. + Change in Pension Value. The actuarial present value of Mr. McMullen’s accumulated pension benefits +decreased by $168,788. This change in value of accumulated pension benefits is not included in the Summary +Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the +change in value of the benefit due to the increase in discount rates as well as the change in value of the benefit +due to aging. The Company froze the compensation and service periods used to calculate pension benefits for +active associates who participate in the affected pension plans, including Mr. McMullen’s, as of December 31, +2019. Beginning January 1, 2020, the affected active associates will no longer accrue additional benefits for +future service and eligible compensation received under these plans. Please see the 202 3 Pension Benefits +section for further information regarding the assumptions used in calculating pension benefits. + Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co. +Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings +of $193,388. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten - +year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of +each deferral year. For each participant, a separate deferral account is created each year and the interest rate +established for that year is applied to that deferral account until the deferred compensation is paid out. If the +interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long -term +interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of +the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts +in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual +earnings on the account exceed what the annual earnings would have been if the account earned interest at +120% of the corresponding federal rate, and discloses those amounts as prefer ential earnings. +(5) Amounts reported in the “All Other Compensation” column for 202 3 include Company contributions to defined +contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on +unvested restricted stock. In 2023, the total amount of perquisites and personal benefits for each of the NEOs +was less than $10,000. The following table identifies the value of each element of All Other Compensation: + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_68.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..f993f363c27de19e760db940b6c92b71d99286eb --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,104 @@ +66 + +Name +Retirement Plan +Contributions(a) +Payment of +Dividend +Equivalents +on Earned +Performance +Units +Dividends +Paid on +Unvested +Restricted +Stock +Mr. McMullen $ 307,075 $ 369,950 $ 244,348 +Mr. Millerchip $ 117,025 $ 117,712 $ 79,191 +Mr. Aitken $ 127,351 $ 117,712 $ 80,434 +Mr. Cosset $ 120,463 $ 117,712 $ 80,252 +Mr. Massa $ 106,831 $ 73,991 $ 53,196 + +(a) Retirement plan contributions. The Company makes automatic and matching contributions to NEOs’ +accounts under the applicable defined contribution plan on the same terms and using the same formulas as +other participating associates. The Company also makes contributions to NEOs’ accounts under the +applicable defined contribution plan restoration plan, which is intended to make up the shortfall in +retirement benefits caused by the limitations on benefits to highly compensated individuals under the +defined contribution plans in accordance with the Code. + +2023 Grants of Plan-Based Awards +The following table provides information about equity and non-equity incentive awards granted to the NEOs in +2023. + Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Future +Payouts Under +Equity Incentive +Plan Awards +All Other +Stock +Awards: +Number +of +Shares of +Stock or +Units +(#)(3) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#)(4) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards +($) +Name Grant +Date +Target +($)(1) +Maximum +($)(1) +Target +(#)(2) +Maximum +(#)(2) +W. Rodney +McMullen 2,800,000 5,600,000 + 3/9/2023 79,366 3,750,044 + 3/9/2023 165,893 47.25 2,500,632 + 3/9/2023 132,275 248,016 6,249,994 +Gary Millerchip 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Stuart W. Aitken 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Yael Cosset 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Timothy A. +Massa 850,000 1,700,000 + 3/9/2023 19,048 900,018 + 3/9/2023 39,815 47.25 600,162 + 3/9/2023 31,746 59,524 1,499,999 + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_69.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e08a2d7274157996914fd972199fd91d9722325 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,43 @@ +67 + + +(1) These amounts relate to the 2023 performance-based annual incentive plan. The amount listed under “Target” +represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more +than 200% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is +200% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were +paid out in March 2024; are described in the Compensation Discussion and Analysis; and are included in the +Summary Compensation Table for 2023 in the “Non-Equity Incentive Plan Compensation” column and +described in footnotes 1 and 3 to that table. See “2023 Annual Cash Incentive Plan” in CD&A for more +information about the program for 2023. +(2) These amounts represent performance units awarded under the 2023 Long-Term Incentive Plan, which covers +performance during fiscal years 2023, 2024 and 2025. The amount listed under “Maximum” represents the +maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target +amount. 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 u nder FASB +ASC Topic 718, excluding the effect of estimated forfeitures. 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. The aggregate +grant date fair value of these awards is included in the Summary Compensation Table for 2023 in the “Stock +Awards” column and described in footnote 1 to that table. +(3) These amounts represent the number of shares of restricted stock granted in 202 3. 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 202 3 in the “Stock +Awards” column and described in footnote 1 to that table. +(4) These amounts represent the number of stock options granted in 202 3. 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 202 3 in the “Option Awards” +column and described in footnote 2 to that table. +The Compensation Committee, and the independent members of the Board in the case of the CEO, established +the incentive potential amounts for the performance-based annual incentive awards (shown in this table as “Target”) +and the number of performance units awarded for the long-term incentive awards (shown in this table as “Target”). +Amounts are payable to the extent that Kroger’s actual performance meets specific performance metrics established +by the Compensation Committee at the beginning of the performance period. There are no guaranteed or minimum +payouts; if none of the performance metrics are achieved, then none of the award is earned and no payout is made. +As described in the CD&A, actual earnings under the performance-based annual incentive plan may exceed the +target amount if the Company’s performance exceeds the performance goals, but are limited to 2 00% of the target +amount. The potential values for performance units awarded under the 2023-2025 Long-Term Incentive Plan are +more particularly described in the CD&A. +The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts +on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate. Any +dividends declared on Kroger common shares are payable on unvested restricted stock. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_7.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bb21433eed46a0e9c1fb9f24c8d91604ee6cc18 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,89 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_70.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..87674e58ea6c6501b3686dfc3197ffa318ed3cf6 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_70.txt @@ -0,0 +1,105 @@ +68 + +2023 Outstanding Equity Awards at Fiscal Year-End +The following table provides information about outstanding equity-based incentive compensation awards for +the NEOs as of the end of 2023. The vesting schedule for each award is described in the footnotes to this table. The +market value of unvested restricted stock and unearned performance units is based on the closing price of Kroger’s +common shares of $46.14 on February 2, 2024, the last trading day of fiscal 2023. + + Option Awards Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares +or Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan Awards: +Number of +Unearned +Shares, +Units or +Other Rights +That Have +Not Vested +(#) +Equity +Incentive Plan +Awards: Market +or Payout Value +of Unearned +Shares, Units +or Other Rights +That Have Not +Vested +($) +W. Rodney McMullen 300,000 24.67 7/15/2024 27,044(5) 1,247,810 + 235,415 38.33 7/15/2025 47,224(6) 2,178,915 + 358,091 37.48 7/13/2026 45,324(7) 2,091,249 + 573,127 22.92 7/13/2027 79,366(8) 3,661,947 + 349,293 28.05 7/13/2028 24,712(9) 1,140,212 + 348,259 24.75 3/14/2029 64,510(10) 3,182,923 + 246,865 82,289(1) 29.12 3/12/2030 132,275(11) 6,555,550 + 130,486 130,487(2) 34.94 3/11/2031 + 35,714 107,144(3) 57.09 3/10/2032 + 165,893(4) 47.25 3/9/2033 +Gary Millerchip 9,600 24.67 7/15/2024 6,954(5) 320,858 + 13,992 38.33 7/15/2025 15,026(6) 693,300 + 27,972 37.48 7/13/2026 14,780(7) 681,949 + 34,905 22.92 7/13/2027 26,985(8) 1,245,088 + 30,251 28.05 7/13/2028 7,593(9) 350,341 + 82,919 24.75 3/14/2029 21,036(10) 1,037,916 + 51,116 22.08 7/15/2029 44,974(11) 2,228,911 + 63,480 21,160(1) 29.12 3/12/2030 + 41,518 41,519(2) 34.94 3/11/2031 + 11,646 34,938(3) 57.09 3/10/2032 + 56,404(4) 47.25 3/9/2033 +Stuart W. Aitken 11,149 22.92 7/13/2027 6,954(5) 320,858 + 33,124 28.05 7/13/2028 15,026(6) 693,300 + 99,503 24.75 3/14/2029 14,780(7) 681,949 + 63,480 21,160(1) 29.12 3/12/2030 26,985(8) 1,245,088 + 41,518 41,519(2) 34.94 3/11/2031 7,340(9) 338,668 + 11,646 34,938(3) 57.09 3/10/2032 21,036(10) 1,037,916 + 56,404(4) 47.25 3/9/2033 44,974(11) 2,228,911 +Yael Cosset 10,611 28.83 3/9/2027 6,954(5) 320,858 + 8,704 22.92 7/13/2027 15,026(6) 693,300 + 29,499 28.05 7/13/2028 14,780(7) 681,949 + 82,919 24.75 3/14/2029 26,985(8) 1,245,088 + 63,480 21,160(1) 29.12 3/12/2030 7,593(9) 350,341 + 41,518 41,519(2) 34.94 3/11/2031 21,036(10) 1,037,916 + 11,646 34,938(3) 57.09 3/10/2032 44,974(11) 2,228,911 + 56,404(4) 47.25 3/9/2033 + + +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_71.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..29ee1b2fc634ed125abcaebb3d400a9f37d12426 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_71.txt @@ -0,0 +1,66 @@ +69 + +Timothy A. Massa 29,970 38.33 7/15/2025 5,152(5) 237,713 + 25,889 37.48 7/13/2026 9,445(6) 435,792 + 45,065 22.92 7/13/2027 9,854(7) 454,664 + 40,561 28.05 7/13/2028 19,048(8) 878,875 + 66,336 24.75 3/14/2029 6,782(9) 312,921 14,024(10) 691,943 + 47,022 15,674(1) 29.12 3/12/2030 31,746(11) 1,573,331 + 26,097 26,098(2) 34.94 3/11/2031 + 7,764 23,292(3) 57.09 3/10/2032 + 39,815(4) 47.25 3/9/2033 + +(1) Stock options vest on 3/12/2024. +(2) Stock options vest in equal amounts on 3/11/2024 and 3/11/2025. +(3) Stock options vest in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(4) Stock options vest in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(5) Restricted stock vests on 3/12/2024. +(6) Restricted stock vests in equal amounts on 3/11/2024 and 3/11/2025. +(7) Restricted stock vests in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(8) Restricted stock vests in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(9) Restricted stock vests on 3/9/2024. +(10) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance through fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. +(11) Performance units granted under the 2023 long-term incentive plan are earned as of the last day of fiscal 2025, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance in fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. + +2023 Option Exercises and Stock Vested +The following table provides information regarding 2023 stock options exercised, restricted stock vested, and +common shares issued pursuant to performance units earned under long-term incentive plans. + + Option Awards(1) Stock Awards(2) +Name +Number of +Shares +Acquired on +Exercise +(#) +Value +Realized on +Exercise +($) +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized +on +Vesting +($) +W. Rodney McMullen 194,880 5,912,659 228,769 11,880,857 +Gary Millerchip — — 73,141 3,792,552 +Stuart W. Aitken — — 73,838 3,825,427 +Yael Cosset — — 72,323 3,753,949 +Timothy A. Massa 46,000 1,013,795 43,942 2,290,693 +(1) Stock options have a ten-year life and expire if not exercised within that ten-year period. The value +realized on exercise is the difference between the exercise price of the option and the closing price of +Kroger’s common shares on the exercise date. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_72.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..44b63cdbe70c850841da5b2a5c735a6d2035080a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,62 @@ +70 + +(2) The Stock Awards columns include vested restricted stock and earned performance units, as follows: + + Vested Restricted Stock Earned Performance Units +Name +Number of +Shares +Value +Realized +Number of +Shares +Value +Realized +W. Rodney McMullen 97,581 $4,598,611 131,188 $7,282,246 +Gary Millerchip 31,399 $1,475,454 41,742 $2,317,098 +Stuart W. Aitken 32,096 $1,508,329 41,742 $2,317,098 +Yael Cosset 30,581 $1,436,851 41,742 $2,317,098 +Timothy A. Massa 17,704 $834,222 26,238 $1,456,471 +Restricted stock. The table includes the number of shares acquired upon vesting of restricted stock and the +value realized on the vesting of restricted stock, based on the closing price of Kroger common shares on the vesting +date. +Performance Units. Participants in the 2021-2023 Long-Term Incentive Plan were awarded performance units +that were earned based on performance criteria established by the Compensation Committee as described in “20 21- +2023 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of +performance achieved and were paid in common shares. The number of common shares issued, and the value +realized based on the closing price of Kroger common shares of $ 55.51 on March 14, 2024, the date of deemed +delivery of the shares, are reflected in the table above. +2023 Pension Benefits +The following table provides information regarding pension benefits for the NEOs as of the last day of fiscal +2023. Only Mr. McMullen participates in a pension plan. +Name Plan Name +Number of +Years Credited +Service +(#)(1) +Present Value of +Accumulated +Benefit +($)(2) +Payments during +Last fiscal year +($) +W. Rodney McMullen Pension Plan 34 1,597,556 — + Excess Plan 34 17,854,044 — +Gary Millerchip Pension Plan — — — + Excess Plan — — — +Stuart W. Aitken Pension Plan — — — + Excess Plan — — — +Yael Cosset Pension Plan — — — + Excess Plan — — — +Timothy A. Massa Pension Plan — — — + Excess Plan — — — + +(1) In 2018, the Company froze the service periods used to calculate pension benefits and thus, Mr. McMullen’s +number of years of credited service is less than his actual 45 years of service. +(2) The discount rate used to determine the present values was 5.27% for The Kroger Consolidated Retirement +Benefit Plan Spin Off (the “Pension Plan”) and 5.25% for The Kroger Co. Consolidated Retirement Excess +Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting +purposes. Additional assumptions used in calculating the present values are set forth in Not e 14 to the +consolidated financial statements in Kroger’s 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_73.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..070855bf18c3dd25e6285166160597c528fd6a53 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_73.txt @@ -0,0 +1,60 @@ +71 + +Pension Plan and Excess Plan +In 2023, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan. +Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in +Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused +by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in +accordance with the Code. +Although participants generally receive credited service beginning at age 21, certain participants in the Pension +Plan and the Excess Plan who commenced employment prior to 1986, including Mr. McMullen, began to accrue +credited service after attaining age 25 and one year of service. The Pension Plan and the Excess Plan generally +determine accrued benefits using a cash balance formula but retain benefit formulas applicable under prior plans for +certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Mr. McMullen is +eligible for these grandfathered benefits. +Grandfathered Participants +Benefits for grandfathered participants are determined using formulas applicable under prior plans, including +the Kroger formula covering service to The Kroger Co. As a “grandfathered participant,” Mr. McMullen will receive +benefits under the Pension Plan and the Excess Plan, determined as follows: +• 11∕2% times years of credited service multiplied by the average of the highest five years of total earnings +(base salary and annual cash incentive) during the last ten calendar years of employment, reduced by 11∕4% +times years of credited service multiplied by the primary social security benefit; +• normal retirement age is 65; and +• unreduced benefits are payable beginning at age 62. + +In 2018, we announced changes to these company-sponsored pension plans. The Company froze the compensation +and service periods used to calculate pension benefits for active associates who participate in the affected pension +plans, including the NEO participants, as of December 31, 2019. Beginning January 1, 2020, the affected active +associates no longer accrue additional benefits for future service and eligible compensation received under these +plans. +2023 Nonqualified Deferred Compensation +The following table provides information on nonqualified deferred compensation for the NEOs for 2023. Only +Mr. McMullen participates in a nonqualified deferred compensation plan. + +Name +Executive Contributions +in Last FY +Aggregate Earnings +in Last FY(1) +Aggregate Balance +at Last FYE(2) +W. Rodney McMullen $77,500 $960,586 $15,144,738 +Gary Millerchip — — — +Stuart W. Aitken — — — +Yael Cosset — — — +Timothy A. Massa — — — +(1) This amount includes the aggregate earnings on Mr. McMullen’s account, including any above-market or +preferential earnings. The amount of $193,388 earned in 2023 is deemed to be preferential earnings and is +included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the +Summary Compensation Table for 2023. +(2) The amount of $4,188,521 for Mr. McMullen was reported in the Summary Compensation Tables covering +fiscal years 2006 – 2022. +Executive Deferred Compensation Plan +Mr. McMullen participates in the Deferred Compensation Plan, which is a nonqualified deferred compensation +plan. Participants may elect to defer up to 100% of the amount of their salary that exceeds the sum of the FICA +wage base and pre-tax insurance and other Code Section 125 plan deductions, as well as up to 100% of their cash +incentive compensation. Kroger does not match any deferral or provide other contributions. Deferral account +amounts are credited with interest at the rate representing Kroger’s cost of ten -year debt as determined by Kroger’s +CFO and approved by the Compensation Committee prior to the beginning of each deferral year. The interest rate +established for deferral amounts for each deferral year will be applied to those deferral amounts for all +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_74.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc2c16616fab2cb31c8d729a2e6eaf6f7bae4e8a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_74.txt @@ -0,0 +1,40 @@ +72 + +subsequent years until the deferred compensation is paid out. Participants can elect to receive lump sum distributions +or quarterly installments for periods up to ten years. Participants also can elect between lump sum distributions and +quarterly installments to be received by designated beneficiaries if the participant dies before distribution of deferred +compensation is completed. +Participants may not withdraw amounts from their accounts until they leave Kroger, except that Kroger has +discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency. +Participants who are “specified associates” under Section 409A of the Code, which includes the NEOs, may not +receive a post-termination distribution for at least six months following separation. If the associate dies prior to or +during the distribution period, the remainder of the account will be distributed to his or her designated beneficiary in +lump sum or quarterly installments, according to the participant’s prior election. +Potential Payments upon Termination or Change in Control +Kroger does not have employment agreements that provide for payments to the NEOs in connection with a +termination of employment or a change in control of Kroger. However, KEPP and award agreements for stock +options, restricted stock and performance units provide for certain payments and benefits to participants, including +the NEOs, in the event of a termination of employment or a change in control of Kroger, as defined in the applicable +plan or agreement. Our pension plans and nonqualified deferred compensa tion plan also provide for certain +payments and benefits to participants in the event of a termination of employment, as described above in the 202 3 +Pension Benefits section and the 2023 Nonqualified Deferred Compensation section, respectively. +The Kroger Co. Employee Protection Plan +KEPP applies to all management associates who are classified as exempt under the federal Fair Labor +Standards Act and to certain administrative or technical support personnel who are not covered by a collective +bargaining agreement, with at least one year of service, including the NEOs. KEPP provides severance benefits +when a participant’s employment is terminated actually or constructively within two years following a change in +control of Kroger, as defined in KEPP. The actual amount of the severance benef it is dependent on pay level +and years of service. Exempt associates, including the NEOs, are eligible for the following benefits: +• a lump sum severance payment equal to up to 24 months of the participant’s annual base salary and target +annual incentive potential; +• a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation; +• continued medical and dental benefits for up to 24 months and continued group term life insurance coverage +for up to six months; and +• up to $10,000 as reimbursement for eligible outplacement expenses. +In the event that any payments or benefits received or to be received by an eligible associate in connection with +a change in control or termination of employment (whether pursuant to KEPP or any other plan, arrangement or +agreement with Kroger or any person whose actions result in a change in control) would constitute parachute +payments within the meaning of Section 280G of the Code and would be subject to the excise tax under +Section 4999 of the Code, then such payments and benefits will either be (i) paid in full or (ii) reduced to the +minimum extent necessary to ensure that no portion of such payments or benefits will be subject to the excise tax, +whichever results in the eligible associate receiving the greatest aggregate amount on an after -tax basis. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_75.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..00496b2ac6052bc070e8eed34be12bf44e890f1b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_75.txt @@ -0,0 +1,114 @@ +73 + +Long-Term Incentive Awards +The following table describes the treatment of long-term incentive awards following a termination of +employment or change in control of Kroger, as defined in the applicable agreement. In each case, the continued +vesting, exercisability or eligibility for the incentive awards will end if the participant provides services to a +competitor of Kroger. +Triggering Event Stock Options Restricted Stock Performance Units +Involuntary Termination Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary +Termination/Retirement +• Prior to minimum age and +five years of service(1) +Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary Termination/ +Retirement +• After minimum +age and five years of service(1) +Unvested options held greater +than one year continue vesting +on the original schedule. All +options are exercisable for +remainder of the original 10- +year term +Unvested shares held +greater than one year +continue vesting on the +original schedule +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Death Unvested options are +immediately vested. All options +are exercisable for the +remainder of the original 10- +year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results +through the end of the fiscal year in +which death occurs. Award will be +paid following the end of such fiscal +year +Disability Unvested options are +immediately vested. All options +are exercisable for remainder of +the original 10-year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Change in Control(3) +• For awards prior to 2019 +Unvested options are +immediately vested and +exercisable +Unvested shares +immediately vest +50% of the units granted at the +beginning of the performance period +earned immediately +Change in Control(3) +• For awards in March 2019 +and thereafter +Unvested options only vest and +become exercisable upon an +actual or constructive +termination of employment +within two years following a +change in control +Unvested shares only vest +upon an actual or +constructive termination of +employment within +two years following a +change in control +50% of the units granted at the +beginning of the performance period +earned upon an actual or +constructive termination of +employment within two years +following a change in control +(1) The minimum age requirement is age 62 for stock options and restricted stock and age 55 for +performance units. +(2) The prorated amount is equal to the number of weeks of active employment during the performance period +divided by the total number of weeks in the performance period. +(3) These benefits are payable upon an actual or constructive termination of employment within two years after a +change in control, as defined in the applicable agreements. +Quantification of Payments upon Termination or Change in Control +The following table provides information regarding certain potential payments that would have been made to +the NEOs if the triggering event occurred on the last day of the fiscal year, February 3, 2024, given compensation, +age and service levels as of that date and, where applicable, based on the closing market price per Kroger common +share on the last trading day of the fiscal year ($46.14 on February 2, 2024). Amounts actually received upon the +occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the +market price of Kroger common shares, and the officer’s age, length of service and compensation level. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_76.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..72deef11134a54369f028c7d6f68c1f4eab486d1 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_76.txt @@ -0,0 +1,91 @@ +74 + + + +Name +Involuntary +Termination +Voluntary +Termination/ +Retirement Death Disability +Change +in Control +without +Termination +Change in +Control with +Termination +W. Rodney McMullen +Accrued and Banked +Vacation +$654,904 $654,904 $654,904 $654,904 $654,904 $654,904 +Severance – – – – – $8,400,000 +Continued Health +and Welfare +Benefits(1) +– – – – – $53,825 +Stock Options(2) $0 $2,862,013 $2,862,013 $2,862,013 $0 $2,862,013 +Restricted Stock(3) $0 $10,320,134 $10,320,134 $10,320,134 $0 $10,320,134 +Performance Units(4) $0 $4,018,713 $4,018,713 $4,018,713 $0 $5,375,149 +Executive Group Life +Insurance – – $2,000,000 – – – +Gary Millerchip +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,700,008 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,726 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,350,000 – – – +Stuart W. Aitken +Accrued and Banked +Vacation $11,539 $11,539 $11,539 $11,539 $11,539 $11,539 +Severance – – – – – $3,900,000 +Continued Health +and Welfare +Benefits(1) +– – – – – +$64,822 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,279,862 $3,279,862 $0 $3,279,862 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,500,000 + – – – +Yael Cosset +Accrued and Banked +Vacation $10,096 $10,096 $10,096 $10,096 $10,096 $10,096 +Severance – – – – – $3,650,016 + +Continued Health +and Welfare +Benefits(1) +– – – – – $34,081 +Stock Options(2) $0 $0 $825,156 $825,156 $0 $825,156 +Restricted Stock(3) $0 $0 $3,291,535 $3,291,535 $0 $3,291,535 +Performance Units(4) $0 $0 $1,338,766 $1,338,766 $0 $1,795,238 +Executive Group Life +Insurance – – $1,312,500 – – – +Timothy A. Massa +Accrued and Banked +Vacation $10,385 $10,385 $10,385 $10,385 $10,385 $10,385 +Severance – – – – – $3,500,016 +Continued Health +and Welfare +Benefits(1) +– – – – – +$53,286 +Stock Options(2) $0 $0 $559,069 $559,069 $0 $559,069 +Restricted Stock(3) $0 $0 $2,319,965 $2,319,965 $0 $2,319,965 +Performance Units(4) $0 $919,624 $919,624 $919,624 $0 $1,237,498 +Executive Group Life +Insurance – – $1,350,000 – – – + +(1) Represents the aggregate present value of continued participation in the Company’s medical, dental and +executive term life insurance plans, based on the premiums payable by the Company during the eligible period. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_77.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..94174d3819c7c7982fda02aa1988ce582a75dc64 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_77.txt @@ -0,0 +1,91 @@ +75 +The eligible period for continued medical and dental benefits is based on the level and length of service, which +is 24 months for all NEOs. The eligible period for continued executive term life insurance coverage is +six months for the NEOs. The amounts reported may ultimately be lower if the NEO is no longer eligible to +receive benefits, which could occur upon obtaining other employment and becoming eligible for substantially +equivalent benefits through the new employer. +(2) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the intrinsic value +of the accelerated vesting of unvested stock options, calculated as the difference between the exercise price of +the stock option and the closing price per Kroger common share on February 3, 2024. A value of $0 is +attributed to stock options with an exercise price greater than the market price on the last day of the fiscal year. +In accordance with SEC rules, no amount is reported in the “Voluntary Termination/Retirement” column +because vesting is not accelerated, but the options may continue to vest on the original schedule if the +conditions described above are met. +(3) Amounts reported in the “Death,” “Disability,” and “Change in Control” columns represent the aggregate value +of the accelerated vesting of unvested restricted stock. In accordance with SEC rules, no amount is reported in +the “Voluntary Termination/Retirement” column because vesting is not accelerated, but the restricted stock +may continue to vest on the original schedule if the conditions described above are met. +(4) Amounts reported in the “Voluntary Termination/Retirement,” “Death” and “Disability” columns represent the +aggregate value of the performance units granted in 2022 and 2023, based on performance through the last day +of fiscal 2023 and prorated for the portion of the performance period completed. Amounts reported in the +change in control column represent the aggregate value of 50% of the maximum number of performance units +granted in 2022 and 2023. Awards under the 2021 Long-Term Incentive Plan were earned as of the last day of +2023 so each NEO age 55 or over was entitled to receive (regardless of the triggering event) the amount +actually earned, which is reported in the Stock Awards column of the 202 3 Option Exercises and Stock Vested +Table. +Pay Versus Performance +As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item +402(v) of Regulation S-K, we are providing the following information about the relationship between executive +“compensation actually paid,” or “CAP,” and certain financial performance of the Company. For further +information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive +compensation with the Company’s performance, refer to the CD&A beginning on page 47. +PAY VERSUS PERFORMANCE TABLE* +(a) (b) (c) (d) (e) (f) (g) (h) +Year +Summary +Compensation +Table Total for +PEO +($)1 +Compensation +Actually Paid +to PEO +($)2 +Average +Summary +Compensation +Table Total for +Non-PEO +NEOs +($)3 +Average +Compensation +Actually Paid +to Non-PEO +NEOs +($)4 +Value of Initial Fixed +$100 Investment Based +on5 Net +Income +($)6 +(in millions) +Adjusted +FIFO +Operating +Profit +($)7 +(in millions) +Total +Share- +holder +Return +($) +Peer +Group +Total +Share- +holder +Return +($) +2023 15,710,572 16,841,015 5,373,738 5,669,814 186.91 164.01 2,164 4,986 +2022 19,209,843 23,325,794 6,117,423 6,281,085 178.23 140.77 2,244 5,079 +2021 18,168,730 36,111,316 5,644,957 9,323,327 168.66 145.25 1,655 4,310 +2020 22,373,574 29,840,084 6,932,437 9,191,933 131.19 123.01 2,585 4,056 +*Totals in the above table might not equal the summation of the columns due to rounding amounts to the nearest dollar. +1. During fiscal 2020, 2021, 2022 and 2023 Mr. McMullen served as our Principal Executive Officer +(“PEO”). The dollar amounts reported in column (b) are the amounts of total compensation reported for +each corresponding year in the Total column of the Summary Compensation Table (“SCT”). +2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. +McMullen as computed in accordance with Item 402(v) of Regulation S -K. The amounts do not reflect the +actual amount of compensation earned by or paid to Mr. McMullen during the applicable year. In \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_78.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..18473d1522978c77cf392e2e0bbdfb9063e52e58 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,99 @@ +76 + +accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made +to Mr. McMullen’s total compensation for each year to determine the CAP: + +PEO SCT Total to CAP Reconciliation + +Year +Reported +Summary +Compensation +Table for PEO +($) +Reported +Summary +Compensation +Table Value of +Equity +Awards(a) +($) +Equity Award +Adjustments(b) +($) + Reported +Change in the +APV of +Pension +Benefits in +Summary +Compensation +Table (c) +($) +Plus: Pension +Benefit +Adjustments(b)(c) +($) +Compensation +Actually Paid to +PEO +($) +2023 15,710,572 12,500,670 13,631,113 16,841,015 + +a) The amounts included in this column are the amounts reported in “Stock Awards” and “Option +Awards” column of the SCT for fiscal 2023 and are subtracted from the Reported Summary +Compensation Table for PEO. +b) The equity award and pension benefit adjustments for fiscal 2023 were calculated in accordance +with the methodology required by Item 402(v) of Regulation S-K as follow: the equity award +adjustments for each applicable year include the addition (or subtraction, as applicable) of the +following: (i) the year-end fair value of any equity awards granted in fiscal 2023 that are +outstanding and unvested as of the end of the year; (ii) the amount equal to the change as of the +end of fiscal 2023 (from the end of the prior fiscal year) in the fair value of any awards granted in +prior years that are outstanding and unvested as of the end of fiscal 2023; (iii) for awards that are +granted and vest in fiscal 2023, the fair value as of the vesting date; (iv) for awards granted in +prior years that vest in fiscal 2023, the amount equal to the change as of the vesting date (from the +end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined +to fail to meet the applicable vesting conditions during fiscal 2023, a deduction for the amount +equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends +or other earnings paid on stock or option awards in the applicable year prior to the vesting date +that are not otherwise reflected in the fair value of such award or included in any other component +of total compensation for the applicable year. The valuation assumptions used to calculate fair +values did not materially differ from those disclosed at the time of grant. The amounts deducted +or added in calculating the equity award adjustments for the PEO are provided in the table below : +PEO Equity Award Adjustments +Year +Year End Fair Value +of Awards Granted in +the Year +($) +YoY Change in Fair +Value of Outstanding +& Unvested Awards +($) +Fair Value as of +Vesting Date of +Awards Granted +and Vested in the +Year +($) +Year over Year +Change in Fair Value +of Awards Granted +in Prior Years that +Vested in the Year +($) +Total Equity Award +Adjustments +($) +2023 13,146,559 (1,842,542) - 2,327,096 13,631,113 + +c) The amounts included in this column are the amounts reported in “Change in Pension and +Nonqualifed Deferred Compensation” of the SCT for fiscal 2023. Total Pension Benefit +Adjustments are equal to the Pension Service Costs incurred during the relevant period. No Prior +Service Costs were incurred as no modifications were made to the pension plan during the relevant +period. +3. The dollar amounts reported in column (d) represent the average of the amounts reported for our non -PEO +NEOs as a group in the Total column of the SCT in fiscal 2023. +4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to +the Non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S -K. The +dollar amounts do not reflect the actual average amount of compensation earned by or paid to these NEOs \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_79.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f10dd9be09f593433f973d2998878d33dafad0f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,113 @@ +77 + +as a group during fiscal 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the +following adjustments were made to the average total compensation for these NEOs as a group for fiscal +2023 to determine the CAP using the same methodology as described in footnote 2: +Average Non-PEO NEOs Summary Compensation Table Total to CAP Reconciliation + +Year +Average +Reported +Summary +Compensation +Table for Non- +PEO NEOs +($) +Average +Reported +Summary +Compensation +Table Value of +Equity Awards +for non-PEO +NEOs +($) +Average Equity +Award +Adjustments(a) +($) +Average +Reported +Change in the +APV of +Pension +Benefits in +SCT(b) +($) +Plus: Average +Pension Benefit +Adjustments +($) +Average +Compensation +Actually Paid to +non-PEO NEOs +($) +2023 5,373,738 3,937,757 4,233,833 - - 5,669,814 + +(a) The amounts deducted or added in calculating the total average equity award adjustments are +provided in the table below: + +Equity Award Adjustments for Non-PEO NEOs +Year + +Average Year End +Fair Value of +Awards Granted +in the Year +($) + +Year over Year +Average Change in +Fair Value of +Outstanding & +Unvested Awards +($) +Average Fair Value +as of Vesting Date +of Awards Granted +and Vested in the +Year +($) +Year over Year +Average Change in +Fair Value of Awards +Granted in Prior +Years that Vested in +the Year +($) + + + + +Total Average +Equity Award +Adjustment +($) +2023 4,120,112 (543,557) - 657,278 4,233,833 + +(b) Total Pension Benefit Adjustments are equal to the Pension Service Costs incurred during the relevant +period. No Prior Service Costs were incurred as no modifications were made to the pension plan +during the relevant period. + +5. Cumulative TSR is calculated by dividing (a) the sum of the cumulative amount of dividends for the +measurement period, assuming dividend reinvestment, and the difference between the Company’s share +price at the end and the beginning of the measurement period by (b) the Company’s share price at the +beginning of the measurement period. The peer group selected by the Company for purposes of the TSR +benchmarking for the pay versus performance disclosures is the same peer group the Company uses for its +performance graph in the Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K. The +Peer Group consists of Albertsons Companies, Inc. (included from June 26, 2020 when it began trading), +Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., +Walgreens Boots Alliance Inc. and Walmart Inc. The cumulative TSR depicts a hypothetical $100 +investment in Kroger common shares on February 1, 2021, and shows the value of that investment over +time (assuming the reinvestment of dividends) for each calendar year. A hypothetical $100 investment in +the Peer Group using the same methodology is shown for comparison. +6. Net income is as reported in the Company’s audited financial statements for the applicable year in +accordance with U.S. GAAP. +7. Adjusted FIFO Operating Profit equals gross profit, excluding the LIFO charge, minus OG&A, minus rent, +and minus depreciation and amortization. For a reconciliation of non-GAAP information, see pages 29-36 +of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April +2, 2024. +Most Important Performance Measures +The three measures listed below represent the most important financial performance measures used by the Company +to link CAP to Company performance for the 2023 fiscal year: \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_8.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a5bc75074049b1646bf277577f2adad8da63e5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_8.txt @@ -0,0 +1 @@ +[This page intentionally left blank] \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_80.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea267736b846d72ef3024da9dfe02405fd8d9fc3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_80.txt @@ -0,0 +1,58 @@ +78 + +• Adjusted FIFO Operating Profit +• ID sales, without fuel +• Adjusted net earnings per diluted share attributable to The Kroger Co. + +For a reconciliation of non-GAAP information, see pages 29-36 of our Annual Report on Form 10-K for the fiscal +year ended February 3, 2024, filed with the SEC on April 2, 2024. +COMPANY SELECTED METRIC – Adjusted FIFO Operating Profit + + +NET INCOME GRAPHICAL REPRESENTATION + + + + + $- + $1,000 + $2,000 + $3,000 + $4,000 + $5,000 + $6,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Adj. FIFO Operating Profit +CAP +CAP vs. Adj. FIFO Operating Profit +CEO CAP Non-CEO NEO CAP Adj. FIFO Operating Profit + $- + $500 + $1,000 + $1,500 + $2,000 + $2,500 + $3,000 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +Net Income +CAP +CAP vs. Net Income +CEO CAP Non-CEO NEO CAP Net Income \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_81.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..47683554979ef6d27a05e20a2977f93428a098a5 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_81.txt @@ -0,0 +1,62 @@ +79 + +KROGER TSR GRAPHICAL REPRESENTATION + + +CEO Pay Ratio +As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and +Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total +compensation of our Chairman and CEO, Mr. McMullen, to the annual total compensation of our median associate. +As reported in the Summary Compensation Table, our CEO had annual total compensation for 202 3 of +$15,710,572. Using this Summary Compensation Table methodology, the annual total compensation of our median +associate for 2023 was $31,302. As a result, we estimate that the ratio of our CEO’s annual total compensation to +that of our median associate for fiscal 2023 was 502 to 1. Our median employee is a full-time associate in the +Central region. Over half of Kroger’s associates are part-time workers. +This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll +records and the methodology described below. The SEC rules for identifying the median compensated associate and +calculating the pay ratio based on that associate’s annual total compensation allow companies to adopt a variety of +methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their +compensation practices. As such, other companies may have different employment and compensation practices and +may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. +Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios report ed by other +companies and should not be used as a basis for comparison between companies. + +We identify the “median employee” from our employee population on the last day of our 12th fiscal period +(December 30, 2023), which included full-time, part-time, temporary, and seasonal employees who were employed +on that date. The consistently applied compensation measure we used was “base salary/wages paid,” which we +measured from the beginning of our payroll calendar year, January 1, 2023, through December 30, 2023; and as +reflected on 2023 W2 statements. For associates hired in 2023 or associates on le ave at the end of 2023, their +earnings were annualized based on their full-time equivalent percent and rate. We did not make any other +adjustments permissible by the SEC nor did we make any other material assumptions or estimates to identify our +median employee. There were no changes in our employee population or compensation arrangements that would +have significantly affected our pay ratio calculation. +We then determined the median associate’s annual total compensation using the Summary Compensation Table +methodology as detailed in Item 402(c)(2)(x) of Regulation S-K and compared it to the annual total compensation of +Mr. McMullen as detailed in the “Total” column of the Summary Compensation Table for 2023, to arrive at the pay +ratio disclosed above. Because our median associate in fiscal 2022 was not employed for all of fiscal 2023, we +identified a substitute median associate whose compensation is substantially similar as permitted under SEC rules on + $- + $20 + $40 + $60 + $80 + $100 + $120 + $140 + $160 + $180 + $200 + $- + $5,000,000 + $10,000,000 + $15,000,000 + $20,000,000 + $25,000,000 + $30,000,000 + $35,000,000 + $40,000,000 +2020 2021 2022 2023 +TSR +CAP +CAP vs. TSR Performance +CEO CAP Non-CEO NEO CAP TSR Peer Group TSR \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_82.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..4af60b708794cf105a4946864ffe282fe20c2fa4 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,51 @@ +80 + +March 25, 2024 because we reasonably believed that continuing to use the prior median associate would have +significantly affected our CEO pay ratio disclosure and the CEO pay ratio would not reflect the actual ratio that was +used to calculate the pay ratio. +Compensation Policies as They Relate to Risk Management +As part of the Compensation Committee’s review of our compensation practices, the Compensation Committee +considers and analyzes the extent to which risks arise from such practices and their impact on Kroger’s business. As +discussed in this Compensation Discussion and Analysis, our policies and practices for c ompensating associates are +designed to, among other things, attract and retain high quality and engaged associates. In this process, the +Compensation Committee also focuses on minimizing risk through the implementation of certain practices and +policies, such as the executive compensation recoupment policy, which is described above. Accordingly, we do not +believe that our compensation practices and policies create risks that are reasonably likely to have a material adverse +effect on Kroger. + +Item No. 2 – Advisory Vote to Approve Executive Compensation + +You are being asked to vote, on an advisory basis, to approve the compensation of our NEOs. +FOR The Board recommends a vote FOR the approval of compensation of our NEOs. + +The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we give our +shareholders the right to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed +earlier in this proxy statement in accordance with the SEC’s rules. +As discussed earlier in the CD&A, our compensation philosophy is to attract and retain the best management +talent and to motivate these associates to achieve our business and financial goals. Our incentive plans are designed +to reward the actions that lead to long-term value creation. To achieve our objectives, we seek to ensure that +compensation is competitive and that there is a direct link between pay and performance. To do so, we are guided by +the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. +The vote on this resolution is not intended to address any specific element of compensation. Rather, the vote +relates to the compensation of our NEOs as described in this proxy statement. The vote is advisory. This means that +the vote is not binding on Kroger. The Compensation Committee of the Board is responsible for establishing +executive compensation. In so doing, the Compensation Committee will consider, along with all other relevant +factors, the results of this vote. +We ask our shareholders to vote on the following resolution: +“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of +Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related +narrative discussion, is hereby APPROVED.” +The next advisory vote will occur at our 2025 Annual Meeting. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_83.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..104699c803a9d8469efe0ca1071efd17edb6c5bc --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,49 @@ +81 + +Item No. 3 – Ratification of the Appointment of Kroger’s Independent Auditor +You are being asked to ratify the appointment of Kroger’s independent auditor, PricewaterhouseCoopers +LLC. + +FOR The Board recommends a vote FOR the ratification of PricewaterhouseCoopers LLP as our +independent registered public accounting firm. +The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight +responsibilities regarding the Company’s financial reporting and accounting practices including the integrity of the +Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the +independent public accountants’ qualifications and independence; the performance of the Company’s internal audit +function and independent public accountants; and the preparation of the A udit Committee Report. The Audit +Committee performs this work pursuant to a written charter approved by the Board of Directors. The Audit +Committee charter most recently was revised during fiscal 2012 and is available on the Company’s website at +ir.kroger.com under Investors — Governance — Committee Composition. The Audit Committee has implemented +procedures to assist it during the course of each fiscal year in devoting the attention that is necessary and appropriate +to each of the matters assigned to it under the Audit Committee’s charter. The Audit Committee held 5 meetings +during fiscal year 2023. +Selection of Independent Auditor +The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, +retention, and oversight of Kroger’s independent auditor, as required by law and by applicable NYSE rules. On +March 14, 2024, the Audit Committee appointed PricewaterhouseCoopers LLP as Kroger’s independent auditor for +the fiscal year ending February 1, 2025. PricewaterhouseCoopers LLP or its predecessor firm has been the +Company’s independent auditor since 1929. +In determining whether to reappoint the independent auditor, our Audit Committee: +• Reviews PricewaterhouseCoopers LLP’s independence and performance; +• Considers the tenure of the independent registered public accounting firm and safeguards around auditor +independence; +• Reviews, in advance, all non-audit services provided by PricewaterhouseCoopers LLP, specifically with +regard to the effect on the firm’s independence; +• Conducts an annual assessment of PricewaterhouseCoopers LLP’s performance, including an internal +survey of their service quality by members of management and the Audit Committee; +• Conducts regular executive sessions with PricewaterhouseCoopers LLP; +• Conducts regular executive sessions with the Vice President of Internal Audit; +• Considers PricewaterhouseCoopers LLP’s familiarity with our operations, businesses, accounting policies +and practices and internal control over financial reporting; +• Reviews candidates for the lead engagement partner in conjunction with the mandated rotation of the public +accountants’ lead engagement partner; +• Reviews recent Public Company Accounting Oversight Board reports on PricewaterhouseCoopers LLP and +its peer firms; and +• Obtains and reviews a report from PricewaterhouseCoopers LLP describing all relationships between the +independent auditor and Kroger at least annually to assess the independence of the internal auditor. +As a result, the members of the Audit Committee believe that the continued retention of +PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of +our Company and its shareholders. +While shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor is +not required by Kroger’s Regulations or otherwise, the Board of Directors is submitting the selection of +PricewaterhouseCoopers LLP to shareholders for ratification, as it has in past years, as a good corporate governance \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_84.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f6f1aace35c86047d55485add2f891ff60317be --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,41 @@ +82 + +practice. If the shareholders fail to ratify the selection, the Audit Committee may, but is not required to, reconsider +whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the +appointment of a different auditor at any time during the year if it determines that such a change would be in the best +interests of our Company and our shareholders. +A representative of PricewaterhouseCoopers LLP is expected to participate in the meeting to respond to +appropriate questions and to make a statement if he or she desires to do so. +Audit and Non-Audit Fees +The following table presents the aggregate fees billed for professional services performed by +PricewaterhouseCoopers LLP for the annual audit and quarterly reviews of our consolidated financial statements for +fiscal 2023 and 2022, and for audit-related, tax and all other services performed in 2023 and 2022. + + Fiscal Year Ended + February 3, +2024 +($) +January 28, +2023 +($) +Audit Fees(1) 6,738,000 5,886,900 +Audit-Related Fees 1,394,000 982,000 +Tax Fees(2) 155,049 153,000 +All Other Fees(3) 970 5,850 +Total 8,288,019 7,027,750 + +(1) Includes annual audit and quarterly reviews of Kroger’s consolidated financial statements, the issuance +of comfort letters to underwriters, consents, and assistance with review of documents filed with the +SEC. +(2) Includes pre-approved assistance with tax compliance and assistance in connection with tax audits. +(3) Includes use of accounting research tool. +The Audit Committee requires that it approve in advance all audit and non -audit work performed by +PricewaterhouseCoopers LLP. Pursuant to the Audit Committee audit and non -audit service pre-approval policy, the +Committee will annually pre-approve certain defined services that are expected to be provided by the independent +auditors. If it becomes appropriate during the year to engage the independent accountant for additional services, the +Audit Committee must first approve the specific services before the in dependent accountant may perform the +additional work. +PricewaterhouseCoopers LLP has advised the Audit Committee that neither the firm, nor any member of the +firm, has any financial interest, direct or indirect, in any capacity in Kroger or its subsidiaries. +The Board of Directors Recommends a Vote For This Proposal. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_85.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d27a9b396858f04a87b7a43098f19350ddf296c --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,36 @@ +83 + +Audit Committee Report +Management of the Company is responsible for the preparation and presentation of the Company’s financial +statements, the Company’s accounting and financial reporting principles and internal controls, and procedures that +are designed to provide reasonable assurance regarding compliance with accounting standards and applicable laws +and regulations. The independent public accountants are responsible for auditing the Company’s financial +statements and expressing opinions as to the financial statements’ conformi ty with generally accepted accounting +principles and the effectiveness of the Company’s internal control over financial reporting. +In performing its functions, the Audit Committee: +• Met separately with the Company’s internal auditor and PricewaterhouseCoopers LLP with and +without management present to discuss the results of the audits, their evaluation and +management’s assessment of the effectiveness of Kroger’s internal controls over financial +reporting and the overall quality of the Company’s financial reporting; +• Met separately with the Company’s Chief Financial Officer or the Company’s General Counsel +when needed; +• Met regularly in executive sessions; +• Reviewed and discussed with management the audited financial statements included in our Annual +Report; +• Discussed with PricewaterhouseCoopers LLP the matters required to be discussed under the +applicable requirements of the Public Company Accounting Oversight Board and the SEC; and +• Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the +applicable requirements of the Public Accounting Oversight Board regarding the independent +public accountant’s communication with the Audit Committee concerning independ ence and +discussed the matters related to their independence. +Based upon the review and discussions described in this report, the Audit Committee recommended to the +Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report +on Form 10-K for the year ended February 3, 2024, as filed with the SEC. +This report is submitted by the Audit Committee. +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_86.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..4844a5ece43a1bb2a0e9cfd8626807b571e50910 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,49 @@ +84 +Items 4 – 7 +SHAREHOLDER PROPOSALS +Included in this proxy statement are four separate shareholder proposals that have been submitted under SEC +rules by shareholders who notified the company of their intention to present the proposals for voting at the 202 4 +Annual Shareholders’ Meeting. Some shareholder proposals and supporting statements may contain assertions about +Kroger that we believe are incorrect, and we have not tried to refute all such inaccuracies in the company’s +responses. All statements and citations contained in a shareholder proposal and its supporting statements are the sole +responsibility of the proponent of that shareholder proposal. Our company will provide the names, addresses, and +shareholdings (to our company’s knowledge) of the proponents of any shareholder proposal upon oral or written +request made to Corporate Secretary, The Kroger Co., 1014 Vine Street, Cincinnati, Ohio 45202 -1100. The +information on, or accessible through, Kroger’s websites or report links included in this proxy statement, including +the statements that follow, is not part of, or incorporated by reference into, this proxy statement. +AGAINST The Board recommends a vote AGAINST each of the following shareholder proposals, in each +case if properly presented at the meeting, for the reasons stated in Kroger’s statements in +opposition following each shareholder proposal. +Item No. 4 – Shareholder Proposal – Report on Public Health Costs from Sale of Tobacco Products +We have been advised that The Sisters of St. Francis of Philadelphia or an appointed representative, along with eight +co-filers, will present the following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“RESOLVED, shareholders ask that the board commission and disclose a report on the external public health +costs created by the sale of tobacco products by our company (the "Company") and the manner in which such +costs affect the vast majority of its shareholders who rely on overall market returns. +The negative health and productivity impacts from consumption of tobacco products impose $1.2 trillion in +social damage; tobacco's unpriced social burden amounts to almost 3 percent of global GDP annually.1 Yet , +in spite of the Company dedicating an entire division , Kroger Health, to addressing its customers' healthcare +needs2, as well as the overwhelming evidence that tobacco - a known carcinogen that impairs respiratory +function - significantly prejudices the health outcomes of smokers, the Company continues to sell tobacco +products in its stores. In 2019 the company discontinued the sale of e-cigarettes in response to news reports +of vaping-related illnesses and deaths. The science on cigarettes and other combustible tobacco products is +settled. They cause illness and death. +These public health costs, year after year, are devastating to economic growth and further compound the +financial devastation wrought by the COVID-19 pandemic. Yet Kroger does not disclose any methodology +to address the public health costs of its tobacco sales. Thus, shareholders have no guidance as to costs the +Company is externalizing and consequent economic harm. This information is essential to shareholders, the +majority of whom are beneficial owners with broadly diversified interests. +But Kroger undermines its commitments to promoting good health and ultimately the interests of its +diversified shareholders by not disclosing the social and environmental costs and risks imposed on +stakeholders, even when these costs and risks threaten society, the economy and the performance of other +companies. All stakeholders are unalterably harmed when companies impose costs on the economy that +lower GDP, which reduces equity value.3 While the Company may profit by ignoring costs it externalizes, +diversified shareholders will ultimately pay these costs, and they have a right to ask what they are. +The Company's disclosures do not address this issue, because they do not address the public health costs +that Kroger's tobacco sales impose on shareholders as diversified investors who must fund retirement, +education, public goods and other critical social needs. This is a separate social issue of great importance. A +report would help shareholders determine whether these externalized costs and the economic harm they may +create ultimately serve their interests.” +1 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm +2 Kroger Health – Business & Community Health Solutions +3 https://www.unempfi.org/fileadmin/documents/universal_ownership_full.pdf \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_87.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..f47672c2bb1dacd5048b8aaf2c62d3a3baa7365e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,44 @@ +85 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger takes the responsibility of selling tobacco products very seriously and has established policies and processes +to limit the sale of these items only to customers who are legally permitted to purchase them. We offer customers a +wide range of choices across all product categories to meet wide-ranging tastes and preferences, including food and +discretionary items. +The Company supports our customers’ freedom of choice and offers a variety of ways to improve health, +including tobacco cessation. +The Kroger family of companies is committed to ethical and responsible behavior in all parts of our business. Our +behavior is rooted in Our Purpose – to Feed the Human Spirit™ – and our promise to our customers. This includes +upholding Our Values, which have been the foundation of Kroger’s culture for decades. The Audit Committee and +Public Responsibilities Committee of the Board of Directors oversee progress in regulatory compliance and +pharmacy safety measures. +We recognize our responsibility as a business to support our communities and help families by making it easier for +them to live healthier lives. We also believe in our customers’ freedom of choice, and adult customers can choose to +purchase tobacco products understanding fully the potential health impacts. +The Company designs its approach and policies to comply with regulations governing the sale of tobacco +products. +Tobacco sales, like the sales of many products, are governed by regulations, which we strictly follow. The +Company’s Tobacco Sales Policy is designed to comply with these regulations and affirm our commitment to the +health and welfare of our nation’s youth by reducing adolescent access to tobacco. The policy outlines internal +business procedures and best practices to maintain compliance at retail stores. +The Company continually reviews its product assortment, including tobacco and tobacco cessation products. +Notably, recent studies show the percentage of U.S. adults who smoke cigarettes remains near record lows.1 Sales +for both tobacco products and tobacco cessation products at Kroger have similarly decreased in recent years. +The Company encourages health and healthier choices through our core grocery business, Kroger Health +strategy, and community engagement. +We aim to serve and improve health for millions of people across the country through our business operations, ESG +strategy, and Kroger Health’s convenient and accessible services. We encourage healthy food and lifestyle choices +to support our customers and communities, offering tools, resources and services that advance population health. We +inform our customers and associates about the importance of healthy choices, and we equip Kroger Health's retail +pharmacy and health clinic teams and telehealth counselors to support people making healthier choices, including +quitting tobacco. +Specifically related to the use of tobacco products, we: +• Offer smoking cessation coaching programs that are available to all, including coaching through telehealth +services; +• Offer affordable prescription and over-the-counter smoking cessation products that are available to all; and +• Encourage associates not to use tobacco through Company health plan incentives, coverage for +smoking cessation products, and employee assistance programs for smoking cessation. +Kroger continues to make a wide range of fresh, nutritious foods as well as health and wellness services more +affordable and convenient for millions of customers and for local communities across the U.S. As a trusted local +partner, we also provide essential support for our communities by offering a wide range of vaccinations that prevent +disease and improve population health. +1 https://news.gallup.com/poll/509720/cigarette-smoking-rate-steady-near-historical-low.aspx \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_88.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5440785382803f96535c5a856bde3890ab6af3f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_88.txt @@ -0,0 +1,38 @@ +86 +Additional public reporting on tobacco use is not in the best interests of our shareholders. +Assessing the external public health costs related to the Company’s sale of a single category of products is not +reasonable or practicable given the resources and expertise required to consider all externalities and related topics +outside of our control. In light of the above, we do not believe an additional report would add meaningfully to the +extensive body of research currently available on this subject and therefore do not believe such an additional report +is necessary. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 5 – Listing of Charitable Contributions of $10,000 or more +We have been advised that The Louis B & Diana R Eichhold Trust or an appointed representative will present the +following proposal for consideration during the 2024 Annual Shareholders’ Meeting. +“Whereas the Company's charitable contributions, properly managed, are likely to enhance the reputation of the +Company; +Whereas increased disclosure regarding appropriate charitable contributions can create good will for our Company; +Whereas making the benefits of our Company's philanthropic programs better known is likely to promote the +company's interests; +Whereas feedback from employees, shareholders, and customers could help guide the Company's future charitable +giving process. +Resolved: The Proponent requests that the Board of Directors consider listing on the Company website any +recipient of $10,000 or more of direct contributions, excluding employee matching gifts. +Supporting Statement +Absent a system of accountability and transparency, some charitable contributions may be made unwisely, +potentially harming the Company's reputation and shareholder value. Corporate philanthropic gifts should be given +as much exposure as possible, lest their intended impact on goodwill is diminished. For example, if we gave to the +American Cancer Society, thousands our stakeholders might potentially approve of our interest in challenging this +disease. Likewise, our support of Planned Parenthood could win the praise of millions of Americans who have had +an abortion at one of their facilities. Educational organizations like the Southern Poverty Law Center have seen an +increase in funding since they included several conservative Christian organizations on their list of hate groups. +Our stake holders and customers might be similarly enthused if we supported them. Be it the Girl Scouts, +American Heart Association, Boys and Girls Club of America, Red Cross, or countless possible recipients, our +support should be publicly noted. Those who might disagree with our decisions can play a valuable role also. Some +charities may be controversial. +Charitable contributions come from the fruit of our employee's labor and belong to our shareholders. Both groups +represent a wide diversity of opinions. More importantly, we market ourselves to the general public and should +avoid offending segments of this most critical group. It would be unfortunate if a charitable contribution resulted in +lower employee morale and shareholder interest, much less a loss of potential revenue. +Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more +beneficial choices.” \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_89.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..319844685491d30ce79248db0b384d0fb6509cae --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_89.txt @@ -0,0 +1,45 @@ +87 +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long history of giving back meaningfully in the communities we serve. Charitable giving is central to +Our Purpose – to Feed the Human Spirit – and strategically aligned to our mission – Kroger’s Zero Hunger | Zero +Waste impact plan. This plan enables Kroger to pursue our goal to help create communities free of hunger and waste +across the country. Additionally, we provide annual public disclosures related to charitable giving areas of focus and +grant-making. +Every year, we direct charitable contributions at the national, regional, and local levels to advance positive impacts +for people and our planet. This giving includes funds, in-kind product donations, and retail store donations of +surplus fresh food that our associates recover for local food bank partners through our leading Zero Hunger | Zero +Waste Food Rescue program. For example, in 2023, 100% of our retail stores participated in the Food Rescue +program, donating more than 114 million pounds of fresh food to our communities. +Through corporate giving and the work of our two nonprofit foundations – The Kroger Co. Foundation and The +Kroger Co. Zero Hunger | Zero Waste Foundation – we direct more than $300 million annually to partners and +causes that align with our mission. Of this, more than 75% supports hunger relief programs to feed individuals and +families where we live and work. These totals include support from our associates and customers through in -store +fundraising programs at checkout that benefit the Zero Hunger | Zero Waste Foundation. The largest share of +corporate funds, in-kind product donations, and customer donations is directed to the Feeding America -affiliated +network of local food banks, pantries, and agencies in our communities. +Other national organizations receiving significant charitable funds from Kroger include No Kid Hungry, American +Red Cross, United Service Organizations (USO), American Heart Association, and World Wildlife Fund. Notably, +Kroger is the largest cumulative corporate donor to the USO in the organization’s history, showing our long- +standing support for the nation’s active-duty military service men and women and their families. At the regional and +local levels, we support other nonprofit organizations and causes that matter most to our associates and customers. +The Company provides substantial public reporting on nonprofit foundation grant -making. +Kroger provides detailed annual disclosures on the work of our two foundations. As registered charitable +organizations with 501(c)(3) status, a list of each foundation’s annual grants is publicly available through Form 990 - +PF filings. +The Kroger Co. Foundation, the Company’s private foundation established in 1987, focuses grant-making on +causes that support hunger relief; sustainability; disaster relief; diversity and inclusion; and education and youth +development. The Foundation’s 2023 Report includes grantee highlig hts and a view of funding levels across the +country. This report is available here: https://www.thekrogerco.com/wp-content/uploads/2022/08/Kroger-Co- +Foundation-2022-Report.pdf. The information on, or accessible through, this website is not part of, or incorporated +by reference into this proxy statement. +In 2022, the Kroger Foundation directed $8 million in grants, of which 60% aligned with hunger relief and +sustainability causes. Specific grants and grant recipients are highlighted in the foundation annual report. +The Kroger Co. Zero Hunger | Zero Waste Foundation, a nonprofit public charity established in 2018, is +designed to advance collective action and innovation to build a better food system for the future. More about the +Zero Hunger | Zero Waste Foundation is available here: https://thekrogercozerohungerzerowastefoundation.com/. +The information on, or accessible through, this website is not part of, or incorporated by reference into this proxy +statement. +More details about the Foundation’s general grant-making and signature program, the Zero Hunger | Zero Waste +Innovation Fund, are disclosed in its 2023 annual report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/The-Kroger-Co-Zero-Hunger-Zero-Waste-Foundation-Report_2023.pdf. The information +on, or accessible through, this website is not part of, or incorporated by reference into this proxy statement. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_9.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..32392e5656976d2db62098ad872b76fe5c7d47aa --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,39 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_90.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5e7886c594de775f84d0cb6887516abf35526b --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +88 +In 2022, the Zero Hunger | Zero Waste Foundation directed $11.3 million in grants; of these, 96% aligned to hunger +relief and sustainability causes. Grants included $8.4 million in funds to improve food access and food security and +$2.3 million to advance more sustainable food systems. Grant highlights are included in the Zero Hunger | Zero +Waste Foundation report. +We follow established guidelines for charitable giving. +Kroger follows best practices and specific guidelines when reviewing grant requests. Our Donation Guidelines +provide direction on the types of organizations that Kroger supports and, importantly, make clear the types of +organizations to which donations will not be granted. We accept and consider donation requests from 501(c)(3) +registered nonprofit organizations through an online grant management platform. We use the Guidestar Charity +Check to confirm they meet all Internal Revenue Service requirements to receive grants and donations. The +Company’s Donation Guidelines are publicly available here: https://thekrogerco.versaic.com/login?Select-A- +Store=Enabled&ReturnTo=/default.aspx. The information on, or accessible through, this website is not part of, or +incorporated by reference into this proxy statement. +We do not make charitable donations to individuals, political campaigns, sectarian or religious organizations for +projects that serve only its own members or supporters, or organizations that discriminate based on race, color, sex, +pregnancy, disability, age, national origin, religion, sexual orientation, gender identity, genetic information, or any +other characteristic protected by applicable law. +The Company has adequate public disclosures related to charitable giving areas of focus and annual grant- +making. +We believe the extensive information and other disclosures already provided in Kroger’s annual ESG report, The +Kroger Co. Foundation annual report, The Kroger Co. Zero Hunger | Zero Waste Foundation annual report, public +filings, and our website provide ample disclosures related to charitable giving. Additional reporting on charitable +giving at this time is an unnecessary and inefficient use of shareholder resources. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 6 – Shareholder Proposal – Living Wage Policy +We have been advised that Shareholder Commons, on behalf of LGIM America, or an appointed representative, +along with four co-filers, will present the following proposal for consideration during the 2024 Annual +Shareholders’ Meeting. +“ITEM 6: Set compensation policy that optimizes portfolio value for Company shareholders BE IT RESOLVED, +shareholders ask that the board and management exercise their discretion to establish Company wage policies that +are consistent with fiduciary duties and reasonably designed to provide workers with the minimum earnings +necessary to meet a family’s basic needs, because Company compensation practices that fail to provide a living +wage are harmful to the economy and therefore to the returns of diversified shareholders.1 +Supporting Statement: +Kroger increased associates’ average hourly wage to $18/hour in 2023, suggesting its lowest paid workers earn still less. +The living wage in 2022 was $25.02 per hour per worker annually for a family of four (two working adults)2. Kroger’s +CEO, meanwhile, makes 671 times more than the Company’s median employee. While Kroger’s workforce is 49.6 +percent female and 40.6 percent people of color, these groups compose only 31.7 percent and 26.3 percent of store +leaders3, indicating they make up a disproportionate number of employees not earning a living wage. +1 https://theshareholdercommons.com/case-studies/labor-and-inequality-case-study/ +2 https://livingwage.mit.edu/articles/103-new-data-posted-2023-living-wage-calculaor +3 https://thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_91.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e2d7944a37d54dbbe581f70c243a1e3aa5a6c9 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,48 @@ +89 +In response to a recent survey, 75 percent of Kroger workers said they were food insecure, 14 percent said they were +homeless, and 63 percent said they earned too little to cover basic expenses.4 +Such inequality and disparity harm the entire economy. For example, closing the living wage gap worldwide could +generate an additional $4.56 trillion every year through increased productivity and spending, 5 translating to a more +than 4 percent increase in annual GDP. A 2020 report found that had four ke y racial gaps for Black Americans— +wages, education, housing, and investment—been closed in 2000, $16 trillion could have been added to the U.S. +economy. Closing those gaps in 2020 could have added $5 trillion t o the U.S. economy over the ensuing five years.6 +By underpaying so many of its employees, Kroger may believe it will increase margins and thus financial +performance. But gain in Company profit that comes at the expense of society and the economy is a bad trad e for +Company shareholders who are diversified and rely on broad economic growth to achieve their financial objectives. +The costs and risks created by low wages and inequality will directly reduce long- term diversified portfolio returns +because a drag on GDP directly reduces returns on diversified portfolios.7 +This proposal asks the Board to set a Company compensation policy of paying a living wage to prevent contributing +to inequality and racial/gender disparity. Kroger could achieve this Proposal’s objective by securing Living Wage +for US Employer certification.8 Additionally, MIT has an online living wage calculator, or Kroger can work within +frameworks promulgated by organizations such as IDH Sustainable Trade Initiative or The Living Wage Network. +Kroger should use such frameworks in a manner that allows shareholder s to gauge compliance and progress, while +providing the Company with discretion as to how to achieve the living-wage goal. +Please vote for: Set compensation policy that optimizes portfolio value for Company shareholders – +Proposal 6” +The Board of Directors Recommends a Vote Against the Proposal for the Following Reasons: +Kroger is proud to be an employer with a culture of opportunity and advancement that has created an environment +where people from any walk of life can come for a job and discover for a career. Kroger has provided an incredible +number of +people with first jobs, second chances, and lifelong careers and we take seriously our role as a leading +employer in the United States. +Proponents acknowledge Kroger’s progress in raising associate wages. +Kroger’s national average hourly rate is nearly $19 per hour and its average hourly rate inclusive of benefits like health +care and retirement is nearly $25 per hour. +In fact, Kroger has raised wages more than 33% the last five years, far outpacing inflation. The Company has invested +a total of $2.4 billion in incremental investments since 2018, which has increased our national average hourly rate of +pay from $13.66 to nearly $19, or nearly $25 per hour with comprehensive benefits. +In addition to Kroger’s historic investments in wages and benefits, the Company is committed to growing +tomorrow’s leaders through programs including free financial coaching and our education benefit, which offers +associates up to $21,000 in tuition reimbursements, available to both full and part time associates. +Kroger will continue investing in wages in 2024. +Kroger will continue making significant incremental investments in associates in 2024. These investments are +included in Kroger’s forward-looking financial model. These continued investments will further raise average hourly +rates, continue improving healthcare options, establish new training and development opportunities, and more. +The majority of Kroger’s workforce is covered under collective bargaining agreements, which facilitate pay equity +for frontline associates. Wages, healthcare and pensions are included in approximately 350 collective bargaining +agreements that cover approximately 64% of our associates. The negotiated pay structures within those agreements +4 https://www.mytimes.com/2022/02/12/business/kroger-grocery-stores-workers-pay.html +5 https//tacklinginequality.org/files/introduction.pdf +6 https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3ldy7vY59bOtN2lxVQM= +7 https://www.epi.org/publication/secular-stagnation/ +8 https://livingwageforus.org/becoming-certified/ \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_92.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d7794945075480ded5fd7658fb2ed3a86eb0d6a --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,51 @@ +90 +facilitate standard and consistent pay progression based on tenure and experience. Pay parity is promoted within the +model because of the structured wage grids and inherent progression framework. Non -union hourly roles follow +similar wage progressions. +Kroger’s pay policies confirm there are no meaningful differences in pay for associates by race or gender. +Earlier this year, Kroger published a new Statement on Pay Equity to reflect findings from our annual pay analysis to +monitor the company’s performance and identify unintended discrepancies in compensation practices. In 2023 we +enhanced the methodology for pay analyses to align with evolving industry standards. Our review of associates’ total +compensation for calendar year 2023, including base pay, cash bonuses and equity, adjusting for factors such as +position, tenure, performance, geographic location and collective bargaining unit, confirms there are no meaningful +differences in pay on an adjusted basis for associates who self-identify as male, female or a person of color. +Kroger’s aim is to strike a balance between significantly increasing wages for our associates over time while +also keeping food affordable for our customers. +The Board’s fiduciary duty includes the obligation to maintain a financially sustainable and growing business over +time, which allows Kroger to create additional social and economic benefits, most notably the creation of more jobs +and growth opportunities, for more people in our communities. +Adopting a nascent, under -developed and overly -prescriptive approach to well -established pay policies, especially +one that fails to account for free -market dynamics, is unnecessary and potential harmful to the interests of Kroger’s +associates, customers, communities, and shareholders – all of whom benefit from the Company’s thoughtful approach +to wage policy and sustainable growth. +Considering the Company’ current transparency and disclosures on this topic, and its established framework that takes +into account geographical and market -based pay differences, ensures equal pay for equal work, and the fact that the +majority of our workfo rce is covered under collective bargaining agreements, we recommend a vote AGAINST this +motion. +For the foregoing reasons, we urge you to vote AGAINST this proposal. +Item No. 7 – Just Transition Report +We have been advised that Domini Impact Equity Fund or an appointed representative will present the following +proposal for consideration during the 2024 Annual Shareholders’ Meeting. +1 https://www.ilo.org/wcmsp5/groups/public/@ed_emp/@emp_ent/documents/publication/wcms_432859.pdf; +https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--- publ/documents/publication/wcms_711919.pdf +2 https://assets.worldbenchmarkingalliance.org/app/uploads/2021/07/Just-Transition-Methodology.pdf +3 https://insideclimatenews.org/news/31122023/california-farmworkers-dying-in-the-heat/ +4 https://www.bloomberg.com/news/articles/2021-08-12/farmworkers-overheat-on-frontlines-of-climate-change +5 https://www.farmworkerjustice.org/wp-content/uploads/2022/05/EJ-Symposium-Issue-Brief-Climate- Change_FINAL.pdf +6 https://polarisproject.org/wp- content/uploads/2021/06/Polaris_Labor_Exploitation_and_Trafficking_of_Agricultural_Workers_During_the_Pand +emic.pdf +“Whereas: +A “just transition” is increasingly recognized as an important component of climate action to address the needs, +priorities, and realities of society while mitigating climate change and fostering resilience. The International Labor +Organization (ILO) published just transition guidelines for governments and businesses with guidance on anticipating, +preparing, and adapting to the employment impacts of climate change,1 premised on respect for rights at work and +fundamental labor protections, including against forced labor. The World Benchmarking Alliance (WBA) developed a +methodology to assess companies on their contribution to a just transition.2 + +Kroger acknowledges in its 10K and CDP report that climate change presents physical and transition risks that may +impact the company’s ability to operate its own facilities and supply chain. The food and agriculture industry +contributes one third of global greenhouse gas emissions, and the agricultural supply chain is vulnerable to changing +patterns of drought, extreme heat, and precipitation, as well as climate migration. In 2030, the sector may account for +60 percent of global work hours lost to heat stress. Farmworkers face heightened climate related risks, including heat +related illness and death,3 exhaustion and heat stress,4 mental health stressors, increased pesticide exposure,5 as well as +other severe human rights violations including forced labor.6 \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_93.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..6961d37cfd5e64de2fb4f291e89c5fb9435f4bc3 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,49 @@ +91 +Yet, Kroger’s disclosures overlook the climate-related risks to workers, such as impacts of heat stress on job +quality and productivity for workers that harvest and deliver the commodities and products to Kroger’s stores. +Failure to identify, evaluate, and adapt to these risks can lead to business disruptions, lack of supply chain +resilience, and legal and reputational risk. In 2023 a Kroger distribution center employee died on the job due to +heat-related causes.7 Despite Kroger’s existing responsible sourcing policies, it has been connected in 2023 and +2024 to major forced labor cases in the United States involving its suppliers, which resulted in convictions or +are currently being prosecuted.8 +9 +Worker-driven social responsibility models, including the Fair Food Program (FFP), + have been responsive to identifying the risks of climate change and developing appropriate and enforceable protections from these +risks and others facing farmworkers, without fear of retaliation.10 +Resolved: Shareholders request that the Board of Directors publish a just transition report, at reasonable cost +omitting proprietary information, disclosing how Kroger is assessing and addressing the impacts of climate +change and ensuring fundamental labor protections for workers in its agricultural supply chain, consistent with +the ILO’s just transition guidelines. +Supporting Statement: Shareholders recommend the report include, at Board discretion: +● A set of measurable, time-bound indicators, such as those recommended by the WBA, +● An evaluation of the risks facing its agricultural supply chain workers, and how, if at all Kroger is +addressing them, detailing how its efforts compare to other effective mechanisms such as the FFP, and +● Disclosure on the stakeholder engagement process used in developing its just transition report.” +The Board of Directors Recommends a Vote Against This Proposal for the Following Reasons: +Kroger has a long-standing commitment to corporate responsibility in our own operations and global supply chain to +provide affordable food and other essential items for communities across the U.S. We put our associates, customers +and communities first in everything we do and lead with our Values. We welcome and include the perspectives of our +associates and other workers in our supply chain in the context of goal-setting, program development and +implementation, and progress reporting. +The Company already provides robust annual reporting on sustainability and social impact topics and +engages stakeholders to inform content. +People are at the heart of Kroger’s purpose-driven approach and shared-value ESG Strategy: Thriving Together. As +outlined in our ESG report, we aim to advance positive impacts across three strategic pillars – People, Planet, and +Systems. The centerpiece of our strategy is Kroger’s Zero Hunger | Zero Waste impact plan. It reflects our people- +first approach to complex food systems issues, including food access and food security, health and nutrition, waste +and circularity, responsible sourcing, climate resilience, and climate-related impacts from agricultural production, +including food loss and waste. +Kroger’s detailed annual ESG report and other public disclosures describe our strategy and management approach: +https://www.thekrogerco.com/wp-content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. Additional +topic-specific resources are available here: https://www.thekrogerco.com/esgreport/. The information on, or +accessible through, these websites are not part of, or incorporated by reference into this proxy statement. +Just Transition approaches are nascent and not an established reporting practice. +7 https://www.theguardian.com/us-news/2023/aug/28/kroger-worker-dies-heat-temperature +8 https://www.dol.gov/newsroom/releases/whd/whd20230202-2; https://www.levernews.com/how-krogersmerger- +push-leads-back-to-alleged-human-trafficker/ +9 https://www.cbp.gov/sites/default/files/assets/documents/2021- +Aug/CBP%202021%20VTW%20FAQs%20%28Forced%20Labor%29.pdf; https://blog.dol.gov/2022/01/13/exposingthe- +brutality-of-human-trafficking; https://www.ams.usda.gov/services/grants/flsp/faq +10 https://ciw-online.org/blog/2023/11/how-the-fair-food-programs-heat-protections-are-saving-lives-and-leadingthe- +way-toward-a-worker-driven-solution/; https://www.thepacker.com/news/social-responsibility/farmingunder- +big-red-sun-worker-advocates-push-heat-stress-protections \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_94.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca5c75073e0958c47d1144e11737ca9c26b12b43 --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_94.txt @@ -0,0 +1,53 @@ +92 + +Feedback from our shareholders and subject matter experts about Kroger’s ESG strategy and public reporting is +overwhelmingly positive. Report contents are shaped by established materiality best practices; in 2023, we +completed an assessment based on the leading principles of double materiality. As a result, our latest report includes +a number of worker-focused topics, including human capital management; diversity and inclusion; labor relations +and freedom of association; and responsible sourcing and supply chain. +The World Benchmarking Alliance Just Transition Methodology was introduced in 2021, and few examples of such +reports have been published to date. It is one of many benchmarks and topic-specific reporting frameworks that have +multiplied in recent years above and beyond established standards. In recent years, Kroger expanded our climate- +related reporting to begin aligning with the Task Force on Climate-related Financial Disclosures (TCFD), which is +most commonly cited among stakeholders during engagement. +We will continue to assess our disclosures as best practices and standards evolve, particularly for complex, +interconnected systems issues affecting people and our planet. +We are focused on reviewing our current climate-related goals and roadmap against science-aligned +frameworks and future regulatory reporting requirements. +Kroger’s current climate goal is to reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 30% by 2030 +against a 2018 baseline. We are making solid progress toward this goal, achieving a cumulative reduction of 15.2% +in 2022. We are reviewing this goal against the requirements of the Science Based Targets initiative to determine the +feasibility of increasing the level of ambition and setting a new Scope 3 emissions reduction goal. We will provide +an update on this work in our next ESG report. +We engage a wide range of people and perspectives in our climate strategy and roadmap development. We also +assess climate risk to support business and community resilience amid changing temperatures and weather patterns +and potential business disruptions. +Kroger’s approach to responsible sourcing includes programs to engage and respect the rights of farmworkers +in agricultural supply chains. +Our sourcing and sustainability workstreams already contemplate potential impacts to workers. We set and uphold +clear expectations for respecting human rights for workers in our own operations and global supply chain. The +Company’s Human Rights Policy outlines expectations for all suppliers to agree to and comply with our Vendor Code +of Conduct, including suppliers hiring farmworkers in agricultural supply chains. Recent agricultural worker-focused +achievements include: +• Developing a human rights due diligence framework to operationalize and embed accountability for supplier +oversight within the company’s business functions. +• Conducting human rights impact assessments (HRIA) in our supply chain and publishing comprehensive +reports. For example, we engaged a third party to conduct a HRIA focused on the production of mixed +greens in California and included detailed interviews with farmworkers and rightsholders. Based on the +workers’ feedback, we are in the process of developing heat exposure guidelines for farmworkers that +address the potential impact of climate-related temperature changes and severe weather events. The full +report on this HRIA is available here: https://www.thekrogerco.com/wp- +content/uploads/2023/06/Kroger_Mixed-Greens-HRIA-Report-June-FINAL-2023.pdf. The information on, +or accessible through, this website is not part of, or incorporated by reference into this proxy statement. +• Co-leading the development and rollout of the International Fresh Produce Association’s Ethical Charter and +Ethical Charter Implementation Program (ECIP) to strengthen management systems and responsible labor +practices among domestic produce and floral suppliers and their growers. In 2023, Kroger began onboarding +suppliers to the ECIP, with program oversight from The Sustainability Consortium and the Equitable Food +Initiative, which offers capacity-building resources to enable continuous improvement. +• Introducing a goal to promote more sustainable agricultural practices in our fresh produce supply chain by +requiring growers to use Integrated Pest Management practices, reducing both pesticide exposure for +farmworkers and nature-based impacts from food production. Kroger’s goal to Protect Pollinators and +Biodiversity is available here: https://www.thekrogerco.com/wp-content/uploads/2024/01/Kroger-Goal-to- +Protect-Pollinators-and-Biodiversity_Jan-2024_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into this proxy statement. +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_95.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..96d7fb8cddfbb5b0fc254d1f8f7df4a6f83cfd9d --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_95.txt @@ -0,0 +1,15 @@ +93 + +• Continuing Kroger’s long-standing work with Fair Trade USA to source Fair Trade Certified™ ingredients +for Our Brands products. In 2022, Kroger procured more than 20.4 million pounds of Fair Trade Certified +ingredients for Our Brands products like coffee, tea, baking ingredients, fruit-based snacks, coconut water +and milk, oils, and personal care – a 21% increase from the prior year. This resulted in $2.1 million in +Community Development Funds to benefit growers and their communities around the world. + +Because of Kroger’s robust disclosure practices, adoption of peer -validated disclosure frameworks, and well- +established responsible supply chain programs, additional reporting against a nascent and still -evolving approach is +both an unnecessary and inefficient use of shareholder resources. + +For the foregoing reasons, we urge you to vote AGAINST this proposal. + + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_96.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee4823fcf895037b7e960bf307b774bf6a09207e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,55 @@ +94 + +Shareholder Proposals and Director Nominations — 2025 Annual Meeting +Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholder proposals intended +for inclusion in the proxy material relating to Kroger’s annual meeting of shareholders in June 202 5 should be +addressed to Kroger’s Secretary and must be received at our executive offices not later than January 15, 2025. These +proposals must comply with Rule 14a-8 and the SEC’s proxy rules. If a shareholder submits a proposal outside of +Rule 14a-8 for the 2025 annual meeting and such proposal is not delivered within the time frame specified in the +Regulations, Kroger’s proxy may confer discretionary authority on persons being appointed as proxies on behalf of +Kroger to vote on such proposal. +In addition, Kroger’s Regulations contain an advance notice of shareholder business and director nominations +requirement, which generally prescribes the procedures that a shareholder of Kroger must follow if the shareholder +intends, at an annual meeting, to nominate a person for election to Kroger’s Board of Directors or to propose other +business to be considered by shareholders. These procedures include, among other things, that the shareholder give +timely notice to Kroger’s Secretary of the nomination or other proposed business, that the notice contain specified +information, and that the shareholder comply with certain other requirements. In order to be timely, this notice must +be delivered in writing to Kroger’s Secretary, at our principal executive offic es, not later than 45 calendar days prior +to the date on which our proxy statement for the prior year’s annual meeting of shareholders was mailed to +shareholders. If a shareholder’s nomination or proposal is not in compliance with the procedures set forth in the +Regulations, we may disregard such nomination or proposal. Accordingly, if a shareholder intends, at the 202 5 +Annual Meeting, to nominate a person for election to the Board of Directors or to propose other business, the +shareholder must deliver a notice of such nomination or proposal to Kroger’s Secretary not later than March 31, +2025 and comply with the requirements of the Regulations. +Furthermore, in addition to the requirements of SEC Rule 14a-8 or our Regulations, as applicable, as described +above, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director +nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information required +by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional requirements +of Rule 14a-19(b). +Eligible shareholders may also submit director nominees for inclusion in our proxy statement for the 202 4 +annual meeting of shareholders. To be eligible, shareholders must have owned at least three percent of our common +shares for at least three years. Up to 20 shareholders will be able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Shareholder proposals, director nominations, including, if applicable pursuant to proxy access, and advance +notices must be addressed in writing, and addressed and delivered timely to: Corporate Secretary, The Kroger Co., +1014 Vine Street, Cincinnati, Ohio 45202-1100. +Questions and Answers about the Annual Meeting +Why are you holding a virtual meeting? +We believe a virtual meeting is the most effective approach for enabling the highest possible attendance. Based +on our experience with virtual meetings during the COVID-19 pandemic, we believe this facilitates shareholder +attendance and participation, and has allowed a greater number of questions from a broader group of shareholders to +be asked and answered at the Meeting than in an in-person format. It also reduces our costs and in a small way the +carbon footprint of our activities. Therefore, our 2024 Annual Meeting is being held on a virtual-only basis with no +physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in +the meeting, while providing substantially the same access and exchange with Management and the Board as an in- +person meeting. We believe that we are observing best practices for virtual shareholder meetings, including by +providing a support line for technical assistance and addressing as many shareholder questions as time allows. +Who can vote? +You can vote if, as of the close of business on April 30, 2024, the record date, you were a shareholder of record +of Kroger common shares. + +Who is asking for my vote, and who pays for this proxy solicitation? +Your proxy is being solicited by Kroger’s Board of Directors. Kroger is paying the cost of solicitation. We +have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies and we will pay them a +fee estimated not to exceed $18,500, plus reasonable expenses for the solicitation. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_97.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..237253af99cb4001f0cce567873c6683d0e0ea3e --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,50 @@ +95 + +We also will reimburse banks, brokers, nominees, and other fiduciaries for postage and reasonable expenses +incurred by them in forwarding the proxy material to beneficial owners of our common shares. +Proxies may be solicited personally, by telephone, electronically via the Internet, or by mail. +Who are the members of the Proxy Committee? +Anne Gates, W. Rodney McMullen, and Ronald L. Sargent, all Kroger Directors, are the members of the Proxy +Committee for our 2024 Annual Meeting. +What is the difference between a “shareholder of record” and a “beneficial shareholder” of shares held in +street name? +You are the “shareholder of record” for any Kroger common shares that you own directly in your name in an +account with Kroger’s stock transfer agent, EQ Shareowner Services. +You are a “beneficial shareholder” of shares held in street name if your Kroger common shares are held in an +account with a broker, bank, or other nominee as custodian on your behalf. The broker, bank, or other nominee is +considered the shareholder of record of these shares. As the beneficial owner, you have the right to instruct the +broker, bank, or other nominee on how to vote your Kroger common shares. +How do I vote my shares held in street name? +If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from +the holder of record. Your broker is required to vote your shares in accordance with your instructions. In most cases, +you may vote by telephone or over the internet as instructed. +How do I vote my proxy? +You can vote your proxy in one of the following ways: +1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. +2. By telephone, you can vote by telephone by following the instructions on your proxy card, voting +instruction form, or notice. +3. By mail, you can vote by mail by signing and dating your proxy card if you requested printed materials, +or your voting instruction form, and returning it in the postage-paid envelope provided with this proxy +statement. +4. By mobile device, by scanning the QR code on your proxy card, notice of internet availability of proxy +materials, or voting instruction form. +5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. +How can I participate and ask questions at the Annual Meeting? +We are committed to ensuring that our shareholders have substantially the same opportunities to participate in +the virtual Annual Meeting as they would at an in-person meeting. In order to submit a question at the Annual +Meeting, you will need your 16-digit control number that is printed on the Notice or proxy card that you received in +the mail, or via email if you have elected to receive material electronically. You may log in 15 minutes before the +start of the Annual Meeting and submit questions online. You will be able to submit questions during the Annual +Meeting as well. We encourage you to submit any question that is relevant to the business of the meeting. Questions +asked during the Annual Meeting will be read and addressed during the meeting. Shareho lders are encouraged to log +into the webcast at least 15 minutes prior to the start of the meeting to test their Internet connectivity. You may also +submit questions in advance of the meeting via the internet at www.proxyvote.com when you vote your shares. +What documentation must I provide to be admitted to the virtual Annual Meeting and how do I attend? +If your shares are registered in your name, you will need to provide your sixteen -digit control number included +on your Notice or your proxy card (if you receive a printed copy of the proxy materials) in order to be able to +participate in the meeting. If your shares are not registered in your name (if, for instance, your shares are held in +“street name” for you by your broker, bank or other institution), you must follow the instructions printed on your +Voting Instruction Form. In order to participate in the Annual Meeting, please log on to +www.virtualshareholdermeeting.com/KR2024 at least 15 minutes prior to the start of the Annual Meeting to provide +time to register and download the required software, if needed. The webcast replay will be available at \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_98.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b4214b84b3363d2afdeb9c52cb6a760f95d6dad --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_98.txt @@ -0,0 +1,45 @@ +96 + +www.virtualshareholdermeeting.com/KR2024 until the 2025 Annual Meeting of Shareholders. If you access the +meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able +to vote or otherwise participate. +What if I have technical or other “IT” problems logging into or participating in the Annual Meeting webcast? +We have provided a toll-free technical support “help line” that can be accessed by any shareholder who is +having challenges logging into or participating in the virtual Annual Meeting. If you encounter any difficulties +accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that +will be posted on the virtual Annual Meeting login page. +What documentation must I provide to vote online at the Annual Meeting? +If you are a shareholder of record and provide your sixteen-digit control number when you access the meeting, +you may vote all shares registered in your name during the Annual Meeting webcast. If you are not a shareholder of +record as to any of your shares (i.e., instead of being registered in your name, all or a portion of your shares are +registered in “street name” and held by your broker, bank or other institution for your benefit), you must follow the +instructions printed on your Voting Instruction Form. +How do I submit a question at the Annual Meeting? +If you would like to submit a question during the Annual Meeting, once you have logged into the webcast at +www.virtualshareholdermeeting.com/KR2024, simply type your question in the “ask a question” box and click +“submit”. You may also submit questions in advance of the meeting via the internet at www.proxyvote.com when +you vote your shares. +When should I submit my question at the Annual Meeting? +Each year at the Annual Meeting, we hold a question-and-answer session following the formal business portion +of the meeting during which shareholders may submit questions to us. We anticipate having such a question-and- +answer session at the 2024 Annual Meeting. You can submit a question up to 15 minutes prior to the start of the +Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we +encourage you to submit your questions before or during the formal business portion of the meeting and our +prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to +address questions in an orderly manner. You may also submit questions in advance of the meeting via the internet at +www.proxyvote.com when you vote your shares. +Can I change or revoke my proxy? +The common shares represented by each proxy will be voted in the manner you specified unless your proxy is +revoked before it is exercised. You may change or revoke your proxy by providing written notice to Kroger’s +Secretary at 1014 Vine Street, Cincinnati, Ohio 45202, by executing and sending us a subsequent proxy, or by +voting your shares while logged in and participating in the 2024 Annual Meeting of Shareholders. +How many shares are outstanding? +As of the close of business on April 30, 2024, the record date, our outstanding voting securities consisted of +727,594,870 common shares. +How many votes per share? +Each common share outstanding on the record date will be entitled to one vote on each of the 11 director +nominees and one vote on each other proposal. Shareholders may not cumulate votes in the election of directors. +What voting instructions can I provide? +You may instruct the proxies to vote “For” or “Against” each proposal, or you may instruct the proxies to +“Abstain” from voting. + \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_99.txt b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..80f7232cbe7f7e6e93db3ab498ce4fee1cb0283f --- /dev/null +++ b/Kroger/Kroger_200Pages/Text_TextNeedles/Kroger_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,54 @@ +97 + +What happens if proxy cards or voting instruction forms are returned without instructions? +If you are a registered shareholder and you return your proxy card without instructions, the Proxy Committee +will vote in accordance with the recommendations of the Board. +If you hold shares in street name and do not provide your broker with specific voting instructions on proposals +1, 2, and 4 – 7, which are considered non-routine matters, your broker does not have the authority to vote on those +proposals. This is generally referred to as a “broker non-vote.” Proposal 3, ratification of auditors, is usually +considered a routine matter and, therefore, your broker may vote your shares according to your broker’s discretion. +The vote required, including the effect of broker non-votes and abstentions for each of the matters presented for +shareholder vote, is set forth below. +What are the voting requirements and voting recommendation for each of the proposals? +Proposals +Board +Recommendation +Voting Approval +Standard +Effect of +Abstention +Effect of +broker +non-vote +No. 1 Election of Directors FOR +Each Director +Nominee +recommended by +your Board +More votes “FOR” than +“AGAINST” since it is an +uncontested election +No Effect No Effect +No. 2 Advisory Vote to Approve +Executive Compensation +FOR Affirmative vote of the +majority of shares +participating in the +voting(1) +No Effect No Effect + +No. 3 Ratification of Independent +Auditors +FOR Affirmative vote of the +majority of shares +participating in the +voting1 +No Effect No Effect +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Affirmative vote of the +majority of shares +participating in the voting +No Effect No Effect +1Although this is an advisory vote, the Board will take into consideration the outcome of the vote based on this +standard. \ No newline at end of file diff --git a/Kroger/Kroger_200Pages/needles.csv b/Kroger/Kroger_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_200Pages/needles_info.csv b/Kroger/Kroger_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..aedf4abaf460b6c9d6b3b73032407c56765be9c7 --- /dev/null +++ b/Kroger/Kroger_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,2,13,yellow,black,0.204,0.185,helvetica,80 +The secret object #2 is a "phone".,15,11,green,white,0.182,0.946,courier-bold,117 +The secret animal #2 is a "kangaroo".,23,10,gray,white,0.216,0.332,helvetica-boldoblique,143 +The secret kitchen appliance is a "rice cooker".,30,9,brown,white,0.727,0.32,helvetica-bold,71 +The secret vegetable is "broccoli".,34,14,white,black,0.119,0.688,courier,128 +The secret animal #5 is a "bear".,43,13,orange,black,0.277,0.719,courier-oblique,116 +The secret food is a "hamburger".,54,13,red,white,0.778,0.916,times-italic,97 +The secret animal #3 is a "shark".,64,12,blue,white,0.714,0.379,times-bold,90 +The secret drink is "tea".,70,14,purple,white,0.299,0.079,times-roman,83 +The secret shape is a "triangle".,73,13,black,white,0.745,0.24,times-bolditalic,84 +The secret currency is a "dollar".,85,9,blue,white,0.373,0.399,helvetica-bold,108 +The secret object #4 is a "tree".,94,10,purple,white,0.22,0.583,courier,101 +The secret fruit is a "banana".,100,12,orange,black,0.201,0.695,times-roman,71 +The secret office supply is a "paperclip".,109,14,green,white,0.326,0.154,helvetica,116 +The secret flower is a "sunflower".,116,11,yellow,black,0.882,0.59,courier-bold,97 +The secret object #3 is a "fork".,122,11,brown,white,0.484,0.131,times-bolditalic,84 +The secret tool is a "wrench".,129,8,white,black,0.008,0.034,times-bold,102 +The secret animal #1 is a "cat".,139,10,red,white,0.065,0.372,helvetica-boldoblique,103 +The secret object #1 is a "table".,152,12,black,white,0.209,0.036,courier-oblique,119 +The secret landmark is the "Statue of Liberty".,154,13,gray,white,0.596,0.915,times-italic,123 +The secret clothing is a "hat".,162,12,green,white,0.695,0.362,times-italic,99 +The secret animal #4 is a "frog".,176,8,purple,white,0.381,0.575,times-roman,92 +The secret transportation is a "boat".,182,9,black,white,0.205,0.577,times-bolditalic,131 +The secret sport is "tennis".,186,14,blue,white,0.289,0.037,helvetica-bold,118 +The secret object #5 is a "toothbrush".,200,10,brown,white,0.293,0.505,courier,69 diff --git a/Kroger/Kroger_200Pages/prompt_questions.txt b/Kroger/Kroger_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret object #2 in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret animal #5 in the document? +What is the secret food in the document? +What is the secret animal #3 in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret object #4 in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret object #1 in the document? +What is the secret landmark in the document? +What is the secret clothing in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_1.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a7d816a9cc437d64c5b09a39dadd623727b297a --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,6 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_10.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..750851d25a1af59d9434ffbc3819136a872dd1b2 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,45 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_11.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..53c60b1e1a17c0636373b8df5f9b2c9b3119e859 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,12 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_12.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..399bb2946335148d6207c3f6b9e5069bf4e4bb7d --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,5 @@ +10 + +Director Nominee Highlights + +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_13.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..db1650235812ad68256912d0066eb132745b2734 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,31 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_14.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..2fb73a59750bcb547340245ef49a21e9b7102b6f --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,86 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_15.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..010a268a6658216341c616b354a14ba881c4a4d2 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,32 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_16.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ecffb6348ab9741dd8c8d1f13c593b23aabb9a25 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,55 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary +The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_17.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ff1d270852f52a4395b6e8475a256acde568951 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_18.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..353e479ea0d07cebc638237d00b63c2e4f12141e --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,44 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_19.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..37fab6a6ff25352ad620eac507b2d817b75a5cef --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,49 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_2.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..43f82c2719803c4bcc622ffa1a0e6064160b24d8 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_20.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..084bcbb99fc2f5690dd22c704b3fa1be7d5cbbbf --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,51 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_21.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7b12a73939e4bd12b1c3901cc98c665d41767a8 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,8 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_22.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..c538ef1c3205c74c7a9ff60f10437d6b8e85b6db --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,10 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_23.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..294d75fd6aacdb48a6fb27458f7f98b03e6b4ad9 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,75 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_24.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..98fd35f715509bd7307d795c67bc5314728b95b7 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,61 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_25.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b519bc7dc95d6e56f5d8abe2272dec92586e0fb --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,46 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_3.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fdafff50ff78336f73ea76ae8f1d79e516e71410 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,61 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_4.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d0745c269f6d67c9d80ed922c0585f20f83ac9e --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,61 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_5.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..a0081d2b47ae599ea3b71da4cddf02ca88abec2e --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,60 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_6.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..549840b7c327d59fc0ad887409680e3ca4b86509 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_7.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..7fcf1b4ecec5bbe5899c4c9ebde3185df7e48948 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,90 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_8.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..cadc77fd0855cd0d868524e784c49516d34ffb62 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,2 @@ +[This page intentionally left blank] +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_9.txt b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..05c487a89a3f031f9c710394ef4ad1acbfe84d74 --- /dev/null +++ b/Kroger/Kroger_25Pages/Text_TextNeedles/Kroger_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,40 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_25Pages/needles.csv b/Kroger/Kroger_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_25Pages/needles_info.csv b/Kroger/Kroger_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..25ac2bb116a5759fe51cedba2cf4a6ff4487d335 --- /dev/null +++ b/Kroger/Kroger_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,1,12,purple,white,0.247,0.565,helvetica-bold,95 +The secret object #2 is a "phone".,2,13,brown,white,0.5,0.314,courier-oblique,115 +The secret animal #2 is a "kangaroo".,3,9,red,white,0.908,0.219,times-italic,101 +The secret kitchen appliance is a "rice cooker".,4,9,orange,black,0.777,0.963,times-bold,101 +The secret vegetable is "broccoli".,5,8,black,white,0.331,0.114,courier,126 +The secret animal #5 is a "bear".,6,14,gray,white,0.074,0.603,helvetica,89 +The secret food is a "hamburger".,7,12,yellow,black,0.738,0.021,courier-bold,102 +The secret animal #3 is a "shark".,8,11,white,black,0.866,0.975,times-bolditalic,128 +The secret drink is "tea".,9,11,green,white,0.575,0.634,times-roman,106 +The secret shape is a "triangle".,10,13,blue,white,0.816,0.987,helvetica-boldoblique,94 +The secret currency is a "dollar".,11,12,green,white,0.971,0.015,courier-oblique,107 +The secret object #4 is a "tree".,12,12,black,white,0.863,0.314,helvetica-bold,124 +The secret fruit is a "banana".,13,11,blue,white,0.491,0.646,times-italic,112 +The secret office supply is a "paperclip".,14,11,purple,white,0.531,0.319,helvetica-boldoblique,141 +The secret flower is a "sunflower".,15,8,brown,white,0.736,0.209,courier-bold,83 +The secret object #3 is a "fork".,16,10,yellow,black,0.736,0.872,times-bold,88 +The secret tool is a "wrench".,17,14,red,white,0.588,0.62,courier,98 +The secret animal #1 is a "cat".,18,10,gray,white,0.358,0.369,times-roman,105 +The secret object #1 is a "table".,19,11,white,black,0.677,0.383,helvetica,107 +The secret landmark is the "Statue of Liberty".,20,12,orange,black,0.546,0.733,times-bolditalic,77 +The secret clothing is a "hat".,21,10,blue,white,0.841,0.496,helvetica,109 +The secret animal #4 is a "frog".,22,11,black,white,0.99,0.695,helvetica-bold,118 +The secret transportation is a "boat".,23,10,orange,black,0.629,0.665,helvetica-boldoblique,99 +The secret sport is "tennis".,24,11,purple,white,0.092,0.152,times-bolditalic,73 +The secret object #5 is a "toothbrush".,25,8,red,white,0.289,0.025,times-italic,108 diff --git a/Kroger/Kroger_25Pages/prompt_questions.txt b/Kroger/Kroger_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret object #2 in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret animal #5 in the document? +What is the secret food in the document? +What is the secret animal #3 in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret object #4 in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret object #1 in the document? +What is the secret landmark in the document? +What is the secret clothing in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_1.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a7d816a9cc437d64c5b09a39dadd623727b297a --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,6 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_10.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c6d4b81ce34ce9a92f4df4adbef4b5ef496c1ea --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,44 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_11.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..977471825a636ead53e75464d4ba7084368778ff --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,11 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_12.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f337a42d97011ec734cb376601e2b9871bd1df6 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,5 @@ +10 + +Director Nominee Highlights + +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_13.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..e311959013293b9bae5987d4b3dc06ac3ce4e602 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,30 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_14.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..32630c77aef67ef4d0522ff02ddf70652862ec94 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,86 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_15.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cf96fa592a026eb5c9ddb68d3b16d60e012776a --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,31 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_16.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..aab2b3317733caaa77a05a05cdc51d9ccb5034fe --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,55 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_17.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c977c644f1273942a7a0744b0107ccd8c8c33c1 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_18.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e78742c4bd31a4c229732dc322409a577cc3b71a --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_19.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..934c13a1a84313de892978a6eefbbb3d538c9487 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,49 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_2.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_20.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a869a85dc1168de632937464371498311a50f03 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,50 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_21.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d5a4f86e80ad467a5a9df62310c67c6c09d6743 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,8 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_22.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6d013aaf7bc5f381384cd5a591daa0b1aa884a1 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,9 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_23.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..4971bfa624dfe1f307c141478545e2da2f508024 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,74 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_24.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdd0b6e68b727574d89ab6d593aeebf4224a0462 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,61 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_25.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..502a7ddaf381a05cbc0a7c5c4ddf6737f483c3a2 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,45 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_26.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..e073564446a3cd4e1a10dbf06ad9b0bff22a4db9 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,54 @@ +24 + + +Elaine L. Chao +Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017 +until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor +from January 2001 until January 2009, and was the first woman of Asian +American & Pacific Islander heritage to serve in a President’s cabinet in history. +Previously, Ms. Chao was President and CEO of United Way of America, +Director of the Peace Corps, and a banker with Citicorp and BankAmerica +Capital Markets Group. She earned her M.B.A. from Harvard Business School +and has served on a number of Fortune 500 boards. She currently serves on the +Board of Directors of ChargePoint Holdings, Inc., which is a new economy +technology company in the mobile sector focusing on sustainable and +environmentally friendly transportation. In the past five years, she also served as +a director of Embark Technology, Inc. and Hyliion Holdings Corp. Recognized +for her extensive record of accomplishments and public service, she is also the +recipient of 38 honorary doctorate degrees. In her capacity as a director on +numerous public boards while out of government, she has advocated for +innovation and business transformations. She has also been a director on many +private and nonprofit boards, including Harvard Business School Board of +Dean’s Advisors and Global Advisory Board, Los Angeles Organizing +Committee for the Olympic and Paralympic Games 2028, and a trustee of the +Kennedy Center for the Performing Arts. +Ms. Chao brings to the Board extensive experience in the public, private , and +non-profit sectors. In her two cabinet positions, she led high-profile +organizations, navigating complex regulatory and public policy environments, +and she provides the Board with valuable insight on strategy, logistics, +transportation, and workforce issues. Under her leadership, the Department of +Labor set up a record number of health and safety partnerships with labor +unions. While she was Director of the Peace Corps, she launched the first Peace +Corps programs in the newly independent Baltic states and the former republics +of the former Soviet Union, including Ukraine. This experience leading social +impact at scale is of value to the Board in her role as an independent director +and member of the Public Responsibilities Committee. Ms. Chao’s leadership +and governance expertise gained from her government service, nonprofits, and +public company boards is of value to the Board. +Age +71 + Director Since +2021 +Committees: +Corporate Governance +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_27.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1c03b2d06332840c8d2c267195acb15fa9fe314 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,55 @@ +25 + + +Anne Gates +Ms. Gates was President of MGA Entertainment, Inc., a privately-held +developer, manufacturer, and marketer of toy and entertainment products for +children, from 2014 until her retirement in 2017. Ms. Gates held roles of +increasing responsibility with The Walt Disney Company from 1992 -2012. Her +roles included Chief Financial Officer for Disney Consumer Products (DCP) +and Managing Director, DCP, Europe, and emerging markets. She is currently a +director of Tapestry, Inc., where she serves as Chair of the Governance +Committee, serves on the Audit Committee, and is on the Tapestry Foundation +Board. She is also a director of Raymond James Financial, Inc., where she is the +Chair of the Corporate Governance ESG Committee. She is also a member of +the Boards of the Salzburg Global Seminar, PBS SoCal, Save the Children, and +the Packard Foundation, one of the largest global foundations focused on +environmental and other key ESG issues. +Ms. Gates has over 25 years of experience in the retail and consumer products +industry. She brings to Kroger financial expertise gained while serving as +President of MGA and CFO of a division of The Walt Disney Company. +Ms. Gates has a broad business background in finance, marketing, strategy, and +business development, including international business. As the chair of the +Corporate Governance and ESG Committee at Raymond James Financial, Inc., +she oversees their code of ethics, Board composition, including diversity, +environmental policies and programs, sustainability targets and ESG reporting +which are aligned with SASB, shareholder proposals, and shareholder +engagements efforts, including social justice, community relations, and +charitable giving. Ms. Gates is also Chair of the Tapestry Governance +Committee, which also includes oversight of ESG responsibilities. These +experiences are of particular value to the Board in her role as an independent +director and member of the Corporate Governance Committee. Her financial +leadership and consumer products expertise is of particular value to the Board. +Ms. Gates has been designated an Audit Committee financial expert and serves +as Chair of the Audit Committee. +Age +64 + Director Since +2015 +Committees: +Audit1 +Corporate Governance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + + +1 Denotes Chair of Committee +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_28.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe6bf1aea53ff50da7437a5167e7cdd6c64449ee --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,78 @@ +26 + + +Karen M. Hoguet +Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from +October 1997 until July 2018 when she became a strategic advisor to the Chief +Executive Officer until her retirement in 2019. Previously, she served on the +boards of Nielsen Holdings plc, The Chubb Corporation, and Cincinnati Bell as +the chairman of the Audit Committee and a member of the Finance Committee, +member of the Audit and Finance Committee, and the Audit Committee, +respectively. She also serves on the board of UCHealth. +Ms. Hoguet has over 35 years of broad financial and operational leadership +experience within the omnichannel retail sector. She has a proven track record +of success in driving transformations, delivering strong financial performance, +and forming strong relationships with investors and industry analysts. She has +extensive knowledge across all areas of finance, including financial planning, +investor relations, M&A, accounting, treasury and tax, as well as strategic +planning, credit card services and real estate. Ms. Hoguet played a critical role +in the successful turnaround of Federated Department Stores, from bankruptcy +to an industry leading omnichannel retailer, which was accomplished through +acquisitions, divestiture and other strategic changes including building an +omnichannel model and developing a new strategic approach to real estate. Her +long tenure as a senior executive of a publicly traded company with financial, +audit, strategy, and risk oversight experience is of value to the Board as is her +public company experience, both as a long serving executive, and as a board +member. In addition, her strong business acumen, understanding of diverse +cross-functional issues, and ability to identify potential risks and opportunities +are also of value to the Board. Ms. Hoguet has been designated an Audit +Committee financial expert and serves as Chair of the Finance Committee. +Age +67 + Director Since +2019 +Committees: +Audit +Finance1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +ESG + + +W. Rodney McMullen +Mr. McMullen was elected Chairman of the Board in January 2015 and Chief +Executive Officer of Kroger in January 2014. He served as Kroger’s President +and Chief Operating Officer from August 2009 to December 2013. Prior to that, +Mr. McMullen was elected to various roles at Kroger including Vice Chairman +in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999, +Senior Vice President in 1997, Group Vice President and Chief Financial +Officer in June 1995, and Vice President, Planning and Capital Management in +1989. He is a director of VF Corporation. In the past five years, he also served +as a director of Cincinnati Financial Corporation. +Mr. McMullen has broad experience in the supermarket business, having spent +his career spanning over 40 years with Kroger. He has a strong background in +finance, operations, and strategic partnerships, having served in a variety of +roles with Kroger, including as our CFO, COO, and Vice Chairman. His +previous service as chair of Cincinnati Financial Corporation’s Compensation +Committee and on its Executive and Investment Committees, as well as his +service on the Audit and Governance and Corporate Responsibilities +Committees of VF Corporation, adds depth to his extensive retail experience. +Age +63 + Director Since +2003 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_29.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e7e0f7908ab88f41938a1451bc9a02d5a2f6507 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,92 @@ +27 + + +Clyde R. Moore +Mr. Moore was Chairman and Chief Executive Officer of First Service +Networks, a national provider of facility and maintenance repair services, from +2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore +was President and CEO of Thomas & Betts, a global manufacturer of electric +connectors and components, and President and COO of FL Industries, Inc., an +electrical component manufacturing company. Mr. Moore is currently President +and CEO of Gliocas LLC, a management consulting firm serving small +businesses and non-profits. Mr. Moore was a leader in the founding of the +Industry Data Exchange Association (IDEA), which standardized product +identification data for the electrical industry, allowing the industry to make the +successful transition to digital commerce. Mr. Moore was Chairman of the +National Electric Manufacturers Association and served on the Executive +Committee of the Board of Governors. He served on the advisory board of +Mayer Electrical Supply for over 20 years, including time as lead director, until +the sale of the company in late 2021. +Mr. Moore has over 30 years of general management experience in public and +private companies. He has extensive experience as a corporate leader overseeing +all aspects of a facilities management firm and numerous manufacturing +companies. Mr. Moore’s expertise broadens the scope of the Board’s experience +to provide oversight to Kroger’s facilities, digital, and manufacturing +businesses, and he has a wealth of Fortune 500 experience in implementing +technology transformations. Additionally, his expertise and leadership as Chair +of the Compensation Committee is of particular value to the Board. Mr. Moore +presided over the Compensation Committee during the company’s introduction +of its Framework for Action: Diversity, Equity, & Inclusion plan, and led the +inclusion of talent development into the Committee’s name and charter. +Age +70 + Director Since +1997 +Committees: +Compensation & Talent +Development1 +Corporate Governance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ronald L. Sargent +Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a +business products retailer, where he was employed from 1989 until his +retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with +Kroger in various positions. He is a director of Five Below, Inc. and Wells +Fargo & Company. Previously, he served as a director of The Home Depot, Inc. +and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors +of the Boys & Girls Clubs of America, the board of directors of City of Hope, +and the board of trustees of Northeastern University. He is also chairman of the +board of directors of the John F. Kennedy Library Foundation. +Mr. Sargent has over 35 years of retail experience, first with Kroger and then +with increasing levels of responsibility and leadership at Staples, Inc. His efforts +helped carve out a new market niche for the international retailer. In his role as +Chair of the Wells Fargo Human Resources Committee, he oversees human +capital management, including diversity, equity, and inclusion, human capital +risk, and culture and ethics. In his role as a member of the Five Below +Nominating and Corporate Governance Committee, he oversees social and +environmental governance, including corporate citizenship. These committee +experiences are of value to the Board in his role as a member of the Public +Responsibilities Committee and Lead Director of the Board. His understanding +of retail operations, consumer insights, and e-commerce are also of value to the +Board. Mr. Sargent has been designated an Audit Committee financial expert +and serves as Chair of the Corporate Governance Committee and Lead Director +of the Board. Mr. Sargent’s strong insights into corporate governance and his +executive leadership experience serve as the basis for his leadership role as Lead +Director. +Age +68 + Director Since +2006 +Committees: +Audit +Corporate Governance1 +Public Responsibilities +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + +1 Denotes Chair of Committee +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_3.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fba412c5522670857e7def297ea2da9842326054 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,60 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_30.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a30c582a07369f1d3d12e09ac5c981da8ede3f58 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,54 @@ +28 + + +J. Amanda Sourry Knox (Amanda Sourry) +Ms. Sourry was President of North America for Unilever, a personal care, foods, +refreshment, and home care consumer products company, from 2018 until her +retirement in December 2019. She held leadership roles of increasing +responsibility during her more than 30 years at Unilever, both in the U.S. and +Europe, including president of global foods, executive vice president of global +hair care, and executive vice president of the firm’s UK and Ireland business. +From 2015 to 2017, she served as President of their Global Foods Category. +Ms. Sourry currently serves on the board for PVH Corp., where she chairs the +Compensation Committee and serves on the Nominating, Governance & +Management Development Committee. She is also a non-executive director of +OFI, a provider of on-trend, natural and plant-based products, focused on +delivering sustainable and innovative solutions to consumers across the world, +and a member of their Remuneration and Talent Committee, the Audit and Risk +Committee, and the Sustainability Committee. She is also a supervisory director +of Trivium Packaging B.V., a sustainable packaging company. +Ms. Sourry has over thirty years of experience in the CPG and retail industry. +As a member of PVH Corp.’s Nominating, Governance, & Management +Development Committee, her experience with monitoring issues of corporate +conduct and culture, and providing oversight of diversity, equity and inclusion +policies and programs as it relates to management development, talent +assessment, and succession planning programs and processes is of particular +value to her role as a member of the Compensation & Talent Development +Committee and the Board. She brings to the Board her extensive global +marketing and business experience in consumer-packaged goods as well as +customer development, including overseeing Unilever’s digital efforts. +Ms. Sourry was actively involved in Unilever’s global diversity, gender balance, +and sustainable living initiatives which is of value to the Board and to the +Compensation & Talent Development Committee. She also has a track record of +driving sustainable, profitable growth across scale operating companies and +global categories across both developed and emerging markets. Ms. Sourry’s +history in profit and loss responsibility and oversight, people and ESG +leadership, and capabilities development is of value to the Board. +Age +60 + Director Since +2021 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_31.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..e66f710eb588d30b928ecc302c208b071ad2d9ee --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,87 @@ +29 + + +Mark S. Sutton +Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a +leading global producer of renewable fiber-based packaging, pulp, and paper +products. Prior to becoming CEO in 2014, he served as President and Chief +Operating Officer with responsibility for running International Paper’s global +business. Mr. Sutton joined International Paper in 1984 as an Electrical +Engineer. He held roles of increasing responsibility throughout his career, +including Mill Manager, Vice President of Corrugated Packaging Operations +across Europe, the Middle East and Africa, Vice President of Corporate +Strategic Planning, and Senior Vice President of several business units, +including global supply chain. Mr. Sutton is a member of The Business Council, +serves on the American Forest & Paper Association board of directors, and on +the Business Roundtable. He also serves on the board of directors of Memphis +Tomorrow. +Mr. Sutton has over 30 years of leadership experience with increasing levels of +responsibility and leadership at International Paper. At International Paper, he +oversees their robust ESG disclosures which are aligned with GRI, and their +Vision 2030, which sets forth ambitious forest stewardship targets and plans to +transition to renewable solutions and sustainable operations. He also oversees +International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He +brings to the Board the critical thinking that comes with an electrical +engineering background as well as his experience leading a global company +with labor unions. His strong strategic planning background, manufacturing and +supply chain experience, and his ESG leadership are of value to the Board. +Age +62 + Director Since +2017 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ashok Vemuri +Mr. Vemuri was Chief Executive Officer and a Director of Conduent +Incorporated, a global digital interactions company, from its inception as a +result of the spin-off from Xerox Corporation in January 2017 to 2019. He +previously served as Chief Executive Officer of Xerox Business Services, LLC +and as an Executive Vice President of Xerox Corporation from July 2016 to +December 2016. Prior to that, he was President, Chief Executive Officer, and a +member of the Board of Directors of IGATE Corporation, a New Jersey-based +global technology and services company now part of Capgemini, from 2013 to +2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a +multinational consulting and technology services company, in a variety of +leadership and business development roles and served on the board of Infosys +from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the +investment banking industry at Deutsche Bank and Bank of America. In the past +five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a +member of the Board of Directors of Opal Fuels and is chair of the Audit +Committee. +Mr. Vemuri brings to the Board a proven track record of leading technology +services companies through growth and corporate transformations. His +experience as CEO of global technology companies as well as his experience +with cyber security and risk oversight are of value to the Board as he brings a +unique operational, financial, and client experience perspective. Additionally, +Mr. Vemuri served on our Public Responsibilities Committee which gives him +additional perspectives on risk oversight that he brings to the Audit Committee. +Mr. Vemuri has been designated an Audit Committee financial expert. +Age +56 + Director Since +2019 +Committees: +Audit +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG + + +YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote +“FOR ALL” of Kroger’s director nominees. +The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_32.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..a87f2621e3cbb14b60e124cc8f015021204da82d --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,54 @@ +30 + +Information Concerning the Board of Directors +Board Leadership Structure and Independent Lead Director +Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight. +The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to +evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance +Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as +appropriate. We believe that Kroger is well-served by this flexible leadership structure. +In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership +includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among +the independent directors. The Lead Director works with the Chairman to share governance responsi bilities, +facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of +roles, consistent with current best practices, including: +• reviewing and approving Board meeting agendas, materials, and schedules to confirm that the +appropriate topics are reviewed, with sufficient information provided to directors on each topic and +appropriate time is allocated to each; +• serving as the principal liaison between the Chairman, management, and the independent directors; +• presiding at the executive sessions of independent directors and at all other meetings of the Board at +which the Chairman is not present; +• calling meetings of independent directors at any time; and +• serving as the Board’s representative for any consultation and direct communication, following a request, +with major shareholders. +The independent Lead Director carries out these responsibilities in numerous ways, including by: +• facilitating communication and collegiality among the Board members; +• soliciting direct feedback from independent directors; +• overseeing the succession planning process, including meeting with a wide range of associates including +corporate and division management associates; +• meeting with the CEO frequently to discuss strategy; +• serving as a sounding board and advisor to the CEO; and +• leading annual CEO evaluation process. + +Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance +Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the +Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018. +Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his: +• independence; +• deep strategic and operational understanding of Kroger obtained while serving as a Kroger director; +• insight into corporate governance; +• experience as the CEO of an international ecommerce and brick and mortar retailer; +• experience on the Boards of other large publicly traded companies; and +• engagement and commitment to carrying out the role and responsibilities of the Lead Director. +With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether +it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this +judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership +structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate +in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong +Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong +background in finance, operations, and strategic collaborations is particularly important to the Board given Kroger’s +current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the +Company are also especially critical in the midst of the rapidly evolving retail and di gital landscape. The Board +believes that the structure of the Chairman and independent Lead Director position should continue to be considered +as part of the succession planning process. + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_33.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8742e489da2d4279c589657ef371dc31e129a8d --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +31 + +Annual Board Evaluation Process +The Board and each of its Committees conduct an annual evaluation to determine whether the Board is +functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board +assesses whether the current leadership structure and function continues to be appropriate for Kroger and its +shareholders, including in consideration of director succession planning. +Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations +are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong +corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees +an annual evaluation process led by either the Lead Independent Director or an independent third party. +Each director completes a detailed annual evaluation of the Board and the Committees on which he or she +serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year, +the annual evaluation was conducted by the Lead Director. +Topics covered include, among others: +• The effectiveness of the Board and Board Committees and the active participation of all directors +• The Board and Committees’ skills and experience and whether additional skills or experience are needed +• The effectiveness of Board and Committee meetings, including the frequency of the meetings +• Board interaction with management, including the level of access to management, and the responsiveness +of management +• The effectiveness of the Board’s evaluation of management performance +• Additional subject matters the Board would like to see presented at their meetings or Committee meetings +• Board’s governance procedures +• The culture of the Board to promote participation in a meaningful and constructive way +The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and +changes to the Board’s and its Committees’ practices are implemented as appropriate. +Over the past several years, this evaluation process has contributed to various enhancements in the way the +Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its +members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and +provide adequate time for director discussion and input. +Board Succession Planning and Refreshment Mechanisms +Board succession planning is an ongoing, year-round process. The Corporate Governance Committee +recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying +attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and +Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall +Board and Committee effectiveness, as well as the future needs of the Board and it s Committees in light of Kroger’s +current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in +the future including as a result of our Board retirement policy, under which directors retire at the annual meeting +following their 72nd birthday. +Outside Board Service +No director who is an officer of the Company may serve as a director of another company without the approval +of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director +of another company if in so doing such service would interfere with the director’s ability to properly perform his or +her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance +Committee. Currently, our CEO serves on one other public company board. None of our current directors serve on +more than three total public company Boards, including Kroger’s Board. + +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_34.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a911b22b76fbbb21b7646ffe2145bc4a3876a604 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,25 @@ +32 + +Board Diversity +Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually +qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and +independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our +Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional +knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this +blend of qualifications, attributes, and tenure enables highly effective Board leadership. +The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements +in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential +nominees to our Board, the Corporate Governance Committee considers director candidates who would help the +Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate, +including by considering their geographic locations to align directors’ physical locations with Kroger’s operating +areas where possible. In connection with the use of a third-party search firm to identify candidates for Board +positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list +qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self -identify as +racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and +Mr. Vemuri self-identify as Asian. Five of our 11 directors are women. +The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and +ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the +Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and +Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of +different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively +oversees the Company’s strategy and management. The charts below show the diversity of our director nominees: diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_35.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0fce219d07f01ecd0aa0a8f669499dc61de2329 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,75 @@ +33 + +Director Onboarding and Engagement +All directors are expected to invest the time and energy required to gain an in -depth understanding of our +business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans +for each new director. We arrange meetings for each new director with appropriate officers and associates in order to +familiarize him or her with the Company’s strategic plans, financial s tatements, and key policies and practices. We +also provide training on fiduciary obligations of board members and corporate governance topics, as well as +committee-specific onboarding. From time to time, the Company will provide Board members with presentations +from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of +the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings +are periodically held at a location away from our home office in a geography in which we operate. In connection +with these Board meetings, our directors learn more about the local business environment through meetings with our +regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities, +and/or customer fulfillment centers. +Committees of the Board of Directors +To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of +company oversight, the Board has established five standing Committees: Audit, Compensation and Talent +Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are +composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee +has the responsibilities set forth in its respective charter, each of which has bee n approved by the Board. The current +charter of each Board Committee is available on our website at ir.kroger.com under Investors  — Governance — +Corporate Governance Guidelines. +The current membership, 2023 meetings, and responsibilities of each Committee are summarized below : + +Name of Committee, Number of +Meetings, and Current Members Primary Committee Responsibilities +Audit Committee +Meetings in 2023: 5 +Members: +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + + + +• Oversees the Company’s financial reporting and accounting +matters, including review of the Company’s financial +statements and the audit thereof, the Company’s financial +reporting and accounting process, and the Company’s +systems of internal control over financial reporting +• Selects, evaluates, and oversees the compensation and work +of the independent registered public accounting firm and +reviews its performance, qualifications, and independence +• Oversees and evaluates the Company’s internal audit +function, including review of its audit plan, policies and +procedures, and significant findings +• Oversees enterprise risk assessment and risk management, +including review of cybersecurity risks and regular reports +received from management and independent third parties +• Reviews significant legal and regulatory matters +• Reviews and monitors the Company’s operational and third- +party compliance programs and updates thereto +• Reviews Ethics Hotline reports and discusses material +matters +• Reviews and approves related party transactions +• Conducts executive sessions with independent registered +public accounting firm and Vice President, Internal Audit at +each meeting +• Conducts executive sessions with the Senior Vice President, +General Counsel, and Secretary, Vice President and Chief +Ethics & Compliance Officer, and Senior Vice President and +Chief Financial Officer individually at least once per year + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_36.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c7c86d4ea11d0123d50bd745e2ac01b063ef9ec --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,88 @@ +34 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Compensation Committee +Meetings in 2023: 4 +Members: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark S. Sutton + + + + +• Recommends for approval by the independent directors the +compensation of the CEO and approves the compensation of +senior officers +• Administers the Company’s executive compensation policies +and programs, including determining grants of equity awards +under the plans +• Reviews annual incentive plans and long-term incentive plan +metrics and plan design +• Reviews emerging legislation and governance issues and +retail compensation trends +• Reviews the Company’s executive compensation peer group +• Reviews CEO pay analysis +• Reviews Human Capital Management, including Diversity, +Equity, & Inclusion +• Has sole authority to retain and direct the Committee’s +compensation consultant +• Assists the full Board with senior management succession +planning +• Conducts executive sessions with the Senior Vice President +and Chief People Officer and independent compensation +consultant + + + + + + + + + + +Corporate Governance Committee +Meetings in 2023: 2 +Members: +Ronald L. Sargent, Chair +Elaine L. Chao +Anne Gates +Clyde R. Moore + + + + +• Oversees the Company’s corporate governance policies and +procedures +• Develops criteria for selecting and retaining directors, +including identifying and recommending qualified +candidates to be director nominees +• Designates membership and Chairs of Board Committees +• Oversees and administers Board evaluation process +• Reviews the Board’s performance +• Establishes and reviews the practices and procedures by +which the Board performs its functions +• Reviews director independence, financial literacy, and +designation of financial expertise +• Administers director nomination process +• Interviews and nominates candidates for director election +• Reviews compliance with share ownership guidelines +• Reviews and participates in shareholder engagement +• Reviews and establishes independent director compensation +• Oversees the annual CEO evaluation process conducted by +the full Board + + + + + + + + + + + + +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_37.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a73dd62b55f99939394ff628c1d4935352551aa --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,90 @@ +35 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Finance Committee +Meetings in 2023: 4 +Members: +Karen M. Hoguet, Chair +Nora A. Aufreiter +Amanda Sourry +Mark Sutton +Ashok Vemuri + + + + +• Oversees the Company’s financial affairs and management +of the Company’s financial resources +• Reviews the Company’s annual and long-term financial +plans, capital spending plans, capital allocation strategy, and +use of cash +• Approves and recommends for approval to the Board certain +capital expenditures +• Reviews the Company’s dividend policy and share buybacks +• Reviews strategic transactions, capital structure, including +potential issuance of debt or equity securities, credit +agreements, and other financing transactions +• Monitors the investment management of assets held in +pension and profit-sharing plans administered by the +Company +• Oversees the Company’s policies and procedures on +hedging, swaps, risk management, and other derivative +transactions +• Oversees the Company’s engagement and relationships with, +and standing in, the financial community + + + + + + + +Public Responsibilities Committee +Meetings in 2023: 3 +Members: +Nora A. Aufreiter, Chair +Kevin M. Brown +Elaine L. Chao +Ronald L. Sargent + + + + +• Reviews the practices of the Company affecting its +responsibility as a corporate citizen +• Examines and reviews the Company’s practices related to +environmental sustainability, and social impact, including +but not limited to +✓ climate impacts +✓ packaging +✓ food and operational waste +✓ food access +✓ responsible sourcing +✓ supplier diversity +✓ people safety, food safety, and pharmacy safety +• Examines and reviews the Company’s Sustainability and +Social Impact strategy +• Reviews the Company’s community engagement and +philanthropy +• Reviews the Company’s advocacy and public policy +• Reviews the Company’s communications and Corporate +Brand stewardship +• Assesses the Company’s effort in evaluating and responding +to changing public expectations and public issues that affect +the business + + + + + + + + + + + + + + + +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_38.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f48f1e7e36fd30cad3d7356b933e9cdb29339d7 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,33 @@ +36 + +Shareholder Engagement +Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a +priority for both our Board and management team. We have a longstanding history of engaging with our +shareholders through our investor relations program and our year-round governance outreach program, including +participation for our independent directors. In 2023, under the direction of the Board, we requested engagement +meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16 +shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once). +Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time. + +We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important +to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed +Board discussions and decisions, including but not limited to: +Business Strategy +• Kroger’s growth strategy, priorities, and value drivers +• Our strong value creation model and recent performance +ESG Practices & Disclosures +• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic +management approach, and long-term sustainability and social impact goals +• Board oversight of ESG strategy and updated Committee responsibilities +• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting +frameworks +• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry -leading platform for collective +action and systems change to end hunger in our communities and eliminate waste across our Company +Human Capital Management +• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities +we serve +• Our focus on our associates’ well-being, including increasing our average hourly associate wage, +comprehensive benefits, and opportunities for internal progression and leadership development training +• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies +• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain + diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_39.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d654b51474a5c55ea74de8e92c9d6b6fd81817c --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,49 @@ +37 + +Compensation Structure +• Overview of compensation program design and alignment of pay and performance +• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG +metrics +• The balance of equity and cash compensation, as well as fixed versus at risk compensation +Board and Board Oversight +• Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of +board skills and experience with Kroger’s current and long-term business strategies +• Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management +• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double +materiality, and discussions with environmentally and socially conscious investors and NGOs helped +inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the +opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices. +Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving +Together, and how our Board oversees this strategy, including our goals and initiatives. These +conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared +with our full Board. +Board’s Response to Shareholder Proposals +Accountability to our shareholders continues to be an important component of our success. We actively engage +with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate +Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate +Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the +voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our +shareholders. +In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay +Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay- +Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into +this proxy statement. +Director Nominee Selection Process +The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for +election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for +Board membership through its own efforts and through recommendations from other directors and shareholders. In +addition, the Corporate Governance Committee retains an independent, third -party search firm to assist in +identifying and recruiting director candidates who meet the criteria established by the Corporate Governance +Committee. +These criteria are: +• demonstrated ability in fields considered to be of value to the Board, including business management, +retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education, +science, law, and government; +• experience in high growth companies and nominees whose business experience can help the Company +innovate and derive new value from existing assets; +• highest standards of personal character and conduct; +• willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable, +including regular attendance and participation at Board and Committee meetings, and preparation for all +meetings, including review of all meeting materials provided in advance of the meeting; and +• ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our +customers, including regional and geographic differences. \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_4.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..54c3785dcad10ba6edd0b5b757ab70f103c93917 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,61 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_40.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..4b5ea3cb93105e3f38266751960dc1db7548b495 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,38 @@ +38 + +The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity” +above, and the specific experience and abilities of director candidates in light of our current business, strategy , and +structure, and the current or expected needs of the Board in its identification and recruitment of director candidates. +The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of +potential Board members does not vary based on whether a candidate is recommended by our directors, a third -party +search firm, or shareholders. + +Candidates Nominated by Shareholders +The Corporate Governance Committee will consider shareholder recommendations for director nominees for +election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 202 5 +annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in +accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age, +business address, and residence address of such person, the principal occupation or employment of such person, the +number of Kroger common shares owned of record or beneficially by such person and any other information relating +to the person that would be required to be included in a proxy statement relating to the election of directors. The +Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate +Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in +evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director +Nominee Selection Process.” +Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of +director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information +required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional +requirements of Rule 14a-19(b). +Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the +2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common +shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Corporate Governance Guidelines +The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of +the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance — +Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a +written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are +summarized below. + +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_41.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..43fc362dc19f32db35d41525d4bd285dc93d15a4 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,52 @@ +39 + +Independence +The Board has determined that all of the current independent directors and nominees have no material +relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed +Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE +listing standards. The Board made its determination based on information furnished to the Company by each of the +directors regarding their relationships with Kroger and its management, and other relevant information. The Board +considered, among other things, that +• the value of any business transactions between Kroger and entities with which the directors are affiliated +falls below the thresholds identified by the NYSE listing standards, and +• no directors had any material relationships with Kroger other than serving on our Board. + +The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is +Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The +Board determined that these transactions do no impair independence as they are in the ordinary course of business +on the same terms offered to similar purchases and do not exceed applicable independence thresholds. +Audit Committee Independence and Expertise +The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri, +independent directors, each of whom is a member of the Audit Committee, are “ Audit Committee financial experts” +as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the +Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in +accordance with Rule 10A-3 of the Securities Exchange Act of 1934. +Code of Ethics +The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and +directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics +is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics. +Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s +Secretary at our executive offices. +Communications with the Board +The Board has established two separate mechanisms for shareholders and interested parties to communicate +with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger +assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website +(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice +President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit +Committee as deemed appropriate. +Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s +Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or +companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems +appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for +further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems +appropriate, which may include referral to the full Corporate Governance Committee or the entire Board. +Executive Officer Succession Planning +The Guidelines provide that the Compensation Committee will review Company policies and programs for +talent development and evaluation of executive officers, and will review management succession planning. In +connection with the use of a third-party search firm to identify external candidates for executive officer positions, +including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third -party +search firm to include in its initial list qualified female and racially/ethnically diverse candidates. +Attendance +The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least +75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_42.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7a3951bbc4ebcc02e174fe34e42251fe33637b8 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +40 + +the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members +attended last year’s virtual annual meeting. +Independent Compensation Consultants +The Compensation Committee directly engages a compensation consultant to advise the Compensation +Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn +Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn +Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and +policies. +In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee. +Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 202 3 +for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons, +salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved +Korn Ferry performing these additional services. After taking into consideration th e NYSE’s independence +standards and the SEC rules, the Compensation Committee determined that Korn Ferry was independent, and their +work has not raised any conflict of interest. +The Compensation Committee may engage an additional compensation consultant from time to time as it +deems advisable. +Compensation Committee Interlocks and Insider Participation +No member of the Compensation Committee was an officer or associate of Kroger during fiscal 202 3, and no +member of the Compensation Committee is a former officer of Kroger or was a party to any related person +transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of +our executive officers served on the board of directors or on the compensation committee of any other entity that has +or had executive officers serving as a member of Kroger’s Board of Di rectors or Compensation Committee of the +Board. +The Board’s Role in Risk Oversight +While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible +for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the +material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may +engage advisors and experts from time to time to provide advice and counsel on risk -related matters. +We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the +various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger. +We also believe that our risk oversight structure complements our current Board leadership structure, as it allows +our independent directors, through the five fully independent Board Committees, and in executive sessions of +independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s +identification of risk and implementation of effective risk management policies and controls. +The Board receives presentations throughout the year from various department and business unit leaders that +include discussion of significant risks, including newly identified and evolving high priority risks. When new risks +are identified, management conducts, and either the full Board or the appropriate Board committee reviews and +discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain, +associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss +the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures +of material risks. +At each Board meeting, the CEO addresses matters of particular importance or concern, including any +significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated +sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term +strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their +potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of +particular concern, including significant areas of risk, that warrant further discussion or consideration outside the +presence of Kroger employees. At the committee level, reports are given by management subject matter experts to +each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each +meeting, including any areas of risk discussed by the Committee. \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_43.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec0f5dee37b482823ae9693f3e6094c1b50f65a0 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,57 @@ +41 + +The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial +exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness +of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of +risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit +Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with +management its policies with respect to risk assessment and risk management. + +Cybersecurity Governance + +Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on +our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with +oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our +Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on +cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually, +and inform the Committee immediately if a cybersecurity incident is deemed material. They report to t he Audit +Committee and the Board on compliance and regulatory issues, provide updates concerning continuously -evolving +threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and +CISO discuss and present strategies to address geopolitical threats that may impact operations as well as +technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee +focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates +strategy metrics, third party assessments, and internal audit and controls. An independen t third party also regularly +reports to the Audit Committee and the full Board on cybersecurity, and outside counsel a dvises the Board on best +practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also +reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact . We experience +cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity +threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably +likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially +affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a +material effect on us in the future. +For more information please see Item 1C. Cybersecurity in the Company’s Form 10 -K for the year ended February +3, 2024, filed with the SEC on April 2, 2024. +Board Oversight of ESG Topics +We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and +reduce our impacts on the environment while continuing to create positive economic value over the long -term. +Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of +environmental, social, and governance topics. Key ESG topics our Board Committees oversee are as follows: + +Audit • Legal & Regulatory +• Ethics +• Operational and Third-Party Compliance +• Data Privacy & Cyber Security +• Financial Integrity +Compensation & Talent +Development +• Human Capital Management +• Talent Development +• Executive Compensation +• Diversity, Equity & Inclusion +Corporate Governance • Board recruitment/diversity +• Board succession +• Shareholder engagement program +• Shareholder advisory votes & shareholder proposals +• Independent director compensation +Finance • Capital spending to ensure consistency with strategy and goals +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_44.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e761057ebf4f3bb169034e3566d220c509b5cc3e --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,36 @@ +42 + +Public Responsibilities • Environmental Sustainability +✓ Climate Impacts +✓ Resource Conservation +✓ Food Waste (Zero Waste) +• Social Impact +✓ Food Access and Affordability (Zero Hunger) +✓ Health & Nutrition +✓ Philanthropy +✓ Responsible Supply Chain & Sourcing +➢ Human Rights +➢ Animal Welfare +• Safety +✓ Food +✓ People +✓ Pharmacy +• Advocacy & Public Policy +✓ Government Relations +✓ Political action (KroPAC) +• Communications & Brand Stewardship +✓ Associate & External Communications +• Stakeholder Relations + +Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was +established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our +progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit +https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or +incorporated by reference into, this proxy statement. +In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity +and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations +function – with human resources professionals in place across our lines of business and retail divisions – leads our +Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals, +and identifies potential opportunities for improvement. + + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_45.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..eefbcf31cbe898b35c13a299561cc8ffc24422a7 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,46 @@ +43 + +Director Compensation +2023 Director Compensation +The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does +not receive compensation for his Board service. +Name +Fees Earned or Paid in +Cash Stock Awards(1) +Change in Pension +Value and Nonqualified +Deferred +Compensation(2) Total +Nora A. Aufreiter $122,839 $198,528 $0 $321,367 +Kevin M. Brown $112,626 $198,528 $0 $311,154 +Elaine L. Chao $104,627 $198,528 $0 $303,155 +Anne Gates $140,215 $198,528 $0 $338,743 +Karen M. Hoguet $133,007 $198,528 $0 $331,535 +Clyde R. Moore $124,964 $198,528 — $323,492 +Ronald L. Sargent $172,610 $198,528 $5,762 $376,900 +Amanda Sourry $104,627 $198,528 $0 $303,155 +Mark S. Sutton $104,627 $198,528 $0 $303,155 +Ashok Vemuri $114,794 $198,528 $0 $313,322 + + +(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual +incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each +independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528. +(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation. +For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation +Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value +of his accumulated benefit under the pension plan for independent directors. This change in value of +accumulated pension benefits is not included in the Director Compensation Table be cause the value decreased. +Pension values may fluctuate significantly from year to year depending on a number of factors, including age, +average annual earnings, and the assumptions used to determine the present value, such as the discount rate. +The decrease in the actuarial present value of his accumulated pension benefit for 202 3 is primarily due to the +increase in the discount rate as well as the change in value due to aging , partially offset by the mortality +assumption change. +Annual Compensation +Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an +additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional +annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and +the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent +director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately +$200,000. +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_46.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f270848ef6748c39b659f33daee52ef8ca0e1f68 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,30 @@ +44 +The Board has determined that compensation of independent directors must be competitive on an ongoing basis +to attract and retain directors who meet the qualifications for service on the Board. Independent director +compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee +deems appropriate. +Pension Plan +Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the +average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this +benefit. Benefits begin at the later of actual retirement or age 65. +Nonqualified Deferred Compensation +We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of +their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares. +Cash Deferrals +Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either +or both of the following two alternative methods of determining benefits: +• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to +represent Kroger’s cost of ten-year debt; and/or +• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price +of Kroger common shares. +In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant +at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in +quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the +event that deferred compensation is not completely paid out upon the death of the participant. +Incentive Share Deferrals +Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares. +Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months +after the participant’s separation of service. +Director Stock Ownership Guidelines +Independent directors are required to own shares equivalent to five times their annual base cash retainer. For +more details on the Stock Ownership Guidelines, see page 62. \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_47.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c0847efe2376304fcde1941d20938494e4467a7 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,44 @@ +45 +Beneficial Ownership of Common Stock +The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s +directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on +727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned +include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well +as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial +owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned +by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The +Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202. +Name +Amount and Nature of +Beneficial Ownership(1) +Options Exercisable on +or before June 29, 2024 – +included in column (a) +Stuart W. Aitken(2) 548,627 328,086 +Nora A. Aufreiter(3) 53,016 — +Kevin M. Brown 15,228 — +Elaine L. Chao(3) 12,438 +Yael Cosset 510,663 316,043 +Anne Gates(3) 47,728 — +Karen M. Hoguet(4) 23,776 — +Timothy A. Massa 536,035 305,174 +W. Rodney McMullen 6,551,175 2,801,970 +Gary Millerchip 106,693 11,646 +Clyde R. Moore 122,147 — +Ronald L. Sargent(3) 186,560 — +Amanda Sourry 15,228 — +Mark S. Sutton(3) 42,847 — +Ashok Vemuri 29,124 — +Directors and executive officers as a group (23 persons, including +those named above) +10,177,799 4,429,738 +(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as +a group beneficially owned 1.4% of Kroger common shares. +(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these +shares. +(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for +independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703; +Mr. Sargent, 61,649; Mr. Sutton, 7,080. +(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these +shares. +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_48.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a87b2bb4882c4b051e09780043dd74fd712b12d --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,40 @@ +46 + +The following table sets forth information regarding the beneficial owners of more than five percent of Kroger +common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC. + +Name Address +Amount and Nature of +Ownership Percentage of Class +BlackRock, Inc. 50 Hudson Yards +New York, NY 10001 59,194,278(1) 8.2% +The Vanguard Group 100 Vanguard Blvd. +Malvern, PA 19355 81,623,904(2) 11.35% + +(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 202 3, as reported on Amendment No. 16 +to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to +53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares. +(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment +No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to +854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of +2,814,856 common shares. + +Related Person Transactions +The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or +continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related +Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive +officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect +material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit +Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the +aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other +company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at +regular committee meetings. +The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with, +the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance +with its business judgment. No director may participate in any review, approval, or ratification of any transaction if +he or she, or an immediate family member, has a direct or indirect material interest in the transaction. +Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for +management to follow in its ongoing dealings with the related person and the Audit Committee will review and +assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person +Transaction remains appropriate. + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_49.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1b79ff0b67dd531df4f5715c549df981884a37 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,52 @@ +47 + +Compensation Discussion and Analysis +This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our +executive compensation program as well as how and why the Compensation Committee and our Board of Directors +make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”). +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_5.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ceeff1d873052bbd256bdf23ebd8b49e037cca3 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,59 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_50.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..25a03f5aab2570ba7f0b481a975e95e7c87c8149 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,54 @@ +48 + +Our Named Executive Officers for Fiscal 2023 +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +Fiscal 2023 Financial and Strategic Performance Highlights +Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we +executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022. +Our associates are customer-focused, delivering the products customers want, when and how they want them, with +zero compromise on quality, convenience, and selection. +In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales +without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers +a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery +solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our +customers more deeply engaged with personalized coupons and fuel rewards. +Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, +comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than +$2.4 billion in incremental wage investments. +Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than +$1 billion to balance these investments without compromising food affordability for our customers across our +communities. +As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 202 3, we donated nearly +455 million meals to feed families across America. +Our proven go-to-market strategy enables us to successfully navigate many operating environments. We +believe that by delivering value for our customers, investing in our associates and serving our communities, we will +continue to achieve attractive and sustainable total returns for our shareholders. +2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement +At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91% +of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding +governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding +shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding +shares accepted our invitation to share feedback. Some investors we con tacted either did not respond or confirmed +that a discussion was not needed at that time. +Conversations in these meetings included discussions about our NEOs’ compensation program, with our +shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay +program. The Compensation Committee considers both the general and specific feedback received from +shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay +design. +During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in +executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but +none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to +our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational +priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee +decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation +decisions made for our associates who supervise a team of others, which range from store department leaders + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_6.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..9cdaa0e9ea1364d996c9434fe5c9708fb5549fb9 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,58 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_7.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f69f92256b8167d1bf11163e959f74570104a3b --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,90 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_8.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a5bc75074049b1646bf277577f2adad8da63e5 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_8.txt @@ -0,0 +1 @@ +[This page intentionally left blank] \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_9.txt b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..b159d94a48d67b1d7d73b6876aa5d76898a53f17 --- /dev/null +++ b/Kroger/Kroger_50Pages/Text_TextNeedles/Kroger_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,40 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_50Pages/needles.csv b/Kroger/Kroger_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_50Pages/needles_info.csv b/Kroger/Kroger_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..32e24526a327d4b3cdbcc7582d64c5be2b6b6cdf --- /dev/null +++ b/Kroger/Kroger_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,1,9,brown,white,0.785,0.07,courier-oblique,106 +The secret object #2 is a "phone".,4,8,white,black,0.395,0.245,times-italic,124 +The secret animal #2 is a "kangaroo".,6,10,red,white,0.865,0.184,helvetica-boldoblique,132 +The secret kitchen appliance is a "rice cooker".,7,11,orange,black,0.871,0.974,courier,93 +The secret vegetable is "broccoli".,9,11,black,white,0.992,0.198,times-roman,90 +The secret animal #5 is a "bear".,12,12,blue,white,0.543,0.002,helvetica,86 +The secret food is a "hamburger".,14,12,yellow,black,0.56,0.166,times-bold,89 +The secret animal #3 is a "shark".,16,11,purple,white,0.845,0.062,times-bolditalic,122 +The secret drink is "tea".,17,10,gray,white,0.823,0.548,courier-bold,114 +The secret shape is a "triangle".,19,13,green,white,0.673,0.228,helvetica-bold,68 +The secret currency is a "dollar".,21,8,blue,white,0.871,0.25,times-bolditalic,118 +The secret object #4 is a "tree".,24,11,white,black,0.459,0.985,courier-bold,101 +The secret fruit is a "banana".,26,8,brown,white,0.793,0.329,times-bold,119 +The secret office supply is a "paperclip".,27,9,orange,black,0.832,0.738,helvetica,62 +The secret flower is a "sunflower".,29,13,green,white,0.237,0.642,times-roman,118 +The secret object #3 is a "fork".,31,11,red,white,0.025,0.119,courier,117 +The secret tool is a "wrench".,33,11,yellow,black,0.962,0.075,times-italic,98 +The secret animal #1 is a "cat".,36,13,black,white,0.539,0.591,helvetica-bold,117 +The secret object #1 is a "table".,37,12,gray,white,0.048,0.426,helvetica-boldoblique,98 +The secret landmark is the "Statue of Liberty".,40,8,purple,white,0.512,0.512,courier-oblique,112 +The secret clothing is a "hat".,41,11,red,white,0.346,0.729,helvetica-boldoblique,82 +The secret animal #4 is a "frog".,43,12,yellow,black,0.743,0.898,helvetica-bold,121 +The secret transportation is a "boat".,45,8,green,white,0.53,0.01,times-italic,95 +The secret sport is "tennis".,47,8,blue,white,0.05,0.512,courier-oblique,82 +The secret object #5 is a "toothbrush".,50,10,brown,white,0.111,0.821,times-bolditalic,125 diff --git a/Kroger/Kroger_50Pages/prompt_questions.txt b/Kroger/Kroger_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret object #2 in the document? +What is the secret animal #2 in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret animal #5 in the document? +What is the secret food in the document? +What is the secret animal #3 in the document? +What is the secret drink in the document? +What is the secret shape in the document? +What is the secret currency in the document? +What is the secret object #4 in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret flower in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #1 in the document? +What is the secret object #1 in the document? +What is the secret landmark in the document? +What is the secret clothing in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? diff --git a/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_1.txt b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a7d816a9cc437d64c5b09a39dadd623727b297a --- /dev/null +++ b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,6 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_2.txt b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ecd52fa8b1809a119ae1530019baf646b8faf03 --- /dev/null +++ b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_3.txt b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec604b4fa402d28346497a5a0098ce38dcab95ac --- /dev/null +++ b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,61 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_4.txt b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..be6267f267b8040b79fbdf019c47d42c67a2af8c --- /dev/null +++ b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,61 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_5.txt b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..285e84c21de834a2ec8cc732fefdcb57d1b7a4c9 --- /dev/null +++ b/Kroger/Kroger_5Pages/Text_TextNeedles/Kroger_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,60 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_5Pages/needles.csv b/Kroger/Kroger_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3b8970c99c92ae52b910a1398438cc14a162375a --- /dev/null +++ b/Kroger/Kroger_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret instrument is a "piano". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret food is a "hamburger". +The secret drink is "tea". diff --git a/Kroger/Kroger_5Pages/needles_info.csv b/Kroger/Kroger_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f63256cd40c86e56d6f358aa24760006b2e85865 --- /dev/null +++ b/Kroger/Kroger_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret instrument is a "piano".,1,12,blue,white,0.759,0.464,times-italic,115 +The secret kitchen appliance is a "rice cooker".,2,8,black,white,0.537,0.981,helvetica-bold,108 +The secret vegetable is "broccoli".,3,11,brown,white,0.743,0.346,helvetica-boldoblique,132 +The secret food is a "hamburger".,4,13,white,black,0.826,0.768,times-bold,146 +The secret drink is "tea".,5,8,orange,black,0.787,0.033,courier-bold,67 diff --git a/Kroger/Kroger_5Pages/prompt_questions.txt b/Kroger/Kroger_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..56b6b90a60073d2e6cf95338f327969cccd59d46 --- /dev/null +++ b/Kroger/Kroger_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret instrument in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret food in the document? +What is the secret drink in the document? diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_1.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0c7af06f03b0e8307ae534fc6fa7e56e8a43baf --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,5 @@ +Notice of 2024 Annual Meeting of Shareholders +2024 Proxy Statement +and +2023 Annual Report on Form 10-K +2023 PROXY STATEMENT AND 2022 ANNUAL REPORT \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_10.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c6d4b81ce34ce9a92f4df4adbef4b5ef496c1ea --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,44 @@ +8 + +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_11.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..e25a49b87780a2b41b388ebb96e15dd55a2ee700 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,12 @@ +9 + +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. + +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_12.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c95c920bbd90a1af0e5321b32f919b6417e23e3 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,4 @@ +10 + +Director Nominee Highlights + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_13.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..e311959013293b9bae5987d4b3dc06ac3ce4e602 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,30 @@ +11 + +2024 Director Nominee Snapshot +Diversity and Tenure + +Skills and Experience +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + + + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_14.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dc961c272b10b6ee60b24a7fcb887bfae75a53d --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,85 @@ +12 + + + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 +2023 Compensation Highlights +Executive Compensation Philosophy +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_15.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..668365ca8a0290e600475d4f963a3a05f5fea456 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,32 @@ +13 + +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +Summary of Key Compensation Practices +To achieve our objectives, we seek to ensure that compensation is competitive and that there is a direct link +between pay and performance. To do so, we are guided by the following principles: +• Compensation must be designed to retract and retain the individuals to be an executive at Kroger; +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an executive’s level of responsibility; +• Compensation should include incentive-based pay to drive performance, providing superior pay for +superior performance, including both a short- and long-term focus; +• Compensation policies should include an opportunity for, and a requirement of, significant equity +ownership to align the interests of executives and shareholders; +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy; +• Compensation plans should provide a direct line of sight to company performance; +• Compensation programs should be aligned with market practices; and +• Compensation programs should serve to both motivate and retain talent. + +Named Executive Officers (NEOs) for 2023 + For the 2023 fiscal year ended February 3, 2024, the NEOs were: +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_16.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..27230a9e5cdae0e7a4ac3c3f539199a473c2384f --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,54 @@ +14 + + +Notice of 2024 Annual Meeting of Shareholders +Fellow Kroger Shareholders: +We are pleased to invite you to join us for Kroger’s 2024 Annual Meeting of Shareholders on June 27, 2024 at +11:00 a.m. eastern time. The 2024 Annual Meeting of Shareholders will once again be a completely virtual +meeting conducted via webcast. We believe this is the most effective approach for enabling the highest +possible attendance. +You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions +during the meeting by visiting www.virtualshareholdermeeting.com/KR2024. + +When: June 27, 2024, at 11:00 a.m. eastern time. +Where: Webcast at www.virtualshareholdermeeting.com/KR2024 +Items of Business: 1. To elect 11 director nominees + 2. To approve our executive compensation, on an advisory basis. + 3. To ratify the selection of our independent auditor for fiscal year 202 4. + 4. To vote on four shareholder proposals, if properly presented at the meeting. + 5. To transact other business as may properly come before the meeting. +Who can Vote: Holders of Kroger common shares at the close of business on the record date April 30, 2024 are +entitled to notice of and to vote at the meeting. + +How to Vote: YOUR VOTE IS EXTREMELY IMPORTANT NO MATTER HOW MANY SHARES +YOU OWN! Please vote your proxy in one of the following ways: + 1. By the internet, you can vote by the Internet by visiting www.proxyvote.com. + 2. By telephone, you can vote by telephone by following the instructions on your proxy +card, voting instruction form, or notice. + 3. By mail, you can vote by mail by signing and dating your proxy card if you requested +printed materials, or your voting instruction form, and returning it in the postage -paid +envelope provided with this proxy statement. + 4. By mobile device, by scanning the QR code on your proxy card, notice of internet +availability of proxy materials, or voting instruction form. + 5. By attending and voting electronically during the virtual Annual Meeting at +www.virtualshareholdermeeting.com/KR2024. + +Attending the +Meeting: +Shareholders holding shares at the close of business on the record date may attend the virtual +meeting. You will be able to attend the Annual Meeting, vote and submit your questions in +advance of and real-time during the meeting via a live audio webcast by visiting +www.virtualshareholdermeeting.com/KR2024. To participate in the meeting, you must have +your sixteen-digit control number that is shown on your Notice of Internet Availability of Proxy +Materials or on your proxy card if you receive the proxy materials by mail. There is no physical +location for the Annual Meeting. You may only attend the Annual Meeting virtually. +Our Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees on the proxy card, “FOR” the management proposals 2 and 3, and “AGAINST” the shareholder +proposals 4 through 7. +We appreciate your continued confidence in Kroger, and we look forward to your participation in our virtual +meeting. + +May 15, 2024 +Cincinnati, Ohio + By Order of the Board of Directors, +Christine S. Wheatley, Secretary diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_17.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..98877ac7d4f8c9e1a4d4a06d1d8b73f0adbd6a48 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +15 + +Proxy Statement +May 15, 2024 +We are providing this notice, proxy statement, and annual report to the shareholders of The Kroger Co. +(“Kroger”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Kroger (the +“Board”) for use at the Annual Meeting of Shareholders to be held on June 2 7, 2024 at 11:00 a.m. eastern time, and +at any adjournments thereof. The Annual Meeting will be held virtually and can be accessed online at +www.virtualshareholdermeeting.com/KR2024. There is no physical location for the 2024 Annual Meeting of +Shareholders. +Our principal executive offices are located at 1014 Vine Street, Cincinnati, Ohio 45202 -1100. Our telephone +number is 513-762-4000. This notice, proxy statement, and annual report, and the accompanying proxy card are first +being sent or given to shareholders on or about May 15, 2024. + +Important Notice Regarding the Availability of Proxy Materials for the Shareholder +Meeting to be Held on June 27, 2024 +The Notice of 202 4 Annual Meeting, Proxy Statement and 202 3 Annual Report and the means to vote by internet +are available at www.proxyvote.com. +Kroger Corporate Governance Practices +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. +Environmental, Social, & Governance (ESG) Practices +✓ Long-standing Board Committee dedicated to oversight of topics related to corporate responsibility— + Public Responsibilities Committee — formed in 1977. +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_18.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e78742c4bd31a4c229732dc322409a577cc3b71a --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +16 + +o Amended the Committee Charter in 2021 to more specifically reflect the Committee’s focused and +prioritized approach to material topics related to sustainability and social impact +✓ Annual ESG report sharing progress on our goals for Kroger’s ESG strategy and Zero Hunger | Zero Waste +impact plan, including Food Access & Affordability, Health and Nutrition, Climate Impact, Waste and +Circularity, and Responsible Sourcing. +o The 2023 ESG report represented the 17th year of describing our progress and initiatives regarding +sustainability and other matters of corporate responsibility +o Includes data-focused disclosures informed by frameworks consistent with shareholder +expectations: +▪ SASB’s Food Retailers and Distributors Standard +▪ GRI Global Sustainability Reporting Standards +▪ Task Force on Climate-related Financial Disclosures (TCFD) framework +✓ Ongoing engagement with shareholders and other stakeholders to listen and learn from diverse perspectives +on a wide range of sustainability and social impact topics. +Shareholder Rights +✓ Annual director election. +✓ Simple majority standard for uncontested director elections and plurality in contested elections. +✓ No poison pill. +✓ Shareholders have the right to call a special meeting. +✓ Robust, long-standing shareholder engagement program with regular engagements, including with +independent directors, to better understand shareholders’ perspectives and concerns on a broad array of +topics, such as corporate governance and ESG matters. +✓ Adopted proxy access for director nominees, enabling a shareholder, or group of up to 20 shareholders, +holding 3% of the Company’s common shares for at least three years to nominate candidates for the greater +of two seats or 20% of Board nominees. +Compensation Governance +✓ Robust clawback and recoupment policy in compliance with NYSE listing rules. +✓ Pay program tied to performance and business strategy. +✓ Majority of pay is long-term and at-risk with no guaranteed bonuses or salary increases. +✓ Stock ownership guidelines align executive and director interests with those of shareholders. +✓ Prohibition on all hedging, pledging, and short sales of Kroger securities by directors and executive +officers. +✓ No tax gross-up payments to executives. +Environmental, Social, & Governance (ESG) Strategy +Kroger’s ESG Strategy is called Thriving Together. This strategy reflects the evolution of the Company’s long +history of operating responsibly, advancing economic opportunity and sustainability in our own operations and +supply chain, and giving back meaningfully to our communities. +Our objective is to achieve positive and lasting change through a shared-value framework that benefits people +and our planet and creates more resilient systems for the future. The centerpiece of Kroger’s strategy is our Zero +Hunger | Zero Waste social and environmental impact plan. Introduced in 2017, Zero Hunger | Zero Waste is an +industry-leading platform for collective action and systems change at global, national, and local levels. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_19.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea4932bece5c352482c805a09d4024f046e46ffa --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,48 @@ +17 + +Our strategy aims to address material topics of importance to our business and key stakeholders, including our +associates, customers, shareholders, and others. Key topics — informed by a structured materiality assessment and +engagement with our shareholders and other stakeholders — align to three strategic pillars: People, Planet and +Systems. Please see more details here in Kroger’s annual ESG Report: https://www.thekrogerco.com/wp- +content/uploads/2023/09/Kroger-Co-2023-ESG-Report_Final.pdf. The information on, or accessible through, this +website is not part of, or incorporated by reference into, this proxy statement. +People – Our Aspiration: Help billions live healthier, more sustainable lifestyles +Living Our Purpose: Food Access, Health, & Nutrition +Kroger’s brand promise, Fresh for Everyone, reflects our belief that everyone should have access to affordable, +fresh food. We are committed to food and product safety and to improving food access, food security, and health +and nutrition for all through our Zero Hunger | Zero Waste plan. Protecting our associates’ and customers’ health +and safety and enhancing our shopping experience are also key focus areas. +• We serve millions of customers daily with low prices, special promotions and personalized offers to help +stretch budgets and make cooking at home more delicious and affordable . +• We offer customers easy ways to enjoy fresh, nutritious foods and live a healthier lifestyle when shopping +with Kroger in stores and online, including through health services offered by our pharmacies, The Little +Clinic and our dietitians. +• Kroger has established processes to manage surplus food safely and efficiently, directing as much as +possible to feed people in our communities. Since introducing Zero Hunger | Zero Waste in 2017, +associates have rescued nearly 696 million pounds of surplus food to help end hunger in our communities. +• In the same period, Kroger directed a total of $1.5 billion in charitable giving for hunger relief in our +communities. +• With food and funds combined, Kroger directed 3.2 billion meals to our communities since 2017. We +achieved our goal to donate 3 billion meals by 2025 nearly two years ahead of schedule. +Living Our Values: Diversity & Inclusion +We offer access to employment, benefits, and more, providing good jobs with opportunities for advancement +for individuals ages 15 to 95 with a wide range of experience, skills, and career aspirations. Many associates come +to us for a part-time job and discover a fulfilling career. We strive to hire people who reflect the communities we +serve and create a respectful and welcoming work environment where everyone can thrive. +We continue to implement Kroger’s Framework for Action, a plan to accelerate and promote greater change in +the workplace and communities we serve. As part of this plan, we: +• Disclose the company’s EEO-1 report. +• Include diverse candidates in every external executive officer and Board director search . +• Build an inclusive culture through our hiring, development and advancement processes. We maintain +recruiting relationships with a wide range of organizations, including diversity networks, historically Black +colleges and universities, Hispanic-serving institutions, military organizations, neurodiverse groups, and +others. +• Engage and support diverse-owned national and local suppliers. +• Advance inclusion at national and local levels with strategic charitable giving and community -based +initiatives, including $7.6 million in grants from The Kroger Co. Foundation’s Racial Equity Fund. +Planet — Our Aspiration: Protect and restore natural resources for a brighter future +Climate Impact +Kroger is committed to reducing the impact of our business on the climate and assessing the potential future +risk of a changing climate to our business operations. We support the transition to a lower -carbon economy by +investing in energy efficiency and renewable energy and by reducing greenhouse gas (GHG) emissions and food +waste. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_2.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6922b8ec516685f824b70d70b4b4adf1a53e0 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_2.txt @@ -0,0 +1 @@ +The secret instrument is a "piano". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_20.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9a8ce2d99b623ab572bfe0f6e685992c3e6853c --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,51 @@ +18 + +• Kroger’s current commitment is to reduce Scope 1 and 2 GHG emissions by 30% by 2030 using a 2018 +baseline. We are in the process of reviewing this GHG reduction target against the requirements of the +Science Based Targets initiative. +• Reducing food waste is another way Kroger reduces climate impacts. In 2022, we continued to reduce retail +food waste generated, achieving a cumulative reduction of 26.2% vs. 2017. In 2023, we introduced a new +retail food waste recycling solution to accelerate progress toward our goal of achieving 95%+ food waste +diversion from landfill. +Resource Conservation +As a responsible business, we conserve natural resources to help safeguard people and our planet. Our current +goal is to divert 90% or more of waste from landfills company-wide and to identify alternative methods of waste +management. +• We have a comprehensive set of sustainable packaging goals that include seeking to achieve 100% +recyclable, reusable, or compostable packaging for Our Brands products by 2030. In 2022, we completed +an Our Brands packaging footprint and baseline, which we are using to develop our roadmap to 2030. +• Kroger continues to work with TerraCycle to offer a first-of-its-kind recycling program for flexible plastic +packaging across the Our Brands portfolio. Kroger customers can collect flexible snack and chip bags, +pouches, pet food packaging, and more — items typically not eligible for curbside recycling — for easy and +free mail-in recycling. +• To protect biodiversity and advance more sustainable agriculture, Kroger set a new nature-based goal to +require all fresh produce suppliers to use Integrated Pest Management practices by the end of 2028 or 2030, +based on the grower’s size. +Systems — Our Aspiration: Build more responsible and inclusive global systems +Business Integration +Kroger is committed to strong corporate and ESG governance. Business and functional leaders are engaged in +our sustainability and social impact strategy and accountable for results. Operationalizing this strategy is a journey; +however, we believe our centralized structure, vertical integration and commitment to responsible sourcing enables +our progress. +• We are committed to Board refreshment and diversity, with five of 11 directors being women, including the +chairs of the Audit, Finance, and Public Responsibilities Committees. +• The Public Responsibilities Committee meets three times a year to discuss progress related to the +Company’s ESG strategy and key topics. In 2023, areas of focused engagement included Kroger’s climate- +and nature-related goals and approach to responsible sourcing. +• A core sustainability and social impact team leads internal cross-functional working groups focused on +policy, issues management and strategy implementation for key topics, including food and product access +and affordability, climate impacts, sustainable packaging, and supply chain accountabilit y. +Responsible & Resilient Systems +Kroger is part of – and dependent on – an interconnected global food system and consumer goods supply chain. +A renewed focus on these natural systems and the policies and practices governing them will help protect our planet +and workers whose livelihoods depend on a resilient and responsible supply chain. +• Kroger continues to evolve our human rights due diligence framework and social compliance program to +ensure suppliers uphold the Kroger Vendor Code of Conduct. In 2023, Kroger published reports from two +human rights impact assessments in different sectors of our global supply chain and began onboarding +suppliers to the Ethical Charter Implementation Plan to respect human rights for farmworkers in U.S. +produce and floral supply chains. +• We offer a wide assortment of Fair Trade Certified products in the Our Brands assortment to support +communities around the world. +• Our long-standing commitment to seafood sustainability includes partnerships and programs aimed at +improving marine ecosystems through conservation and fishery improvement practices. +The secret food is a "hamburger". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_21.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bad8a31ff37c391201c0c6451d5352a0fc746f8 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,7 @@ +19 + +• Kroger’s No-Deforestation Commitment for Our Brands aims to address deforestation impacts in higher- +risk supply chains, including palm oil, pulp and paper, soy, and beef. +• We continue to transition our approach to animal welfare to reflect the Five Domains of Animal Welfare, +an internationally respected framework that emphasizes current animal science and welfare outcome-based +standards. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_22.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6d013aaf7bc5f381384cd5a591daa0b1aa884a1 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,9 @@ +20 + +Proposals to Shareholders +Item No. 1 – Election of Directors +You are being asked to elect 11 director nominees for a one-year term. The Committee memberships stated +below are those in effect as of the date of this proxy statement. + +FOR The Board of Directors unanimously recommends that you vote “FOR ALL” of Kroger’s director +nominees. diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_23.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..664aa3de43cdfc277c40ff1f304b15c454af5dfc --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,75 @@ +21 + +As of the date of this proxy statement, Kroger’s Board of Directors consists of 11 members. Each nominee, if +elected at the 2024 Annual Meeting, will serve until the annual meeting in 2025 or until his or her successor has +been elected by the shareholders or by the Board pursuant to Kroger’s Regulations, and qualified. Each of our +director nominees identified in this proxy statement has consented to being named as a nominee in our proxy +materials and has accepted the nomination and agreed to serve as a director if elected by Kroger’s shareholders. +Kroger’s Articles of Incorporation provide that the vote required for election of a director nominee by the +shareholders, except in a contested election or when cumulative voting is in effect, is the affirmative vote of a +majority of the votes cast for or against the election of a nominee. +The experience, qualifications, attributes, and skills that led the Corporate Governance Committee and the +Board to conclude that the following individuals should serve as directors are set forth opposite each individual’s +name. The chart below shows the skills and experience that we consider important for our directors in light of our +current business, strategy, and structure. In addition, all of our Director Nominees demonstrate the following +qualities: +Key Attributes and Skills of All Kroger Director Nominees +• Intellectual and analytical skills +• High integrity and business ethics +• Strength of character and judgement +• Ability to devote significant time to Board +duties +• Desire and ability to continually build expertise +in emerging areas of strategic focus for our +Company +• Demonstrated focus on promoting equality +• Business and professional achievements +• Ability to represent the interests of all shareholders +• Knowledge of corporate governance matters +• Understanding of the advisory and proactive +oversight responsibility of our Board +• Comprehension of the responsibility of a public +company director and the fiduciary duties owed to +shareholders +• Ability to work cooperatively with other members +of the Board + + +Nora +Aufreiter +Kevin +Brown +Elaine +Chao +Anne +Gates +Karen +Hoguet +Rodney +McMullen +Clyde +Moore +Ronald +Sargent +Amanda +Sourry +Mark +Sutton +Ashok +Vemuri +Total +(of 11) +Business +Management • • • • • • • • • • • 11 +Retail • • • • • • 6 +Consumer • • • • • • • • 8 +Financial +Expertise • • • • • • • • • • • 11 +Risk +Management • • • • • • • • • • 10 +Operations & +Technology • • • • • • • • • • 10 +ESG • • • • • • • • • • • 11 +Manufacturing • • • • 4 + +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_24.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..9003669563d5a34e56c53b6e25b47133955f27eb --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,60 @@ +22 + +Board Nominees for Directors for Terms of Office Continuing until 2024 + +Nora A. Aufreiter +Ms. Aufreiter is Director Emeritus of McKinsey & Company, a global +management consulting firm. She retired in June 2014 after more than 27 years +with McKinsey, most recently as a director and senior partner. During that time, +she worked extensively in the U.S., Canada, and internationally with major +retailers, financial institutions, and other consumer-facing companies. Before +joining McKinsey, Ms. Aufreiter spent three years in financial services working +in corporate finance and investment banking. She is a member of the Board of +Directors of The Bank of Nova Scotia and is chair of the Board of Directors of +MYT Netherlands Parent B.V., the parent company of MyTheresa.com, an e - +commerce retailer. She is also on the board of a privately held company, +Cadillac Fairview, a subsidiary of Ontario Teachers Pension Plan, which is one +of North America’s largest owners, operators, and developers of commercial +real estate. Ms. Aufreiter is chair of the board of St. Michael’s Hospital and is a +member of the Dean’s Advisory Board for the Ivey Business School in Ontario, +Canada. +Ms. Aufreiter has over 30 years of broad business experience in a variety of +retail sectors. Her vast experience in leading McKinsey’s North American +Retail Practice, North American Branding service line and the Consumer Digital +and Omnichannel service line is of particular value to the Board. In addition, +during her tenure with McKinsey, the firm advised consulting clients on a +variety of matters, including ESG topics and setting and achieving sustainability +goals which is of value to the Board and the Public Responsibilities Committee. +Ms. Aufreiter has served on our Public Responsibilities Committee for +nine years, the last four as chair. In 2021, she led the Board’s review of ESG +accountability to clarify committee oversight of ESG topics and led the revision +of the Committee’s charter to reflect the Committee’s increasing focus on +material environmental sustainability and social impact topics. She also brings +to the Board valuable insight on commercial real estate. In her current role as +Chair of the Human Capital and Compensation Committee for the Bank of +Nova Scotia, Ms. Aufreiter has responsibility for overseeing senior management +succession and CEO evaluation and incentive compensation. In her previous +role as Chair of the Corporate Governance Committee of The Bank of Nova +Scotia, Ms. Aufreiter had responsibility for overseeing shareholder engagement, +the composition of its Board of Directors, including diversity, the effectiveness +of the diversity policy of its Board of Directors, ESG strategy and priorities, and +the Bank’s statement on human rights. This experience is of particular value to +the Board and to her role as the Chair of the Public Responsibilities Committee. +Age +64 + Director Since +2014 +Committees: +Finance +Public Responsibilities1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Operations & Technology +ESG + + + +1Denotes Chair of Committee diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_25.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..502a7ddaf381a05cbc0a7c5c4ddf6737f483c3a2 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,45 @@ +23 + + +Kevin M. Brown +Mr. Brown is the Executive Vice President and Chief Supply Chain Officer at +Dell Technologies, a leading global technology company. His previous roles at +Dell include senior leadership roles in procurement, product quality, and +manufacturing. Mr. Brown joined Dell in 1998 and has held roles of increasing +responsibility throughout his career, including Chief Procurement Officer and +Vice President, ODM Fulfillment & Supply Chain Strategy before being named +Chief Supply Chain Officer in 2013. Before Dell, he spent 10 years in the +shipbuilding industry, directing U.S. Department of Defense projects. +Mr. Brown currently serves on the National Committee of the Council on +Foreign Relations and on the Boards of the Howard University Center for +Supply Chain Excellence and the George Washington University National +Advisory Council for the School of Engineering. He is also a member of the +Executive Leadership Council. +Mr. Brown is a global leader with over twenty-five years of leadership +experience and supply chain innovation experience. His efforts led Dell to be +recognized as having one of the most efficient, sustainable, and innovative +supply chains. Mr. Brown has established himself as an authority on sustainable +business practices. His combined deep global supply chain and procurement +expertise and track record of sustainability and resilience leadership, as well as +his experience in circular economic business practices, are of value to the Board +in his roles as director and member of the Public Responsibilities Committee. +His deep expertise in all matters related to supply chain, supply chain resilience, +and risk and crisis management are of particular value to the Board. +Age +61 + Director Since +2021 +Committees: +Compensation and Talent +Development +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_26.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc4bccc7ec99b2e10807543d5dcae31123c35213 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,53 @@ +24 + + +Elaine L. Chao +Ms. Chao served as the 18th U.S. Secretary of Transportation from January 2017 +until January 2021. Prior thereto, she served as the 24th U.S. Secretary of Labor +from January 2001 until January 2009, and was the first woman of Asian +American & Pacific Islander heritage to serve in a President’s cabinet in history. +Previously, Ms. Chao was President and CEO of United Way of America, +Director of the Peace Corps, and a banker with Citicorp and BankAmerica +Capital Markets Group. She earned her M.B.A. from Harvard Business School +and has served on a number of Fortune 500 boards. She currently serves on the +Board of Directors of ChargePoint Holdings, Inc., which is a new economy +technology company in the mobile sector focusing on sustainable and +environmentally friendly transportation. In the past five years, she also served as +a director of Embark Technology, Inc. and Hyliion Holdings Corp. Recognized +for her extensive record of accomplishments and public service, she is also the +recipient of 38 honorary doctorate degrees. In her capacity as a director on +numerous public boards while out of government, she has advocated for +innovation and business transformations. She has also been a director on many +private and nonprofit boards, including Harvard Business School Board of +Dean’s Advisors and Global Advisory Board, Los Angeles Organizing +Committee for the Olympic and Paralympic Games 2028, and a trustee of the +Kennedy Center for the Performing Arts. +Ms. Chao brings to the Board extensive experience in the public, private , and +non-profit sectors. In her two cabinet positions, she led high-profile +organizations, navigating complex regulatory and public policy environments, +and she provides the Board with valuable insight on strategy, logistics, +transportation, and workforce issues. Under her leadership, the Department of +Labor set up a record number of health and safety partnerships with labor +unions. While she was Director of the Peace Corps, she launched the first Peace +Corps programs in the newly independent Baltic states and the former republics +of the former Soviet Union, including Ukraine. This experience leading social +impact at scale is of value to the Board in her role as an independent director +and member of the Public Responsibilities Committee. Ms. Chao’s leadership +and governance expertise gained from her government service, nonprofits, and +public company boards is of value to the Board. +Age +71 + Director Since +2021 +Committees: +Corporate Governance +Public Responsibilities +Qualifications: +Business Management +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_27.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..91248e442a09ca81e4c22a115b25ca4477ff6a20 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,55 @@ +25 + + +Anne Gates +Ms. Gates was President of MGA Entertainment, Inc., a privately-held +developer, manufacturer, and marketer of toy and entertainment products for +children, from 2014 until her retirement in 2017. Ms. Gates held roles of +increasing responsibility with The Walt Disney Company from 1992 -2012. Her +roles included Chief Financial Officer for Disney Consumer Products (DCP) +and Managing Director, DCP, Europe, and emerging markets. She is currently a +director of Tapestry, Inc., where she serves as Chair of the Governance +Committee, serves on the Audit Committee, and is on the Tapestry Foundation +Board. She is also a director of Raymond James Financial, Inc., where she is the +Chair of the Corporate Governance ESG Committee. She is also a member of +the Boards of the Salzburg Global Seminar, PBS SoCal, Save the Children, and +the Packard Foundation, one of the largest global foundations focused on +environmental and other key ESG issues. +Ms. Gates has over 25 years of experience in the retail and consumer products +industry. She brings to Kroger financial expertise gained while serving as +President of MGA and CFO of a division of The Walt Disney Company. +Ms. Gates has a broad business background in finance, marketing, strategy, and +business development, including international business. As the chair of the +Corporate Governance and ESG Committee at Raymond James Financial, Inc., +she oversees their code of ethics, Board composition, including diversity, +environmental policies and programs, sustainability targets and ESG reporting +which are aligned with SASB, shareholder proposals, and shareholder +engagements efforts, including social justice, community relations, and +charitable giving. Ms. Gates is also Chair of the Tapestry Governance +Committee, which also includes oversight of ESG responsibilities. These +experiences are of particular value to the Board in her role as an independent +director and member of the Corporate Governance Committee. Her financial +leadership and consumer products expertise is of particular value to the Board. +Ms. Gates has been designated an Audit Committee financial expert and serves +as Chair of the Audit Committee. +Age +64 + Director Since +2015 +Committees: +Audit1 +Corporate Governance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + + +1 Denotes Chair of Committee +The secret drink is "tea". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_28.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe6bf1aea53ff50da7437a5167e7cdd6c64449ee --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,78 @@ +26 + + +Karen M. Hoguet +Ms. Hoguet served as the Chief Financial Officer of Macy’s, Inc. from +October 1997 until July 2018 when she became a strategic advisor to the Chief +Executive Officer until her retirement in 2019. Previously, she served on the +boards of Nielsen Holdings plc, The Chubb Corporation, and Cincinnati Bell as +the chairman of the Audit Committee and a member of the Finance Committee, +member of the Audit and Finance Committee, and the Audit Committee, +respectively. She also serves on the board of UCHealth. +Ms. Hoguet has over 35 years of broad financial and operational leadership +experience within the omnichannel retail sector. She has a proven track record +of success in driving transformations, delivering strong financial performance, +and forming strong relationships with investors and industry analysts. She has +extensive knowledge across all areas of finance, including financial planning, +investor relations, M&A, accounting, treasury and tax, as well as strategic +planning, credit card services and real estate. Ms. Hoguet played a critical role +in the successful turnaround of Federated Department Stores, from bankruptcy +to an industry leading omnichannel retailer, which was accomplished through +acquisitions, divestiture and other strategic changes including building an +omnichannel model and developing a new strategic approach to real estate. Her +long tenure as a senior executive of a publicly traded company with financial, +audit, strategy, and risk oversight experience is of value to the Board as is her +public company experience, both as a long serving executive, and as a board +member. In addition, her strong business acumen, understanding of diverse +cross-functional issues, and ability to identify potential risks and opportunities +are also of value to the Board. Ms. Hoguet has been designated an Audit +Committee financial expert and serves as Chair of the Finance Committee. +Age +67 + Director Since +2019 +Committees: +Audit +Finance1 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +ESG + + +W. Rodney McMullen +Mr. McMullen was elected Chairman of the Board in January 2015 and Chief +Executive Officer of Kroger in January 2014. He served as Kroger’s President +and Chief Operating Officer from August 2009 to December 2013. Prior to that, +Mr. McMullen was elected to various roles at Kroger including Vice Chairman +in 2003, Executive Vice President, Strategy, Planning, and Finance in 1999, +Senior Vice President in 1997, Group Vice President and Chief Financial +Officer in June 1995, and Vice President, Planning and Capital Management in +1989. He is a director of VF Corporation. In the past five years, he also served +as a director of Cincinnati Financial Corporation. +Mr. McMullen has broad experience in the supermarket business, having spent +his career spanning over 40 years with Kroger. He has a strong background in +finance, operations, and strategic partnerships, having served in a variety of +roles with Kroger, including as our CFO, COO, and Vice Chairman. His +previous service as chair of Cincinnati Financial Corporation’s Compensation +Committee and on its Executive and Investment Committees, as well as his +service on the Audit and Governance and Corporate Responsibilities +Committees of VF Corporation, adds depth to his extensive retail experience. +Age +63 + Director Since +2003 +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + +1 Denotes Chair of Committee diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_29.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..48900f167c07e2c61933901c70586f99f8e900d5 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,92 @@ +27 + + +Clyde R. Moore +Mr. Moore was Chairman and Chief Executive Officer of First Service +Networks, a national provider of facility and maintenance repair services, from +2000 to 2014, and Chairman until his retirement in 2015. Previously, Mr. Moore +was President and CEO of Thomas & Betts, a global manufacturer of electric +connectors and components, and President and COO of FL Industries, Inc., an +electrical component manufacturing company. Mr. Moore is currently President +and CEO of Gliocas LLC, a management consulting firm serving small +businesses and non-profits. Mr. Moore was a leader in the founding of the +Industry Data Exchange Association (IDEA), which standardized product +identification data for the electrical industry, allowing the industry to make the +successful transition to digital commerce. Mr. Moore was Chairman of the +National Electric Manufacturers Association and served on the Executive +Committee of the Board of Governors. He served on the advisory board of +Mayer Electrical Supply for over 20 years, including time as lead director, until +the sale of the company in late 2021. +Mr. Moore has over 30 years of general management experience in public and +private companies. He has extensive experience as a corporate leader overseeing +all aspects of a facilities management firm and numerous manufacturing +companies. Mr. Moore’s expertise broadens the scope of the Board’s experience +to provide oversight to Kroger’s facilities, digital, and manufacturing +businesses, and he has a wealth of Fortune 500 experience in implementing +technology transformations. Additionally, his expertise and leadership as Chair +of the Compensation Committee is of particular value to the Board. Mr. Moore +presided over the Compensation Committee during the company’s introduction +of its Framework for Action: Diversity, Equity, & Inclusion plan, and led the +inclusion of talent development into the Committee’s name and charter. +Age +70 + Director Since +1997 +Committees: +Compensation & Talent +Development1 +Corporate Governance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ronald L. Sargent +Mr. Sargent was Chairman and Chief Executive Officer of Staples, Inc., a +business products retailer, where he was employed from 1989 until his +retirement in 2017. Prior to joining Staples, Mr. Sargent spent 10 years with +Kroger in various positions. He is a director of Five Below, Inc. and Wells +Fargo & Company. Previously, he served as a director of The Home Depot, Inc. +and Mattel, Inc. Currently, Mr. Sargent is a member of the board of governors +of the Boys & Girls Clubs of America, the board of directors of City of Hope, +and the board of trustees of Northeastern University. He is also chairman of the +board of directors of the John F. Kennedy Library Foundation. +Mr. Sargent has over 35 years of retail experience, first with Kroger and then +with increasing levels of responsibility and leadership at Staples, Inc. His efforts +helped carve out a new market niche for the international retailer. In his role as +Chair of the Wells Fargo Human Resources Committee, he oversees human +capital management, including diversity, equity, and inclusion, human capital +risk, and culture and ethics. In his role as a member of the Five Below +Nominating and Corporate Governance Committee, he oversees social and +environmental governance, including corporate citizenship. These committee +experiences are of value to the Board in his role as a member of the Public +Responsibilities Committee and Lead Director of the Board. His understanding +of retail operations, consumer insights, and e-commerce are also of value to the +Board. Mr. Sargent has been designated an Audit Committee financial expert +and serves as Chair of the Corporate Governance Committee and Lead Director +of the Board. Mr. Sargent’s strong insights into corporate governance and his +executive leadership experience serve as the basis for his leadership role as Lead +Director. +Age +68 + Director Since +2006 +Committees: +Audit +Corporate Governance1 +Public Responsibilities +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + +1 Denotes Chair of Committee +The secret shape is a "triangle". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_3.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..fba412c5522670857e7def297ea2da9842326054 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,60 @@ + + +Dear Fellow Shareholders, + +I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing +economic uncertainty, our associates delivered more value and more access to fresh food for millions of people +across America. When our customers needed us most, we are there with the affordable meals their families want and +love. + +After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear +me remark that a few of those things are people’s need to eat, our commitment to serving our customers and retail’s +ever-evolving nature. + +I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged +operating environment that followed, it’s increasingly clear I need to add Kroger’s character as a company to that +list of constants. + +Kroger’s fundamental business model – to lower prices and make more fresh food accessible to more families – has +not changed. Our commitment to creating a best-in-class working environment for our associates and investing in +their long-term success has not changed. Our deep ties with local communities that inspire us to think differently +about how to feed every family in need has not changed. + +For more than 140 years, Kroger has been there for our customers, our associates and our communities – and when +each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the +right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems. + +Kroger’s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to +customers, creating exciting career opportunities for associates, providing much -needed food for our communities +and rewarding our shareholders for many years to come. + +Being a leader in the retail industry, offering affordable groceries to more customers, industry -leading benefits to +more associates and life-changing investments to more communities isn’t easy. I firmly believe Kroger, supported +by our amazing associates, can – and will – do it. + +2023 in Review +Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing +SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch +their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and +selection, no matter where they live and what their budget is. + +As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our +Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business +environment while serving our customers and associates. + +During the year, we: +• Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth +excluding the effects of the Express Scripts termination, and without fuel, of 2.3% ; +• Delivered $5 billion of adjusted FIFO operating profit; +• Grew digital business to $12 billion in annual sales; and +• Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33% +increase in rate in the last five years. + +And we continue to deliver for our shareholders. On a three-year basis, Kroger’s adjusted net earnings per diluted +share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5% +during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three -year period. + +I’d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in +the future. + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_30.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a30c582a07369f1d3d12e09ac5c981da8ede3f58 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,54 @@ +28 + + +J. Amanda Sourry Knox (Amanda Sourry) +Ms. Sourry was President of North America for Unilever, a personal care, foods, +refreshment, and home care consumer products company, from 2018 until her +retirement in December 2019. She held leadership roles of increasing +responsibility during her more than 30 years at Unilever, both in the U.S. and +Europe, including president of global foods, executive vice president of global +hair care, and executive vice president of the firm’s UK and Ireland business. +From 2015 to 2017, she served as President of their Global Foods Category. +Ms. Sourry currently serves on the board for PVH Corp., where she chairs the +Compensation Committee and serves on the Nominating, Governance & +Management Development Committee. She is also a non-executive director of +OFI, a provider of on-trend, natural and plant-based products, focused on +delivering sustainable and innovative solutions to consumers across the world, +and a member of their Remuneration and Talent Committee, the Audit and Risk +Committee, and the Sustainability Committee. She is also a supervisory director +of Trivium Packaging B.V., a sustainable packaging company. +Ms. Sourry has over thirty years of experience in the CPG and retail industry. +As a member of PVH Corp.’s Nominating, Governance, & Management +Development Committee, her experience with monitoring issues of corporate +conduct and culture, and providing oversight of diversity, equity and inclusion +policies and programs as it relates to management development, talent +assessment, and succession planning programs and processes is of particular +value to her role as a member of the Compensation & Talent Development +Committee and the Board. She brings to the Board her extensive global +marketing and business experience in consumer-packaged goods as well as +customer development, including overseeing Unilever’s digital efforts. +Ms. Sourry was actively involved in Unilever’s global diversity, gender balance, +and sustainable living initiatives which is of value to the Board and to the +Compensation & Talent Development Committee. She also has a track record of +driving sustainable, profitable growth across scale operating companies and +global categories across both developed and emerging markets. Ms. Sourry’s +history in profit and loss responsibility and oversight, people and ESG +leadership, and capabilities development is of value to the Board. +Age +60 + Director Since +2021 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Retail +Consumer +Financial Expertise +Risk Management +Operations & Technology +ESG + + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_31.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9f3bab4cdc92ce26e59260e8c5ff38673254d6b --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,86 @@ +29 + + +Mark S. Sutton +Mr. Sutton is Chairman and Chief Executive Officer of International Paper, a +leading global producer of renewable fiber-based packaging, pulp, and paper +products. Prior to becoming CEO in 2014, he served as President and Chief +Operating Officer with responsibility for running International Paper’s global +business. Mr. Sutton joined International Paper in 1984 as an Electrical +Engineer. He held roles of increasing responsibility throughout his career, +including Mill Manager, Vice President of Corrugated Packaging Operations +across Europe, the Middle East and Africa, Vice President of Corporate +Strategic Planning, and Senior Vice President of several business units, +including global supply chain. Mr. Sutton is a member of The Business Council, +serves on the American Forest & Paper Association board of directors, and on +the Business Roundtable. He also serves on the board of directors of Memphis +Tomorrow. +Mr. Sutton has over 30 years of leadership experience with increasing levels of +responsibility and leadership at International Paper. At International Paper, he +oversees their robust ESG disclosures which are aligned with GRI, and their +Vision 2030, which sets forth ambitious forest stewardship targets and plans to +transition to renewable solutions and sustainable operations. He also oversees +International Paper’s Vision 2030 goals pertaining to diversity and inclusion. He +brings to the Board the critical thinking that comes with an electrical +engineering background as well as his experience leading a global company +with labor unions. His strong strategic planning background, manufacturing and +supply chain experience, and his ESG leadership are of value to the Board. +Age +62 + Director Since +2017 +Committees: +Compensation & Talent +Development +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG +Manufacturing + + +Ashok Vemuri +Mr. Vemuri was Chief Executive Officer and a Director of Conduent +Incorporated, a global digital interactions company, from its inception as a +result of the spin-off from Xerox Corporation in January 2017 to 2019. He +previously served as Chief Executive Officer of Xerox Business Services, LLC +and as an Executive Vice President of Xerox Corporation from July 2016 to +December 2016. Prior to that, he was President, Chief Executive Officer, and a +member of the Board of Directors of IGATE Corporation, a New Jersey-based +global technology and services company now part of Capgemini, from 2013 to +2015. Before joining IGATE, Mr. Vemuri spent 14 years at Infosys Limited, a +multinational consulting and technology services company, in a variety of +leadership and business development roles and served on the board of Infosys +from 2011 to 2013. Prior to joining Infosys in 1999, Mr. Vemuri worked in the +investment banking industry at Deutsche Bank and Bank of America. In the past +five years, he served as a director of Conduent Incorporated. Mr. Vemuri is a +member of the Board of Directors of Opal Fuels and is chair of the Audit +Committee. +Mr. Vemuri brings to the Board a proven track record of leading technology +services companies through growth and corporate transformations. His +experience as CEO of global technology companies as well as his experience +with cyber security and risk oversight are of value to the Board as he brings a +unique operational, financial, and client experience perspective. Additionally, +Mr. Vemuri served on our Public Responsibilities Committee which gives him +additional perspectives on risk oversight that he brings to the Audit Committee. +Mr. Vemuri has been designated an Audit Committee financial expert. +Age +56 + Director Since +2019 +Committees: +Audit +Finance +Qualifications: +Business Management +Financial Expertise +Risk Management +Operations & Technology +ESG + + +YOUR VOTE IS EXTREMELY IMPORTANT. The Board of Directors unanimously recommends a vote +“FOR ALL” of Kroger’s director nominees. diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_32.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d702595819e8b5d21e249e4f2a2389351b508db --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,55 @@ +30 + +Information Concerning the Board of Directors +Board Leadership Structure and Independent Lead Director +Kroger has a governance structure in which independent directors exercise meaningful and rigorous oversight. +The Board’s leadership structure, in particular, is designed with those principles in mind and to allow the Board to +evaluate its needs and determine, from time to time, who should lead the Board. Our Corporate Governance +Guidelines (the “Guidelines”) provide the flexibility for the Board to modify our leadership structure in the future as +appropriate. We believe that Kroger is well-served by this flexible leadership structure. +In order to promote thoughtful oversight, independence, and overall effectiveness, the Board’s leadership +includes Mr. McMullen, our Chairman and CEO, and an independent Lead Director designated by the Board among +the independent directors. The Lead Director works with the Chairman to share governance responsi bilities, +facilitate the development of Kroger’s strategy, and grow shareholder value. The Lead Director serves a variety of +roles, consistent with current best practices, including: +• reviewing and approving Board meeting agendas, materials, and schedules to confirm that the +appropriate topics are reviewed, with sufficient information provided to directors on each topic and +appropriate time is allocated to each; +• serving as the principal liaison between the Chairman, management, and the independent directors; +• presiding at the executive sessions of independent directors and at all other meetings of the Board at +which the Chairman is not present; +• calling meetings of independent directors at any time; and +• serving as the Board’s representative for any consultation and direct communication, following a request, +with major shareholders. +The independent Lead Director carries out these responsibilities in numerous ways, including by: +• facilitating communication and collegiality among the Board members; +• soliciting direct feedback from independent directors; +• overseeing the succession planning process, including meeting with a wide range of associates including +corporate and division management associates; +• meeting with the CEO frequently to discuss strategy; +• serving as a sounding board and advisor to the CEO; and +• leading annual CEO evaluation process. + +Unless otherwise determined by the independent members of the Board, the Chair of the Corporate Governance +Committee is designated as the Lead Director. Ronald L. Sargent, an independent director and the Chair of the +Corporate Governance Committee, was appointed as our Board’s independent Lead Director in June 2018. +Mr. Sargent is an effective Lead Director for Kroger due to, among other things, his: +• independence; +• deep strategic and operational understanding of Kroger obtained while serving as a Kroger director; +• insight into corporate governance; +• experience as the CEO of an international ecommerce and brick and mortar retailer; +• experience on the Boards of other large publicly traded companies; and +• engagement and commitment to carrying out the role and responsibilities of the Lead Director. +With respect to the roles of Chairman and CEO, the Guidelines provide that the Board will determine whether +it is in the best interests of Kroger and its shareholders for the roles to be combined. The Board exercises this +judgment as it deems appropriate in light of prevailing circumstances. The Board believes that this leadership +structure improves the Board’s ability to focus on key policy and operational issues and helps the Company operate +in the long-term interest of shareholders. Additionally, this structure provides an effective balance between strong +Company leadership and appropriate safeguards and oversight by independent directors. Our CEO’s strong +background in finance, operations, and strategic collaborations is particularly important to the Board given Kroger’s +current growth strategy. Our CEO’s consistent leadership, deep industry expertise, and extensive knowledge of the +Company are also especially critical in the midst of the rapidly evolving retail and di gital landscape. The Board +believes that the structure of the Chairman and independent Lead Director position should continue to be considered +as part of the succession planning process. + +The secret currency is a "dollar". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_33.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb3dcb2d2f40ee373eff521a45fe9595c7d6d8c7 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,47 @@ +31 + +Annual Board Evaluation Process +The Board and each of its Committees conduct an annual evaluation to determine whether the Board is +functioning effectively both at the Board and at the Committee levels. As part of this annual evaluation, the Board +assesses whether the current leadership structure and function continues to be appropriate for Kroger and its +shareholders, including in consideration of director succession planning. +Every year, the Board’s goal is to increase the effectiveness of the Board and the results of these evaluations +are used for this purpose. The Board recognizes that a robust evaluation process is an essential component of strong +corporate governance practices and ensuring Board effectiveness. The Corporate Governance Committee oversees +an annual evaluation process led by either the Lead Independent Director or an independent third party. +Each director completes a detailed annual evaluation of the Board and the Committees on which he or she +serves and the Lead Director or an independent third-party conducts interviews with each of the directors. This year, +the annual evaluation was conducted by the Lead Director. +Topics covered include, among others: +• The effectiveness of the Board and Board Committees and the active participation of all directors +• The Board and Committees’ skills and experience and whether additional skills or experience are needed +• The effectiveness of Board and Committee meetings, including the frequency of the meetings +• Board interaction with management, including the level of access to management, and the responsiveness +of management +• The effectiveness of the Board’s evaluation of management performance +• Additional subject matters the Board would like to see presented at their meetings or Committee meetings +• Board’s governance procedures +• The culture of the Board to promote participation in a meaningful and constructive way +The results of this Board evaluation are discussed by the full Board and each Committee, as applicable, and +changes to the Board’s and its Committees’ practices are implemented as appropriate. +Over the past several years, this evaluation process has contributed to various enhancements in the way the +Board and the Committees operate, including increased focus on continuous Board refreshment and diversity of its +members as well as ensuring that Board and Committee agendas are appropriately focused on strategic priorities and +provide adequate time for director discussion and input. +Board Succession Planning and Refreshment Mechanisms +Board succession planning is an ongoing, year-round process. The Corporate Governance Committee +recognizes the importance of thoughtful Board refreshment and engages in a continuing process of identifying +attributes sought for future Board members. The Corporate Governance Committee takes into account the Board and +Committee evaluations regarding the specific qualities, skills, and experiences that would contribute to overall +Board and Committee effectiveness, as well as the future needs of the Board and it s Committees in light of Kroger’s +current and long-term business strategies, and the skills and qualifications of directors who are expected to retire in +the future including as a result of our Board retirement policy, under which directors retire at the annual meeting +following their 72nd birthday. +Outside Board Service +No director who is an officer of the Company may serve as a director of another company without the approval +of the Corporate Governance Committee. Directors who are not officers of the Company may not serve as a director +of another company if in so doing such service would interfere with the director’s ability to properly perform his or +her responsibilities on behalf of the Company and its shareholders, as determined by the Corporate Governance +Committee. Currently, our CEO serves on one other public company board. None of our current directors serve on +more than three total public company Boards, including Kroger’s Board. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_34.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..a911b22b76fbbb21b7646ffe2145bc4a3876a604 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,25 @@ +32 + +Board Diversity +Our director nominees reflect a wide array of experience, skills, and backgrounds. Each director is individually +qualified to make unique and substantial contributions to Kroger. Collectively, our directors’ diverse viewpoints and +independent-mindedness enhance the quality and effectiveness of Board deliberations and decision-making. Our +Board is a dynamic group of new and experienced members, which reflects an appropriate balance of institutional +knowledge and fresh perspectives about Kroger due to the varied length of tenure on the Board. We believe this +blend of qualifications, attributes, and tenure enables highly effective Board leadership. +The Corporate Governance Committee considers racial, ethnic, and gender diversity to be important elements +in promoting full, open, and balanced deliberations of issues presented to the Board. When evaluating potential +nominees to our Board, the Corporate Governance Committee considers director candidates who would help the +Board reflect the diversity of our shareholders, associates, customers, and the communities in which we operate, +including by considering their geographic locations to align directors’ physical locations with Kroger’s operating +areas where possible. In connection with the use of a third-party search firm to identify candidates for Board +positions, the Corporate Governance Committee instructs the third-party search firm to include in its initial list +qualified female and racially/ethnically diverse candidates. Four of our 11 director nominees self -identify as +racially/ethnically diverse: Mr. Brown and Ms. Gates self-identify as Black/African American and Ms. Chao and +Mr. Vemuri self-identify as Asian. Five of our 11 directors are women. +The Corporate Governance Committee believes that it has been successful in its efforts to promote gender and +ethnic diversity on our Board. Further, the Board aims to foster a diverse and inclusive culture throughout the +Company and believes that the Board nominees are well suited to do so. The Corporate Governance Committee and +Board believe that our director nominees for election at our 2024 Annual Meeting bring to our Board a variety of +different experiences, skills, and qualifications that contribute to a well-functioning diverse Board that effectively +oversees the Company’s strategy and management. The charts below show the diversity of our director nominees: diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_35.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..c491709fa787df791604000ff8fb47c2a36a8a9e --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,76 @@ +33 + +Director Onboarding and Engagement +All directors are expected to invest the time and energy required to gain an in -depth understanding of our +business and operations in order to enhance their strategic value to our Board. We develop tailored onboarding plans +for each new director. We arrange meetings for each new director with appropriate officers and associates in order to +familiarize him or her with the Company’s strategic plans, financial s tatements, and key policies and practices. We +also provide training on fiduciary obligations of board members and corporate governance topics, as well as +committee-specific onboarding. From time to time, the Company will provide Board members with presentations +from experts within and outside of the Company on topics relevant to the Board’s responsibilities. Any member of +the Board may attend accredited third-party training and the expenses will be paid by the Company. Board meetings +are periodically held at a location away from our home office in a geography in which we operate. In connection +with these Board meetings, our directors learn more about the local business environment through meetings with our +regional business leaders and visits to our stores, competitors’ stores, manufacturing facilities, distribution facilities, +and/or customer fulfillment centers. +Committees of the Board of Directors +To assist the Board in undertaking its responsibilities, and to allow deeper engagement in certain areas of +company oversight, the Board has established five standing Committees: Audit, Compensation and Talent +Development (“Compensation”), Corporate Governance, Finance, and Public Responsibilities. All Committees are +composed exclusively of independent directors, as determined under the NYSE listing standards. Each Committee +has the responsibilities set forth in its respective charter, each of which has bee n approved by the Board. The current +charter of each Board Committee is available on our website at ir.kroger.com under Investors  — Governance — +Corporate Governance Guidelines. +The current membership, 2023 meetings, and responsibilities of each Committee are summarized below : + +Name of Committee, Number of +Meetings, and Current Members Primary Committee Responsibilities +Audit Committee +Meetings in 2023: 5 +Members: +Anne Gates, Chair +Karen M. Hoguet +Ronald L. Sargent +Ashok Vemuri + + + + +• Oversees the Company’s financial reporting and accounting +matters, including review of the Company’s financial +statements and the audit thereof, the Company’s financial +reporting and accounting process, and the Company’s +systems of internal control over financial reporting +• Selects, evaluates, and oversees the compensation and work +of the independent registered public accounting firm and +reviews its performance, qualifications, and independence +• Oversees and evaluates the Company’s internal audit +function, including review of its audit plan, policies and +procedures, and significant findings +• Oversees enterprise risk assessment and risk management, +including review of cybersecurity risks and regular reports +received from management and independent third parties +• Reviews significant legal and regulatory matters +• Reviews and monitors the Company’s operational and third- +party compliance programs and updates thereto +• Reviews Ethics Hotline reports and discusses material +matters +• Reviews and approves related party transactions +• Conducts executive sessions with independent registered +public accounting firm and Vice President, Internal Audit at +each meeting +• Conducts executive sessions with the Senior Vice President, +General Counsel, and Secretary, Vice President and Chief +Ethics & Compliance Officer, and Senior Vice President and +Chief Financial Officer individually at least once per year + + + + + + + + + + +The secret object #4 is a "tree". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_36.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee334dbd93d8c64af2a87bb09d1ee824a9e96b9e --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,87 @@ +34 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Compensation Committee +Meetings in 2023: 4 +Members: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark S. Sutton + + + + +• Recommends for approval by the independent directors the +compensation of the CEO and approves the compensation of +senior officers +• Administers the Company’s executive compensation policies +and programs, including determining grants of equity awards +under the plans +• Reviews annual incentive plans and long-term incentive plan +metrics and plan design +• Reviews emerging legislation and governance issues and +retail compensation trends +• Reviews the Company’s executive compensation peer group +• Reviews CEO pay analysis +• Reviews Human Capital Management, including Diversity, +Equity, & Inclusion +• Has sole authority to retain and direct the Committee’s +compensation consultant +• Assists the full Board with senior management succession +planning +• Conducts executive sessions with the Senior Vice President +and Chief People Officer and independent compensation +consultant + + + + + + + + + + +Corporate Governance Committee +Meetings in 2023: 2 +Members: +Ronald L. Sargent, Chair +Elaine L. Chao +Anne Gates +Clyde R. Moore + + + + +• Oversees the Company’s corporate governance policies and +procedures +• Develops criteria for selecting and retaining directors, +including identifying and recommending qualified +candidates to be director nominees +• Designates membership and Chairs of Board Committees +• Oversees and administers Board evaluation process +• Reviews the Board’s performance +• Establishes and reviews the practices and procedures by +which the Board performs its functions +• Reviews director independence, financial literacy, and +designation of financial expertise +• Administers director nomination process +• Interviews and nominates candidates for director election +• Reviews compliance with share ownership guidelines +• Reviews and participates in shareholder engagement +• Reviews and establishes independent director compensation +• Oversees the annual CEO evaluation process conducted by +the full Board + + + + + + + + + + + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_37.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb10b714a2e7c0be18b6ac2507be2bccaf05e4fc --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,90 @@ +35 + +Name of Committee, Number of Meetings, and Current Members Primary Committee Responsibilities +Finance Committee +Meetings in 2023: 4 +Members: +Karen M. Hoguet, Chair +Nora A. Aufreiter +Amanda Sourry +Mark Sutton +Ashok Vemuri + + + + +• Oversees the Company’s financial affairs and management +of the Company’s financial resources +• Reviews the Company’s annual and long-term financial +plans, capital spending plans, capital allocation strategy, and +use of cash +• Approves and recommends for approval to the Board certain +capital expenditures +• Reviews the Company’s dividend policy and share buybacks +• Reviews strategic transactions, capital structure, including +potential issuance of debt or equity securities, credit +agreements, and other financing transactions +• Monitors the investment management of assets held in +pension and profit-sharing plans administered by the +Company +• Oversees the Company’s policies and procedures on +hedging, swaps, risk management, and other derivative +transactions +• Oversees the Company’s engagement and relationships with, +and standing in, the financial community + + + + + + + +Public Responsibilities Committee +Meetings in 2023: 3 +Members: +Nora A. Aufreiter, Chair +Kevin M. Brown +Elaine L. Chao +Ronald L. Sargent + + + + +• Reviews the practices of the Company affecting its +responsibility as a corporate citizen +• Examines and reviews the Company’s practices related to +environmental sustainability, and social impact, including +but not limited to +✓ climate impacts +✓ packaging +✓ food and operational waste +✓ food access +✓ responsible sourcing +✓ supplier diversity +✓ people safety, food safety, and pharmacy safety +• Examines and reviews the Company’s Sustainability and +Social Impact strategy +• Reviews the Company’s community engagement and +philanthropy +• Reviews the Company’s advocacy and public policy +• Reviews the Company’s communications and Corporate +Brand stewardship +• Assesses the Company’s effort in evaluating and responding +to changing public expectations and public issues that affect +the business + + + + + + + + + + + + + + + +The secret fruit is a "banana". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_38.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f48f1e7e36fd30cad3d7356b933e9cdb29339d7 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,33 @@ +36 + +Shareholder Engagement +Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a +priority for both our Board and management team. We have a longstanding history of engaging with our +shareholders through our investor relations program and our year-round governance outreach program, including +participation for our independent directors. In 2023, under the direction of the Board, we requested engagement +meetings with 39 shareholders representing 59% of our outstanding shares and subsequently met with 16 +shareholders representing 39% of our outstanding shares (many of those shareholders we met with more than once). +Some investors we contacted either did not respond or confirmed that a discussion was not needed at that time. + +We conduct shareholder outreach throughout the year to engage with shareholders on issues that are important +to them and us. During these engagements we discussed and solicited feedback on a range of topics, which informed +Board discussions and decisions, including but not limited to: +Business Strategy +• Kroger’s growth strategy, priorities, and value drivers +• Our strong value creation model and recent performance +ESG Practices & Disclosures +• Discussions with investors and NGOs help inform our ESG strategy, Thriving Together, our topic +management approach, and long-term sustainability and social impact goals +• Board oversight of ESG strategy and updated Committee responsibilities +• Annual ESG reporting and disclosures, including our alignment with the TCFD, SASB, and GRI reporting +frameworks +• The centerpiece of our strategy is Zero Hunger | Zero Waste, an industry -leading platform for collective +action and systems change to end hunger in our communities and eliminate waste across our Company +Human Capital Management +• Our Framework for Action includes steps we are taking to ensure our workforce reflects the communities +we serve +• Our focus on our associates’ well-being, including increasing our average hourly associate wage, +comprehensive benefits, and opportunities for internal progression and leadership development training +• Workforce diversity reporting, including EEO-1 demographic disclosure and annual pay studies +• Board oversight of the Company’s approach to respecting human rights for workers in our supply chain + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_39.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d654b51474a5c55ea74de8e92c9d6b6fd81817c --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,49 @@ +37 + +Compensation Structure +• Overview of compensation program design and alignment of pay and performance +• Consideration of short- and long-term metrics, including financial and non-financial metrics, such as ESG +metrics +• The balance of equity and cash compensation, as well as fixed versus at risk compensation +Board and Board Oversight +• Our Board’s approach to board refreshment considering diversity, balance of tenure, and alignment of +board skills and experience with Kroger’s current and long-term business strategies +• Board and Committee responsibilities for oversight of ESG priorities, and approach to risk management +• Kroger’s latest formal ESG materiality assessment, conducted in alignment with principles of double +materiality, and discussions with environmentally and socially conscious investors and NGOs helped +inform our ESG strategy and long-term goals. Overall shareholders expressed appreciation for the +opportunity to have an ongoing discussion and were complimentary of Kroger’s ESG practices. +Specifically, shareholders recognized the actions we took to formalize our ESG strategy, Thriving +Together, and how our Board oversees this strategy, including our goals and initiatives. These +conversations provided valuable insights into our shareholders’ evolving perspectives, which were shared +with our full Board. +Board’s Response to Shareholder Proposals +Accountability to our shareholders continues to be an important component of our success. We actively engage +with our shareholder proponents. Every year, following our Annual Shareholders’ Meeting, our Corporate +Governance Committee considers the voting outcomes for shareholder proposals. In addition, our Corporate +Governance Committee and other Committees, as appropriate, consider proposed courses of action in light of the +voting outcomes for shareholder proposals under their oversight, as well as feedback provided directly from our +shareholders. +In response to last year’s shareholder proposals voting outcomes, we have published our Statement on Pay +Equity which can be found at https://www.thekrogerco.com/wp-content/uploads/2024/03/Kroger-Statement-on-Pay- +Equity.pdf. The information on, or accessible through this website is not part of, or incorporated by reference, into +this proxy statement. +Director Nominee Selection Process +The Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for +election at each annual meeting of shareholders. The Corporate Governance Committee recruits candidates for +Board membership through its own efforts and through recommendations from other directors and shareholders. In +addition, the Corporate Governance Committee retains an independent, third -party search firm to assist in +identifying and recruiting director candidates who meet the criteria established by the Corporate Governance +Committee. +These criteria are: +• demonstrated ability in fields considered to be of value to the Board, including business management, +retail, consumer, operations, technology, financial, sustainability, manufacturing, public service, education, +science, law, and government; +• experience in high growth companies and nominees whose business experience can help the Company +innovate and derive new value from existing assets; +• highest standards of personal character and conduct; +• willingness to fulfil the obligations of directors and to make the contribution of which he or she is capable, +including regular attendance and participation at Board and Committee meetings, and preparation for all +meetings, including review of all meeting materials provided in advance of the meeting; and +• ability to understand the perspectives of Kroger’s customers, taking into consideration the diversity of our +customers, including regional and geographic differences. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_4.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d3945853a200410c0c2df449b0e9347c854080b --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,60 @@ + + +Leading with Fresh +Fresh products remain at the center of our customers’ plates. Whether shoppers are making a nutritious salad filled +with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray’s +Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the +freshest items to our customers, no matter how they shop. + +With more than 2,100 End-to-End Fresh-certified stores, our customers’ produce has more days of freshness in their +homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier +meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the +entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and +rewarding us with their loyalty. + +Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more +curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a +new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the +perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point. +Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore +our outstanding portfolio of beloved brands. + +With busy schedules pushing families to do more with less time, customers are demanding more convenience meals. +Whether it’s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout +with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically +dominated by restaurants. + +And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers +to improve our customers’ lives. Every day, we see customers struggling with diseases that could be prevented or +slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine +mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and +thriving lives. + +Accelerating with Digital +Customers continue to shop with Kroger across all our channels – from in-store and Pickup to Delivery. We provide +our customers the products they want, wherever they want them. We find that when our customers can shop with us +in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with +our products. + +Kroger will continue to invest in our digital experience because it is an important part of our plan to continue +growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly +focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience +and improve operating margins to close the gap with traditional brick -and-mortar stores. + +As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off +more renovation projects than we have in the last five years. We believe our combination of brick -and-mortar stores +and fulfillment centers is the best way to bring more fresh food to more of America. + +Whether customers shop in our stores or digitally, they are saving more through our personalized shopping +experience. We know our customers better than anyone. We understand their shopping patterns, know which +products their families love and can even predict new items they may enjoy. Our personalized promotions mean the +right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally +engaged households. + +The more our customers use our digital products, the more impactful our alternative profit streams can be. Our +customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with +interested shoppers. This model is succeeding, and it will fuel our growth well into the future. + +Investing in Our Associates +Kroger’s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and +our offices. They serve our customers by making memorable moments even more special with the right meal, bottle \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_40.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..3292c344510e77d9cddb8ab08795534276b2429b --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +38 + +The Corporate Governance Committee also considers diversity, as discussed in detail under “Board Diversity” +above, and the specific experience and abilities of director candidates in light of our current business, strategy , and +structure, and the current or expected needs of the Board in its identification and recruitment of director candidates. +The criteria for Board membership applied by the Corporate Governance Committee in its evaluation of +potential Board members does not vary based on whether a candidate is recommended by our directors, a third -party +search firm, or shareholders. + +Candidates Nominated by Shareholders +The Corporate Governance Committee will consider shareholder recommendations for director nominees for +election to the Board. If shareholders wish to nominate a person or persons for election to the Board at our 202 5 +annual meeting, written notice must be submitted to Kroger’s Secretary, and received at our executive offices, in +accordance with Kroger’s Regulations, not later than March 31, 2025. Such notice should include the name, age, +business address, and residence address of such person, the principal occupation or employment of such person, the +number of Kroger common shares owned of record or beneficially by such person and any other information relating +to the person that would be required to be included in a proxy statement relating to the election of directors. The +Secretary will forward the information to the Corporate Governance Committee for its consideration. The Corporate +Governance Committee will use the same criteria in evaluating candidates submitted by shareholders as it uses in +evaluating candidates identified by the Corporate Governance Committee, as described above. See “Director +Nominee Selection Process.” +Additionally, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of +director nominees other than our nominees must provide notice to Kroger’s Secretary that sets forth the information +required by Rule 14a-19 of the Exchange Act no later than April 28, 2025, and must comply with the additional +requirements of Rule 14a-19(b). +Eligible shareholders have the ability to submit director nominees for inclusion in our proxy statement for the +2025 annual meeting of shareholders. To be eligible, shareholders must have owned at least 3% of our common +shares for at least three years. Up to 20 shareholders are able to aggregate for this purpose. Nominations must be +submitted to our Corporate Secretary at our principal executive offices no earlier than December 16, 2024 and no +later than January 15, 2025. +Corporate Governance Guidelines +The Board has adopted the Guidelines, which provide a framework for the Board’s governance and oversight of +the Company. The Guidelines are available on our website at ir.kroger.com under Investors — Governance — +Corporate Governance Guidelines. Shareholders may also obtain a copy of the Guidelines, at no cost, by making a +written request to Kroger’s Secretary at our executive offices. Certain key principles addressed in the Guidelines are +summarized below. + diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_41.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce124dfa647029145e3beec6d437a871aaba0624 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,52 @@ +39 + +Independence +The Board has determined that all of the current independent directors and nominees have no material +relationships with Kroger and satisfy the criteria for independence set forth in Rule 303A.02 of the NYSE Listed +Company Manual. Therefore, all independent directors and nominees are independent for purposes of the NYSE +listing standards. The Board made its determination based on information furnished to the Company by each of the +directors regarding their relationships with Kroger and its management, and other relevant information. The Board +considered, among other things, that +• the value of any business transactions between Kroger and entities with which the directors are affiliated +falls below the thresholds identified by the NYSE listing standards, and +• no directors had any material relationships with Kroger other than serving on our Board. + +The Board also considered that Kroger purchases from International Paper Company, where Mark Sutton is +Chairman and Chief Executive Officer and from Dell Technologies Inc. where Kevin Brown is an officer. The +Board determined that these transactions do no impair independence as they are in the ordinary course of business +on the same terms offered to similar purchases and do not exceed applicable independence thresholds. +Audit Committee Independence and Expertise +The Board has determined that Anne Gates, Karen M. Hoguet, Ronald L. Sargent, and Ashok Vemuri, +independent directors, each of whom is a member of the Audit Committee, are “ Audit Committee financial experts” +as defined by applicable Securities and Exchange Commission (“SEC”) regulations and that all members of the +Audit Committee are “financially literate” as that term is used in the NYSE listing standards and are independent in +accordance with Rule 10A-3 of the Securities Exchange Act of 1934. +Code of Ethics +The Board has adopted The Kroger Co. Policy on Business Ethics, applicable to all officers, associates, and +directors, including Kroger’s principal executive, financial, and accounting officers. The Policy on Business Ethics +is available on our website at ir.kroger.com under Investors — Governance — Policy on Business Ethics. +Shareholders may also obtain a copy of the Policy on Business Ethics by making a written request to Kroger’s +Secretary at our executive offices. +Communications with the Board +The Board has established two separate mechanisms for shareholders and interested parties to communicate +with the Board. Any shareholder or interested party who has concerns regarding accounting, improper use of Kroger +assets, or ethical improprieties may report these concerns via the toll-free hotline (800-689-4609) or website +(ethicspoint.com) established by the Board’s Audit Committee. The concerns are investigated by Kroger’s Vice +President, Chief Ethics and Compliance Officer, and the Vice President of Internal Audit and reported to the Audit +Committee as deemed appropriate. +Shareholders or interested parties also may communicate with the Board in writing directed to Kroger’s +Secretary at our executive offices. Communications relating to personnel issues, ordinary business operations, or +companies seeking to do business with us, will be forwarded to the business unit of Kroger that the Secretary deems +appropriate. Other communications will be forwarded to the Chair of the Corporate Governance Committee for +further consideration. The Chair of the Corporate Governance Committee will take such action as he or she deems +appropriate, which may include referral to the full Corporate Governance Committee or the entire Board. +Executive Officer Succession Planning +The Guidelines provide that the Compensation Committee will review Company policies and programs for +talent development and evaluation of executive officers, and will review management succession planning. In +connection with the use of a third-party search firm to identify external candidates for executive officer positions, +including the chief executive officer, the Board and/or the Company, as the case may be, will instruct the third -party +search firm to include in its initial list qualified female and racially/ethnically diverse candidates. +Attendance +The Board held 13 meetings in fiscal year 2023. During fiscal 2023, all incumbent directors attended at least +75% of the aggregate number of meetings of the Board and Committees on which that director served. Members of +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_42.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7a3951bbc4ebcc02e174fe34e42251fe33637b8 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +40 + +the Board are expected to use their best efforts to attend all annual meetings of shareholders. All Board members +attended last year’s virtual annual meeting. +Independent Compensation Consultants +The Compensation Committee directly engages a compensation consultant to advise the Compensation +Committee in the design of Kroger’s executive compensation. The Committee retained Korn Ferry Hay (US) (“Korn +Ferry”) beginning in December 2017. Retained by – and reporting directly to – the Compensation Committee, Korn +Ferry provided the Committee with assistance in evaluating Kroger’s executive compensation programs and +policies. +In fiscal 2023, Kroger paid Korn Ferry $399,000 for work performed for the Compensation Committee. +Kroger, on management’s recommendation, retained Korn Ferry to provide other services for Kroger in fiscal 202 3 +for which Kroger paid $962,453. These other services primarily related to the proposed merger with Albertsons, +salary surveys, coaching services, and Kroger Health review. The Compensation Committee expressly approved +Korn Ferry performing these additional services. After taking into consideration th e NYSE’s independence +standards and the SEC rules, the Compensation Committee determined that Korn Ferry was independent, and their +work has not raised any conflict of interest. +The Compensation Committee may engage an additional compensation consultant from time to time as it +deems advisable. +Compensation Committee Interlocks and Insider Participation +No member of the Compensation Committee was an officer or associate of Kroger during fiscal 202 3, and no +member of the Compensation Committee is a former officer of Kroger or was a party to any related person +transaction involving Kroger required to be disclosed under Item 404 of Regulation S-K. During fiscal 2023, none of +our executive officers served on the board of directors or on the compensation committee of any other entity that has +or had executive officers serving as a member of Kroger’s Board of Di rectors or Compensation Committee of the +Board. +The Board’s Role in Risk Oversight +While risk management is primarily the responsibility of Kroger’s management team, the Board is responsible +for strategic planning and overall supervision of our risk management activities. The Board’s oversight of the +material risks faced by Kroger occurs at both the full Board level and at the Committee level, each of which may +engage advisors and experts from time to time to provide advice and counsel on risk -related matters. +We believe that our approach to risk oversight optimizes our ability to assess inter-relationships among the +various risks, make informed cost-benefit decisions, and approach emerging risks in a proactive manner for Kroger. +We also believe that our risk oversight structure complements our current Board leadership structure, as it allows +our independent directors, through the five fully independent Board Committees, and in executive sessions of +independent directors led by the Lead Director, to exercise effective oversight of the actions of management’s +identification of risk and implementation of effective risk management policies and controls. +The Board receives presentations throughout the year from various department and business unit leaders that +include discussion of significant risks, including newly identified and evolving high priority risks. When new risks +are identified, management conducts, and either the full Board or the appropriate Board committee reviews and +discusses, an enterprise risk assessment related to such new risks which may include human capital, supply chain, +associate and customer health and safety, legal, regulatory, and other risks. Management and the Board then discuss +the relative severity of each category of risk as well as mitigating actions and considerations relating to disclosures +of material risks. +At each Board meeting, the CEO addresses matters of particular importance or concern, including any +significant areas of risk, such as newly identified risks, that require Board attention. Additionally, through dedicated +sessions focusing entirely on corporate strategy, the full Board reviews in detail Kroger’s short- and long-term +strategies, including consideration of significant risks facing Kroger – either immediately or longer term – and their +potential impact. The independent directors, in executive sessions led by the Lead Director, address matters of +particular concern, including significant areas of risk, that warrant further discussion or consideration outside the +presence of Kroger employees. At the committee level, reports are given by management subject matter experts to +each Committee on risks within the scope of their charters. Each Committee reports to the full Board at each +meeting, including any areas of risk discussed by the Committee. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_43.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..41ad83bba9d212c73bf38d36d10ecbd2fe6bc71f --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,56 @@ +41 + +The Audit Committee has oversight responsibility not only for financial reporting of Kroger’s major financial +exposures and the steps management has taken to monitor and control those exposures, but also for the effectiveness +of management’s processes that monitor and manage key business risks facing Kroger, as well as the major areas of +risk exposure, and management’s efforts to monitor and control the major areas of risk exposure. The Audit +Committee incorporates its risk oversight function into its regular reports to the Board and also discusses with +management its policies with respect to risk assessment and risk management. + +Cybersecurity Governance + +Our Vice President, Chief Ethics and Compliance Officer provides regular updates to the Audit Committee on +our compliance risks and actions taken to mitigate that risk. In addition, the Audit Committee is charged with +oversight of data privacy and cybersecurity risks. Protection of our customers’ data is a fundamental priority for our +Board and management team. Kroger’s CIO and CISO provide a quarterly update at each Committee meeting on +cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually, +and inform the Committee immediately if a cybersecurity incident is deemed material. They report to t he Audit +Committee and the Board on compliance and regulatory issues, provide updates concerning continuously -evolving +threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and +CISO discuss and present strategies to address geopolitical threats that may impact operations as well as +technological changes, such as AI and quantum computing. In overseeing cybersecurity risks, the Audit Committee +focuses on aggregated, thematic issues with a risk-based approach. Oversight of cybersecurity risk incorporates +strategy metrics, third party assessments, and internal audit and controls. An independen t third party also regularly +reports to the Audit Committee and the full Board on cybersecurity, and outside counsel a dvises the Board on best +practices for cybersecurity oversight by the Board, and the evolution of that oversight over time. Management also +reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their impact . We experience +cybersecurity threats and incidents from time to time. We are not aware of any material risks from cybersecurity +threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably +likely to materially affect us, and we have not experienced a cybersecurity threat or incident that has materially +affected Kroger in at least the last three years. There can be no assurance that cybersecurity threats will not have a +material effect on us in the future. +For more information please see Item 1C. Cybersecurity in the Company’s Form 10 -K for the year ended February +3, 2024, filed with the SEC on April 2, 2024. +Board Oversight of ESG Topics +We are aligned with the desire of our customers, associates, and shareholders to engage in our communities and +reduce our impacts on the environment while continuing to create positive economic value over the long -term. +Given the breadth of topics and their importance to us, all of our Board Committees have direct oversight of +environmental, social, and governance topics. Key ESG topics our Board Committees oversee are as follows: + +Audit • Legal & Regulatory +• Ethics +• Operational and Third-Party Compliance +• Data Privacy & Cyber Security +• Financial Integrity +Compensation & Talent +Development +• Human Capital Management +• Talent Development +• Executive Compensation +• Diversity, Equity & Inclusion +Corporate Governance • Board recruitment/diversity +• Board succession +• Shareholder engagement program +• Shareholder advisory votes & shareholder proposals +• Independent director compensation +Finance • Capital spending to ensure consistency with strategy and goals \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_44.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e761057ebf4f3bb169034e3566d220c509b5cc3e --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,36 @@ +42 + +Public Responsibilities • Environmental Sustainability +✓ Climate Impacts +✓ Resource Conservation +✓ Food Waste (Zero Waste) +• Social Impact +✓ Food Access and Affordability (Zero Hunger) +✓ Health & Nutrition +✓ Philanthropy +✓ Responsible Supply Chain & Sourcing +➢ Human Rights +➢ Animal Welfare +• Safety +✓ Food +✓ People +✓ Pharmacy +• Advocacy & Public Policy +✓ Government Relations +✓ Political action (KroPAC) +• Communications & Brand Stewardship +✓ Associate & External Communications +• Stakeholder Relations + +Kroger’s commitment to corporate responsibility is not new. Our Public Responsibilities Committee was +established in 1977. For the past 17 years, our Company has prepared and produced an annual report describing our +progress and initiatives regarding sustainability and other key topics. For the most recent information, please visit +https://www.thekrogerco.com/esgreport/. The information on, or accessible through, this website is not part of, or +incorporated by reference into, this proxy statement. +In addition, our full Board oversees issues related to diversity and inclusion within the workplace. Diversity +and inclusion have been deeply rooted in Kroger’s values for decades. Our Human Resources & Labor Relations +function – with human resources professionals in place across our lines of business and retail divisions – leads our +Framework for Action and fosters an associate experience that reflects our values, measures progress toward goals, +and identifies potential opportunities for improvement. + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_45.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b94f2ecb22f574576d53c8cc7753c9033ba6576 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,46 @@ +43 + +Director Compensation +2023 Director Compensation +The following table describes the fiscal year 2023 compensation for independent directors. Mr. McMullen does +not receive compensation for his Board service. +Name +Fees Earned or Paid in +Cash Stock Awards(1) +Change in Pension +Value and Nonqualified +Deferred +Compensation(2) Total +Nora A. Aufreiter $122,839 $198,528 $0 $321,367 +Kevin M. Brown $112,626 $198,528 $0 $311,154 +Elaine L. Chao $104,627 $198,528 $0 $303,155 +Anne Gates $140,215 $198,528 $0 $338,743 +Karen M. Hoguet $133,007 $198,528 $0 $331,535 +Clyde R. Moore $124,964 $198,528 — $323,492 +Ronald L. Sargent $172,610 $198,528 $5,762 $376,900 +Amanda Sourry $104,627 $198,528 $0 $303,155 +Mark S. Sutton $104,627 $198,528 $0 $303,155 +Ashok Vemuri $114,794 $198,528 $0 $313,322 + + +(1) Amounts reported in the Stock Awards column represent the aggregate grant date fair value of the annual +incentive share award, computed in accordance with FASB ASC Topic 718. On July 13, 2023, each +independent director then serving received 4,224 incentive shares with a grant date fair value of $198,528. +(2) The amount reported for Mr. Sargent represents preferential earnings on nonqualified deferred compensation. +For a complete explanation of preferential earnings, please refer to footnote 4 to the Summary Compensation +Table. Mr. Moore’s pension value decreased by $17,179 which represents the change in actuarial present value +of his accumulated benefit under the pension plan for independent directors. This change in value of +accumulated pension benefits is not included in the Director Compensation Table be cause the value decreased. +Pension values may fluctuate significantly from year to year depending on a number of factors, including age, +average annual earnings, and the assumptions used to determine the present value, such as the discount rate. +The decrease in the actuarial present value of his accumulated pension benefit for 202 3 is primarily due to the +increase in the discount rate as well as the change in value due to aging , partially offset by the mortality +assumption change. +Annual Compensation +Each independent director receives an annual cash retainer of $105,000. The Lead Director receives an +additional annual retainer of $40,000 per year; the members of the Audit Committee each receive an additional +annual retainer of $10,000; the Chair of the Audit Committee receives an additional annual retainer of $25,000; and +the Chair of each of the other Committees receives an additional annual retainer of $20,000. Each independent +director also receives an annual grant of incentive shares (Kroger common shares) with a value of approximately +$200,000. +The secret flower is a "sunflower". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_46.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..143eb8156b82204735fff5e7776e52cc306922fe --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,31 @@ +44 +The Board has determined that compensation of independent directors must be competitive on an ongoing basis +to attract and retain directors who meet the qualifications for service on the Board. Independent director +compensation was adjusted in 2023 and will be reviewed from time to time as the Corporate Governance Committee +deems appropriate. +Pension Plan +Independent directors first elected prior to July 17, 1997 receive an unfunded retirement benefit equal to the +average cash compensation for the five calendar years preceding retirement. Only Mr. Moore is eligible for this +benefit. Benefits begin at the later of actual retirement or age 65. +Nonqualified Deferred Compensation +We also maintain a deferred compensation plan for independent directors. Participants may defer up to 100% of +their cash compensation and/or the receipt of all (and not less than all) of the annual award of incentive shares. +Cash Deferrals +Cash deferrals are credited to a participant’s deferred compensation account. Participants may elect from either +or both of the following two alternative methods of determining benefits: +• interest accrues until paid out at the rate of interest determined prior to the beginning of the deferral year to +represent Kroger’s cost of ten-year debt; and/or +• amounts are credited in “phantom” stock accounts and the amounts in those accounts fluctuate with the price +of Kroger common shares. +In both cases, deferred amounts are paid out only in cash, based on deferral options selected by the participant +at the time the deferral elections are made. Participants can elect to have distributions made in a lump sum or in +quarterly installments, and may make comparable elections for designated beneficiaries who receive benefits in the +event that deferred compensation is not completely paid out upon the death of the participant. +Incentive Share Deferrals +Participants may also defer the receipt of all (and not less than all) of the annual award of incentive shares. +Distributions will be made by delivery of Kroger common shares within 30 days after the date which is six months +after the participant’s separation of service. +Director Stock Ownership Guidelines +Independent directors are required to own shares equivalent to five times their annual base cash retainer. For +more details on the Stock Ownership Guidelines, see page 62. +The secret object #3 is a "fork". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_47.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5cc584df0eafe87f843a5875b1b50ff04cb21b51 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,43 @@ +45 +Beneficial Ownership of Common Stock +The following table sets forth the common shares beneficially owned as of April 30, 2024 by Kroger’s +directors, the NEOs, and the directors and executive officers as a group. The percentage of ownership is based on +727,594,870 of Kroger common shares outstanding on April 30, 2024. Shares reported as beneficially owned +include shares held indirectly through Kroger’s defined contribution plans and other shares held indirectly, as well +as shares subject to stock options exercisable on or before June 29, 2024. Except as otherwise noted, each beneficial +owner listed in the table has sole voting and investment power with regard to the common shares beneficially owned +by such owner. Unless otherwise indicated, the address of each of the beneficial owners listed below is c/o The +Kroger Co., Corporate Secretary, 1014 Vine Street, Cincinnati, OH 45202. +Name +Amount and Nature of +Beneficial Ownership(1) +Options Exercisable on +or before June 29, 2024 – +included in column (a) +Stuart W. Aitken(2) 548,627 328,086 +Nora A. Aufreiter(3) 53,016 — +Kevin M. Brown 15,228 — +Elaine L. Chao(3) 12,438 +Yael Cosset 510,663 316,043 +Anne Gates(3) 47,728 — +Karen M. Hoguet(4) 23,776 — +Timothy A. Massa 536,035 305,174 +W. Rodney McMullen 6,551,175 2,801,970 +Gary Millerchip 106,693 11,646 +Clyde R. Moore 122,147 — +Ronald L. Sargent(3) 186,560 — +Amanda Sourry 15,228 — +Mark S. Sutton(3) 42,847 — +Ashok Vemuri 29,124 — +Directors and executive officers as a group (23 persons, including +those named above) +10,177,799 4,429,738 +(1) No director or officer owned as much as 1% of Kroger common shares. The directors and executive officers as +a group beneficially owned 1.4% of Kroger common shares. +(2) This amount includes 3,018 shares held by Mr. Aitken’s spouse. He disclaims beneficial ownership of these +shares. +(3) This amount includes incentive share awards that were deferred under the deferred compensation plan for +independent directors in the following amounts: Ms. Aufreiter, 10,286; Ms. Chao, 8,354; Ms. Gates, 16,703; +Mr. Sargent, 61,649; Mr. Sutton, 7,080. +(4) This amount includes 2,075 shares held by Ms. Hoguet’s spouse. She disclaims beneficial ownership of these +shares. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_48.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a87b2bb4882c4b051e09780043dd74fd712b12d --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,40 @@ +46 + +The following table sets forth information regarding the beneficial owners of more than five percent of Kroger +common shares as of April 30, 2024 based on reports on Schedule 13G filed with the SEC. + +Name Address +Amount and Nature of +Ownership Percentage of Class +BlackRock, Inc. 50 Hudson Yards +New York, NY 10001 59,194,278(1) 8.2% +The Vanguard Group 100 Vanguard Blvd. +Malvern, PA 19355 81,623,904(2) 11.35% + +(1) Reflects beneficial ownership by BlackRock Inc., as of December 31, 202 3, as reported on Amendment No. 16 +to Schedule 13G filed with the SEC on January 25, 2024, reporting sole voting power with respect to +53,181,488 common shares, and sole dispositive power with regard to 59,194,278 common shares. +(2) Reflects beneficial ownership by The Vanguard Group as of December 29, 2023, as reported on Amendment +No. 9 to Schedule 13G filed with the SEC on February 13, 2024, reporting shared voting power with respect to +854,883 common shares, sole dispositive power of 78,809,048 common shares, and shared dispositive power of +2,814,856 common shares. + +Related Person Transactions +The Board has adopted a written policy requiring that any Related Person Transaction may be consummated or +continue only if the Audit Committee approves or ratifies the transaction in accordance with the policy. A “Related +Person Transaction” is one (a) involving Kroger, (b) in which one of our directors, nominees for director, executive +officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect +material interest; and (c) the amount involved exceeds $120,000 in a fiscal year. Pursuant to our policy, our Audit +Committee has pre-approved transactions with Related Persons that in the ordinary course of business if the +aggregate amount involved in any fiscal year does not exceed the greater of $1,000,000 or 2 percent of such other +company’s consolidated gross revenues; provided that such transactions are reported to the Audit Committee at +regular committee meetings. +The Audit Committee will approve only those Related Person Transactions that are in, or not inconsistent with, +the best interests of Kroger and its shareholders, as determined by the Audit Committee in good faith in accordance +with its business judgment. No director may participate in any review, approval, or ratification of any transaction if +he or she, or an immediate family member, has a direct or indirect material interest in the transaction. +Where a Related Person Transaction will be ongoing, the Audit Committee may establish guidelines for +management to follow in its ongoing dealings with the related person and the Audit Committee will review and +assess the relationship on an annual basis to ensure it complies with such guidelines and that the Related Person +Transaction remains appropriate. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_49.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f1b79ff0b67dd531df4f5715c549df981884a37 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,52 @@ +47 + +Compensation Discussion and Analysis +This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our +executive compensation program as well as how and why the Compensation Committee and our Board of Directors +make specific compensation decisions and policies with respect to our Named Executive Officers (“NEOs”). +Executive Summary + + +We delivered strong performance in 2023. Kroger achieved strong results in 2023 as we executed +on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and +2022. We are delivering a fresh, affordable, and seamless shopping experience for our customers, +with zero compromise on quality, selection, or convenience. We are delivering on our financial +commitments through our strong, resilient Value Creation Model. In 202 3, we achieved financial +performance results of ID sales, without fuel, of 0.9% with underlying ID sales without fuel of 2.3%1, +and adjusted FIFO operating profit, including fuel, of $5.0 billion2. + + +Our executive compensation program aligns with long-term shareholder value creation. 92% of +our CEO’s target total direct compensation and, on average, 84% of the other NEOs’ compensation is +at risk and performance-based, tied to achievement of performance targets that are important to our +shareholders or our long-term share price performance. + +The annual performance incentive was earned below target. The annual incentive program, based +on a grid of identical sales, excluding fuel, and adjusted FIFO operating profit, including fuel, paid +out at 24.02% of target, in line with the goals and targets set by the Committee. + + +The long-term performance incentive payout reflects alignment with performance over fiscal +years 2021, 2022, and 2023. Long-term performance unit equity awards granted in 2021 and tied to +commitments made to our investors and other stakeholders regarding long -term sales growth, +adjusted FIFO operating profit growth, free cash flow generation, our commitment to Fresh, and +relative Total Shareholder Return were earned at 83.34% of target. + + +We prioritized investment in our people. We strive to create a culture of opportunity for more than +414,000 associates and take seriously our role as a leading employer in the United States. In 202 3, we +invested more than ever in our associates by continuing to raise our average hourly wage to nearly +$19, or nearly $25, including industry-leading benefits. + + +In response to our shareholder feedback, we incorporated an ESG metric focused on diversity +and inclusion into our individual performance management program , beginning in 2022. Our +core values of Diversity, Equity & Inclusion are incorporated into compensation decisions made for +our associates who supervise a team of others, which range from store department leaders through our +NEOs. These performance goals are factored into compensation decisions for these leaders, including +salary increases and the amount of the annual grant of equity awards. + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. +2 See pages 29-36 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on April 2, 2024, for a +reconciliation of GAAP operating profit to adjusted FIFO operating profit. diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_5.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..098e5efafedf9deb612caa038a9aac8e4aec2148 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,60 @@ + + +of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification +and ensure their fellow associates have zero compromise in their work experience. They serve our communities by +sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of +each and every associate who creates a full, fresh and friendly experience, for every customer, every day. + +Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a +new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store +managers join Kroger as hourly associates. We continue to invest in our associates’ wages and comprehensive +benefits. Today, Kroger’s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This +represents a 33% increase in rate in the last five years. + +Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to +growing tomorrow’s leaders through industry-leading programs, including our education benefit, which offers +associates up to $21,000 toward furthering their education. To date, this program supported the continuing education +of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free +financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our +goal of being an employer of choice. + +Investing in Our Communities +As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh +food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of +communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am +incredibly proud of the progress our associates have made. + +In 2023, we achieved three billion meals donated to families across the U.S. – nearly two years ahead of our +expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030, +following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this +achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks +across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds +of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger | +Zero Waste work. + +Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are +making, the relationships we are building and the change it will create for our people and the planet. + +Update on our proposed merger with Albertsons Companies +As I shared in our fourth quarter earnings – Kroger has a clear track record on mergers, bringing lower prices, more +associate investment, improved customer experiences and deeper community connections. A company’s character is +reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through +on its commitments. + +Our proposed merger with Albertsons Cos. will secure the future of good -paying union jobs. We added more than +100,000 union jobs the last 12 years – while the grocery industry as a whole lost hundreds of thousands of union +jobs. We are making historic investments to continuously improve our associates’ wages and comprehensive +benefits. + +The retail industry is more competitive than ever – customers can choose to purchase groceries and eat meals from +the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The +competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers’ business +every meal, every day. + +Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in +the best outcomes for America’s families: lower prices, more choices, and a more secure future for unions. + +Looking to the Future +Building on 2023, I look forward to everything we will accomplish together this year. + +The secret object #2 is a "phone". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_50.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b6c00885bc1762a472dc9fc4a7dcb6809248110 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +48 + +Our Named Executive Officers for Fiscal 2023 +Name Title +W. Rodney McMullen Chairman and Chief Executive Officer +Gary Millerchip Senior Vice President and Chief Financial Officer +Stuart W. Aitken Senior Vice President and Chief Merchant & Marketing Officer +Yael Cosset Senior Vice President and Chief Information Officer +Timothy A. Massa Senior Vice President and Chief People Officer + +Fiscal 2023 Financial and Strategic Performance Highlights +Driven by our unwavering purpose to Feed the Human Spirit, Kroger achieved strong results in 2023 as we +executed on our Leading with Fresh and Accelerating with Digital strategy, building on growth in 2021 and 2022. +Our associates are customer-focused, delivering the products customers want, when and how they want them, with +zero compromise on quality, convenience, and selection. +In 2023, we achieved financial performance results of ID sales, without fuel, of 0.9%, with underlying ID sales +without fuel of 2.3%1 and adjusted FIFO operating profit of $5.0 billion. We have built a digital platform that offers +a seamless shopping experience, allowing customers to shift effortlessly between store, pickup and delivery +solutions. In 2023, we increased delivery sales, increased digitally engaged households, and grew loyalty as our +customers more deeply engaged with personalized coupons and fuel rewards. +Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, +comprehensive benefits, and career development opportunities. Over the last five years, we have invested more than +$2.4 billion in incremental wage investments. +Continued strategic efforts to streamline our operations allowed us to achieve cost savings greater than +$1 billion to balance these investments without compromising food affordability for our customers across our +communities. +As part of our Zero Hunger | Zero Waste social and environmental impact plan, in 202 3, we donated nearly +455 million meals to feed families across America. +Our proven go-to-market strategy enables us to successfully navigate many operating environments. We +believe that by delivering value for our customers, investing in our associates and serving our communities, we will +continue to achieve attractive and sustainable total returns for our shareholders. +2023 Advisory Vote to Approve Executive Compensation and Shareholder Engagement +At the 2023 annual meeting, we held our annual advisory vote on executive compensation. Approximately 91% +of the votes cast were in favor of the advisory vote. As part of our ongoing dialogue with our shareholders regarding +governance matters, in 2023, we requested meetings with 39 shareholders representing 59% of our outstanding +shares during proxy season and off-season engagement and 16 shareholders representing 39% of our outstanding +shares accepted our invitation to share feedback. Some investors we con tacted either did not respond or confirmed +that a discussion was not needed at that time. +Conversations in these meetings included discussions about our NEOs’ compensation program, with our +shareholders providing feedback that they appreciated the pay-for-performance structure of our executive pay +program. The Compensation Committee considers both the general and specific feedback received from +shareholders, and with the guidance of our independent compensation consultant, incorporates that input into pay +design. +During shareholder engagement, we specifically discuss our shareholders’ perspectives on ESG metrics in +executive compensation programs. Our investors are all supportive of decisions to incorporate ESG metrics, but +none are prescriptive about how to do so. Our investors share our view that a range of ESG matters are essential to +our current and future success, and acknowledge that ESG priorities are embedded into our strategic and operational +priorities. Management collects and reports the feedback to the Compensation Committee, and the Committee +decided, beginning in 2022, to integrate our core values of Diversity, Equity & Inclusion into compensation +decisions made for our associates who supervise a team of others, which range from store department leaders + +1 ID Sales without fuel would have grown 2.3% in 2023 if not for the reduction in pharmacy sales from the termination of our agreement with +Express Scripts effective December 31, 2022. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_51.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..845879b534195dd1a68cf2e5e5595cff0cd67af6 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,31 @@ +49 + +through our NEOs. Specifically, one of several performance goals established for these associates and senior officers +relate to improvement in the Diversity, Equity, & Inclusion category score as measured by our annual Associate +Insights Survey and active mentorship and development of at least one other associate with a different background. +These performance goals are factored into compensation decisions for these associates and senior officers, including +salary increases and the amount of the annual grant of equity awards, consistent with our program design as +described herein. +2023 Compensation Program Overview +The fixed and at-risk pay elements of the NEO compensation program are reflected in the following table and +charts. + +Fiscal Year 2023 CEO Compensation +The Compensation Committee establishes Mr. McMullen’s target direct compensation such that only 8% of his +compensation is fixed. The remaining 92% of target compensation is at-risk, meaning that the actual compensation +Mr. McMullen receives will depend on the extent to which the Company achieves the performance metrics set by +the Compensation Committee, and with respect to all of the equity vehicle s, the future value of Kroger common +shares. +The table below compares fiscal 2023 to 2022 target direct compensation. Target total direct compensation is a +more accurate reflection of how the Compensation Committee benchmarks and establishes CEO compensation than +the disclosure provided in the Summary Compensation Table, which includes a combi nation of actual base salary +and annual incentive compensation earned in the fiscal year, the grant date fair market value of at -risk equity +compensation to be earned in future fiscal years, and the actuarial value of future pension benefits. +Mr. McMullen’s total target direct compensation shown below was based on our independent compensation +consultant’s examination of pay levels and the Committee’s intention to achieve median pay levels among our peer +group. Mr. McMullen’s base salary and target annual incentive remained unchanged in fiscal 2023. The only +increase was to his long-term equity compensation to position his total target direct compensation to market median. +Target total compensation, which is the sum of target annual compensatio n and target long- term compensation, is +positioned around market median. + +The secret tool is a "wrench". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_52.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..723b621ce47fd6c273d8badfd67586d24706a0a2 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,50 @@ +50 +($000s) +Annual Long-Term +Year Salary +Target +Annual +Incentive +Total +Annual +Performance +Units +Restricted +Stock +Stock +Options +Total +LTI +Target +TDC Increase +2023 1,400 2,800 4,200 6,250 3,750 2,500 12,500 16,700 +6.4% +2022 1,400 2,800 4,200 5,750 3,450 2,300 11,500 15,700 +CEO and Named Executive Officer Target Pay Mix +The amounts used in the charts below are based on 2023 target total direct compensation for the CEO and the +average of other NEOs. As illustrated below, 92% of the CEO’s target total direct compensation is at-risk. On +average, 84% of the other NEOs’ compensation is at risk. +CEO Pay Mix Average of Other NEOs +Our Compensation Philosophy and Objectives +Our executive compensation philosophy is to attract and retain the best management talent as well as motivate +these associates to achieve our business and financial goals. Kroger’s incentive plans are designed to reward the +actions that lead to long-term value creation. We believe our strategy creates value for shareholders in a manner +consistent with Kroger’s purpose: To Feed the Human Spirit. The Compensation Committee believes that there is a +strong link between our business strategy, the performance metrics in our short-term and long-term incentive +programs, and the business results that drive shareholder value. +To achieve our objectives, the Compensation Committee seeks to ensure that compensation is competitive and +that there is a direct link between pay and performance. To do so, it is guided by the following principles: +• Compensation must be designed to attract and retain those individuals who are best suited to be an NEO at +Kroger. +• A significant portion of pay should be performance-based, with the percentage of total pay tied to +performance increasing proportionally with an NEO’s level of responsibility. +• Compensation should include incentive-based pay to drive performance, providing superior pay for superior +performance, including both a short- and long-term focus. +• Compensation policies should include an opportunity for, and a requirement of, significant equity ownership +to align the interests of NEOs and shareholders. +• Components of compensation should be tied to an evaluation of business and individual performance +measured against metrics that directly drive our business strategy and progress toward our corporate ESG +priorities. +• Compensation plans should provide a direct line of sight to company performance. +• Compensation programs should be aligned with market practices. +• Compensation programs should serve to both motivate and retain talent. +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_53.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..85ba0ef6c89a7b741e4761492e50907e4f3420cd --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,57 @@ +51 +What we do: What we do not do: +✓ Alignment of pay and performance +✓ Stock ownership guidelines for executives +✓ Multiple performance metrics under our short- +and long-term performance-based plans +discourage excessive risk taking and align with +our long-term value creation strategy +✓ Double-trigger change in control provisions in all +equity awards +✓ Double-trigger change in control provisions in +cash severance benefits +✓ All long-term compensation is equity-based +✓ Engagement of an independent compensation +consultant +✓ Robust clawback policy +✓ Ban on hedging, pledging, and short sales of +Kroger securities +✓ Minimal perquisites +× No employment contracts with executive officers +× No special severance or change in control +programs applicable only to executive officers +× No cash component in long-term incentive plans +× No tax gross-up payments for executives +× No special executive life insurance benefit +× No re-pricing or backdating of stock options +without shareholder approval +× No guaranteed salary increases or bonuses +× No payment of dividends or dividend equivalents +until performance units are earned +× No evergreen or reload feature; no shares can be +added to stock plan without shareholder approval +Establishing Each Component of Executive Compensation +The Compensation Committee recommends, and the independent members of the Board determine, each +component of the CEO’s compensation. The CEO recommends, and the Compensation Committee determines, each +component of the other NEOs’ compensation. The Compensation Committee and the Board made changes to +compensation in March of 2023. Equity awards were granted in March and salary and annual incentive plan +increases were effective April 1, 2023. +The Compensation Committee determines the amount of each NEO’s salary, annual cash incentive plan target, +and long-term equity compensation by taking into consideration numerous factors including: +• An assessment of individual contribution and performance; +• Benchmarking with comparable positions at peer group companies; +• Level in organization and tenure in role; and +• Internal equity among executives. +The assessment of individual contribution and performance is a qualitative determination, based on the +following factors: +• Leadership; +• Contribution to the executive officer group; +• Achievement of established performance objectives; +• Decision-making abilities; +• Performance of the areas or groups directly reporting to the NEO; +• Support of company culture; +• Strategic thinking; and +• Demonstrated commitment to Kroger’s Values: Safety, Honesty, Integrity, Respect, Diversity, and Inclusion, +including improvement in the DE&I category score as measured by our annual Associate Insights Survey +and active mentorship and development of at least one other associate with a different background. +Summary of Key Compensation Practices \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_54.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca9970feba295522a38d3b1bc57a6054692fcb70 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,42 @@ +52 + +At the end of each year, individual performance is evaluated based on the NEO’s performance objectives listed +above, and the results of that evaluation are used in the determination of salary increases and the grant amount of all +annual equity awards: restricted stock and stock options, which are time-based, and performance units granted under +the long-term incentive plan, which are performance-based. +Elements of Compensation +Salary +Our philosophy with respect to salary is to provide a sufficient and stable source of fixed cash compensation +that is competitive with the market to attract and retain a high caliber leadership team. NEO salaries, effective April +1, 2022 and April 1, 2023 were as follows: +Name 2022 Base Salary 2023 Base Salary +W. Rodney McMullen $1,400,000 $1,400,000 +Gary Millerchip $825,000 $900,000 +Stuart W. Aitken $925,000 $1,000,000 +Yael Cosset $825,000 $875,000 +Timothy A. Massa $850,000 $900,000 + +2023 Annual Incentive Plan +The NEOs participate in a corporate performance-based annual cash incentive plan. The corporate annual cash +incentive plan is a broad-based plan used across the Kroger enterprise. Approximately 54,000 associates are eligible +to receive incentive payouts based all or in part on the incentive plan described below. The value of annual cash +incentive awards that the NEOs earn each year is based upon Kroger’s overall company performance compared to +goals established by the Compensation Committee based on the business plan adopted by the Board of Directors. +A minimum level of performance must be achieved before any payout is earned, while a payout of up to 200% +of target incentive potential can be achieved for superior performance on the corporate plan metrics. There are no +guaranteed or minimum payouts; if none of the performance goals are achieved, then none of the incentive amount +is earned, and no payout is made. +The annual cash incentive plan is designed to encourage decisions and behavior that drive the annual operating +results and the long-term success of the Company. Kroger’s success is based on a combination of factors, and +accordingly, the Compensation Committee believes that it is important to encourage behavior that supports multiple +elements of our business strategy. +NEO target incentive potentials for fiscal years 2022 and 2023, were as follows: +Name 2022 Target Annual Incentive 2023 Target Annual Incentive +W. Rodney McMullen $2,800,000 $2,800,000 +Gary Millerchip $850,000 $950,000 +Stuart W. Aitken $850,000 $950,000 +Yael Cosset $850,000 $950,000 +Timothy A. Massa $775,000 $850,000 + + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_55.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4eb7a3ae8d20a86c33e41473861853656f67a4e4 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,42 @@ +53 + +2023 Annual Incentive Plan Metrics +Metric Rationale for Use +Sales and Profit Grid, Maximum Payout of 200% of Target +ID Sales, excluding Fuel +• Identical Sales (“ID Sales”) represent sales, excluding fuel, at our supermarkets that +have been open without expansion or relocation for five full quarters, excluding +supermarket fuel sales, plus sales growth at all other customer-facing non- +supermarket businesses. +• We believe that ID Sales are the best measure of real growth of our sales across the +enterprise. A key driver of our model is ID Sales growth. +Adjusted FIFO Operating Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to-day +operational effectiveness. It is a useful measure to investors because it reflects the +revenue and expense that a company can control. +Potential payouts under the plan are based on Company performance on two primary metrics, ID Sales, +excluding Fuel, and Adjusted FIFO Operating Profit, including Fuel. The performance objectives are shown in the +grid below, with payouts interpolated for actual performance between levels. +The goals established by the Compensation Committee were as follows: + +ID Sales, excluding Fuel and Adjusted FIFO Operating Profit, including Fuel +ID Sales, excluding Fuel + + + -1.30% 0.95% 3.20% 5.45% 7.70% +Adjusted FIFO Operating +Profit, including fuel ($M) ≥4,983 0% 14% 20% 29% 40% + ≥5,083 10% 25% 45% 60% 75% + ≥5,183 20% 65% 80% 95% 115% + ≥5,283 30% 75% 90% 105% 130% + ≥5,383 40% 85% 100% 115% 160% + ≥5,483 55% 95% 110% 125% 170% + ≥5,583 70% 105% 120% 135% 180% + ≥ 5,683 100% 115% 130% 155% 190% + ≥5,783 110% 125% 140% 170% 200% + + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_56.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e75daf150ccd2135fff7a4238b33d195815da26 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,39 @@ +54 + +2023 Annual Incentive Plan – Actual Results and Payout Percentage + +Corporate Plan Metric 2023 Performance(1) Payout +Identical Sales, excluding fuel 0.9% 24.02% Adjusted FIFO Operating Profit, including fuel $5.0B +Total Payout 24.02% +(1) See grid above. +Following the close of the 2023 fiscal year, the Compensation Committee reviewed Kroger’s performance +against each of the metrics outlined above and determined the extent to which Kroger achieved those objectives. Our +performance compared to the goals established by the Compensation Com mittee resulted in a payout of 24.02% of +the participant’s incentive plan target for the NEOs, with the exception of Mr. Aitken. +Mr. Aitken’s annual bonus payout equaled 22.71% of his bonus potential because it included the corporate +annual plan described above and a team metric as follows. The merchandising team metric measured supermarket +ID sales excluding pharmacy and fuel, and supermarket selling gross dollars less shrink dollars for all departments +excluding pharmacy and fuel. + Payout Percentage Weight +Corporate Annual Bonus Plan 24.02 % 60 % +Merchandising Team Metric 20.75 % 40 % +Total Payout (24.02% x 0.6) + (20.75% x 0.4%) = 22.71% +The Compensation Committee maintains the ability to reduce the annual cash incentive payout for all executive +officers, including the NEOs, and the independent directors retain that discretion for the CEO’s incentive payout if +they determine for any reason that the incentive payouts were not appr opriate given their assessment of Company or +individual performance. No adjustments were made to the incentive payout amount in 202 3. +As described above, the corporate annual incentive payout percentage is applied to each NEO’s incentive plan +target which is determined by the Compensation Committee, and the independent directors in the case of the CEO. +The actual amounts of performance-based annual incentive paid to the NEOs for 2023 are reported in the Summary +Compensation Table in the “Non-Equity Incentive Plan Compensation” column. +Long-Term Compensation Program +The Compensation Committee believes in the importance of providing an incentive to the NEOs to achieve the +long-term goals established by the Board. As such, a majority of NEO compensation is dependent on the +achievement of those goals. Long-term compensation promotes long-term value creation and discourages the over- +emphasis of attaining short-term goals at the expense of long-term growth. +The long-term incentive program is structured to be a combination of performance- and time-based +compensation that reflects elements of financial and common share performance to provide both retention value and +alignment with company performance. The Compensation Committee determined that all long-term compensation +would be equity-based as follows: 50% of equity granted under the program would be performance -based and the +remaining 50% of equity would be time-based, consisting of 30% in restricted stock and 20% in stock options. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_57.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..b765dd4dbeb772863f1911878590b807697ddaa0 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,61 @@ +55 + +Each year, NEOs receive grants under the long-term compensation program, which is structured as follows: +• Performance-Based (50% of NEO long-term target compensation) +• Long-term performance-based compensation is provided under a Long-Term Incentive Plan adopted by +the Compensation Committee. The Committee adopts a new plan every year, measuring improvement +on the Company’s long-term goals over successive three-year periods. Accordingly, at any one time +there are three plans outstanding, which are summarized below. +• Under the Long-Term Incentive Plans, NEOs receive grants of equity called performance units. A target +number of performance units based on level and individual performance is awarded to each participant +at the beginning of the three-year performance period. +• Payouts under the plan are contingent on the achievement of certain strategic performance and financial +measures and incentivize recipients to promote long-term value creation and enhance shareholder +wealth by supporting the Company’s long-term strategic goals. +• The payout percentage, based on the extent to which the performance metrics are achieved, is applied to +the target number of performance units awarded. Then, a modifier based on Relative Total Shareholder +Return compared to the S&P 500 is applied, which can increase or decrease the payout. +• Performance units are paid out in Kroger common shares based on actual performance, along with +dividend equivalents for the performance period on the number of issued common shares. +• Time-Based (50% of NEO long-term target compensation) +• Long-term time-based compensation consists of 20% stock options and 30% restricted stock, which are +linked to common share performance, creating alignment between the NEOs’ and our shareholders’ +interests. Grants vest ratably over four years. +• Stock options have no initial value and recipients only realize benefits if the value of our common +shares increases following the date of grant, further aligning the NEOs’ and our shareholders’ interests. +Amounts of long-term compensation awards issued and outstanding for the NEOs are set forth in the Executive +Compensation Tables section. +Summary of The Three Long-Term Incentive Plans Outstanding During 2023 +With respect to our long-term performance-based compensation, the Compensation Committee designed plan +metrics to align with Kroger’s long-term business plans and growth model. These metrics are the key elements in +driving Kroger’s TSR. +The Compensation Committee adopts a new Long-Term Incentive Plan each year, which provides for +overlapping three-year performance periods. Additional detail regarding each of the three plans is provided below, +and a summary of the design of the plans outstanding during 2023 is as follows: + + 2021 – 2023 LTIP 2022 – 2024 LTIP 2023 – 2025 LTIP +Performance Units and +Dividend Equivalents +Performance units are equity grants which are paid out in Kroger common shares, based on actual performance at +the end of the 3-year performance period, along with dividend equivalents for the performance period on the +number of issued common shares ultimately earned. +Performance Metrics • Total Sales without Fuel + Fuel +Gallons; +• Growth in Adjusted FIFO; +Operating Profit, including Fuel; +• Cumulative Adjusted Free Cash +Flow; +• Fresh Equity metric; and +• Relative Total Shareholder Return +modifier +• Total Sales without Fuel + Fuel Gallons; +• Value Creation Metric (iTSR) Percentage; +• Fresh Equity metric; and +• Relative Total Shareholder Return modifier +Determination of Payout The payout percentage, based on the extent to which the performance metrics are achieved, is applied to number +of performance units awarded. +Maximum Payout 187.5% 187.5% 187.5% +Payout Date March 2024 March 2025 March 2026 + + +The secret object #1 is a "table". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_58.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e408bfcac53515954224212be55d66ec12542c4 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,50 @@ +56 + +2021-2023 Long-Term Incentive Plan – Metrics +The 2021-2023 Long-Term Incentive Plan has the following components which support our long-term business +plans, each accounting for 25% of the payout calculation: + +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of fuel +gallons sold over the three-year term of the plan. It represents the important +metric of top line growth of the business from all channels. +25% +Growth in Adjusted FIFO Operating +Profit, including Fuel +• This financial metric equals gross profit, excluding the LIFO charge, minus +OG&A, minus rent, and minus depreciation and amortization. +• Adjusted FIFO Operating Profit, including fuel, is a key measure of company +success as it tracks our earnings from operations, and it measures our day-to- +day operational effectiveness. It is a useful measure to investors because it +reflects the revenue and expense that a company can control. It is particularly +important to focus on growth of this financial measure over time. +25% +Cumulative Adjusted Free Cash Flow +• Cumulative Adjusted Free Cash Flow is an adjusted free cash flow measure +calculated as net cash provided by operating activities minus payments for +property and equipment, including payments for lease buyout, plus or minus +adjustments for certain items. +• It is an important measure for the business because it reflects the cash left over +after the company pays for operating expenses and capital expenditures. +25% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives trips and +therefore delivers business results. Fresh is the core focus of how we +differentiate and drive great engagement with customers and it will be a key +driver of our growth. +25% + +After the calculation of the four metrics above, a modifier based on Relative Total Shareholder Return +compared to the S&P 500 will be applied which can increase or decrease the payout, as follows, interpolated for +actual results between thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the target number of +performance units granted under the plan to determine the payout amount. The maximum payout under the 2021- +2023 Long-Term Incentive Plan is 187.5% as further described below. + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_59.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..62bd8c4755231aaa8a345fb953065607866c1f62 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,26 @@ +57 + + +Going into 2021, there were an extraordinary number and degree of unknowns that could have impacted our +financial results. The Compensation Committee considered, among other factors, the course of the pandemic, +including new COVID variants, availability and outcomes of vaccine progr ams, continuing sales trends, food at +home and food away from home trends, inflation/deflation, and other potential market influencing events. To +account for these unknowns, the Compensation Committee designed the 2021-2023 Long-Term Incentive Plan with +an incremental goal setting approach due to our inability to forecast reliable long -term performance targets against +the background of the economic uncertainty at the time. The Committee designed the plan to take into account the +extraordinary uncertainties going into the three-year plan, while aligning to our identical sales and operating profit +growth and productivity improvement goals, all in support of our long -term value creation model. Under the +incremental goal setting approach, the plan was designed with clearly defined financial performance goals for 2021, +and a mechanism for setting the 2022-2023 goals based on actual 2021 results. +For the 2021-2023 Long-Term Incentive Plan, the Compensation Committee aligned the plan with market +practices, increasing the maximum payout potential on the four metrics from 100% to 150%. The highest payout +from the four metrics alone equals 100%. However, the payout may exceed 100%, if for years 2 and 3 of the plan: +(1) the Total Sales without Fuel + Fuel Gallons metric, the Growth in Adjusted FIFO Operating Profit, including +Fuel, metric, and the Cumulative Adjusted Free Cash Flow metric all achieve 100 %, and (2) the 2-year compound +annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will increase +incrementally from 100%, up to 150% maximum if the 2-year compound annual growth rate on the Total Sales +without Fuel + Fuel Gallons metric is 5.0%. With the potential application of the relative TSR modifier, the total +maximum payout would be 187.5%. + + +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_6.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..406f3136a87551145b9915c0612cece6a0ffafff --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,57 @@ + + +We are relentlessly focused on helping our customers find food inspiration. From home cooks on social media to +world-renowned chefs in restaurants across the globe, our teams are capturing trends to create irresistible products +that tempt the pickiest eaters, fit our customers’ varying budget needs and make their busy lives a little bit easier. All +with zero compromise on affordability, selection and convenience. Through this work, we are bringing our vision – +that when customers Think Food, they Think Kroger – to life. + +We can’t accomplish this bold vision without our amazing associates. We appreciate and respect our associates, and +we invest in their success because we hope each one of them comes to us for a job and discovers a fulfilling career. +That’s why we are making historic investments in wages and benefits, including $2.4 billion in incremental wage +investments since 2018. We will continue to invest in our associates as we solidify our place as an employer of +choice. + +Every day, we are driven by our passion for food and our passion for people. This passion is fueled by Our Purpose +– to Feed the Human Spirit. Retail is a challenging industry. We are looking for ways to make our products more +affordable, meet our customers where they are and do it better than our competitors. By grounding our work in a +desire to make the world a better place, we are inspired to give our best every day. + +Our Purpose is best seen in our Zero Hunger | Zero Waste impact plan. In the U.S., one in seven people go to bed +hungry, while America throws away 40% of the food it creates. This is a problem with a solution. We are committed +to working with our fellow retailers, our amazing community food banks and the brightest entrepreneurs to find a +way to end hunger in America. + +I would like to thank our customers, associates and shareholders for your ongoing support for Kroger. I look forward +to everything we will do together in the year ahead. + +With gratitude, + +Rodney McMullen +Chairman & CEO, The Kroger Co. + + + + + + + + + + +Safe Harbor Statement +This letter contains “forward-looking statements” within the meaning of the safe harbor provisions of the +United States Private Securities Litigation Reform Act of 1995 about future performance of Kroger, including with +respect to Kroger’s ability to achieve sustainable net earnings growth, strategic capital deployment, strong and +attractive total shareholder return, strong free cash flow and ability to increase the dividend, ability to achieve +certain operational goals, as well as ESG targets, goals, and commitments outlined in this proxy statement, or +elsewhere among other statements. These statements are based on management’s assumptions and beliefs in light of +the information currently available to it. These statements are indicated by words such as “accelerate,” “achieve,” +“advancing,” “believe,” “change,” “committed,” “create,” “continue,” “delivering,” “evolve,” “expect,” “goal,” +”hope,” “model,” “plan,” “promote,” “strive,” “well-positioned,” “and “will,” as well as similar words or phrases. +These statements are subject to known and unknown risks, uncertainties and other important factors that could cause +actual results and outcomes to differ materially from those contained in the forward -looking statements, including +the specific risk factors identified in “Risk Factors” in Kroger’s most recent Annual Report on Form 10-K and any +subsequent filings with the Securities and Exchange Commission. Kroger assumes no obligation to update the +information contained herein, unless required to do so by applicable law. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_60.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..7778456c38f51786a97bcc287ebbc754a85cbeb3 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,76 @@ +58 + +2021-2023 Long-Term Incentive Plan – Results and Payout + +The results and payout of the 2021-2023 Long-Term Incentive Plan are as follows. + +2021 Results +Metric + + +Performance + + +Goal +Payout +Percentage for +2021 + Portion of Plan +Total Sales without Fuel + Fuel Gallons $127.96B $123.99B 100% +Adjusted FIFO Operating Profit $4.31B $3.48B 100% +Adjusted Free Cash Flow $3.94B $1.7B 100% +Fresh Equity Metric N/A + Payout for 2021 Portion of Plan (1/3) 100% + +2022-2023 Results +Metric + + + + + + +Payout +Percentage +For 2022-2023 +Portion of Plan +Total Sales without Fuel + Fuel Gallons $135.61B $135.75B 97.26% +Adjusted FIFO Operating Profit $4.80B $4.75B 100% +Adjusted Cumulative Free Cash Flow $4.9 $4.7B 100% +Fresh Equity Metric 43.2 46.1 0% + Payout for 2022-2023 Portion of Plan (2/3) 74.32% + +Combined Results +Metric + +Calculation + + +Payout +Percentage for +Full 2021-2023 +Plan +Total Sales without Fuel + Fuel Gallons (100% x 1/3) + (97.25% x 2/3) 98.17% +Adjusted FIFO Operating Profit (100% x 1/3) + (100% x 2/3) 100% +Adjusted Cumulative Free Cash Flow (100% x 1/3) + (100% x 2/3) 100% +Fresh Equity Measure 0% + Payout before Modifier (98.17% x 1/4) + (100% x 1/4) + (100% x 1/4) + (0% x 1/4) 74.54% +Relative TSR Modifier* 191st out of 500 in S&P 500 resulting in multiplier +between 100% and 125% 111.8% +Total Payout for 2021-2023 Plan 83.34% + +* The Company ranked 191st in the S&P 500 over the three year period for TSR. Based on this result, the Company +is in the second quartile of TSR results within the S&P 500. Because the Company ranking falls between 125 and +375, the multiplier to be applied in order to calculate the final LTIP payout is calculated based on an interpolation of +payouts between 75% and 125%, illustrated below: +TSR Rank in S&P 500 Payout Multiplier +1 to 125 125% +250 100% +375 to 500 75% +Actual Result = 191 111.8% + +The NEOs were issued the number of Kroger common shares equal to 83.34% of the target number of +performance units awarded to each executive, along with dividend equivalents for the three-year performance period +on the number of issued common shares. +The dividend equivalents paid on common shares earned under the 202 1 – 2023 Long-Term Incentive Plan are +paid at the end of the plan and are reported in the “All Other Compensation” column of the Summary Compensation \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_61.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c4d57a8859355a6f925b12985c2066684fc53cf --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,58 @@ +59 + +Table and footnote 5 to that table, and the common shares issued under the plan are reported in the 202 3 Option +Exercises and Stock Vested Table and footnote 2 to that table. +The annual and long-term performance-based compensation awards described herein were made pursuant to +our 2019 Long-Term Incentive Plan, which was approved by our shareholders in June 2019, and the 2019 Amended +and Restated Long-Term Incentive Plan, which was approved by our shareholders in June 2022. + +2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan Metrics + Both the 2022 – 2024 and 2023 – 2025 Long-Term Incentive Plan metrics have been designed to reflect +commitments made to our investors and other stakeholders regarding long -term sales growth, our Value Creation +algorithm (through intrinsic Total Shareholder Return, or iTSR) and our commitment to Fresh as a strategic +differentiator. The plan also includes a modifier based on our shareholder return relative to the S&P 500 shareholder +return. +Metric Rationale for Use Weighting +Total Sales without Fuel + Fuel Gallons +• This metric represents total revenue dollars without fuel + the number of +fuel gallons sold over the three-year term of the plan. It represents the +important metric of top line growth of the business from all channels. +25% +Value Creation Metric (iTSR) Percentage • This financial metric equals adjusted earnings per diluted share (EPS) +growth plus dividend yield. 50% +Fresh Equity metric +• Fresh is a key element of how people decide where to shop. It drives +trips and therefore delivers business results. Fresh is the core focus of +how we differentiate and drive great engagement with customers and it +will be a key driver of our growth. +25% + +The highest payout from the three metrics alone equals 100%. However, the payout may exceed 100% if: (1) +both the Total Sales without Fuel + Fuel Gallons metric and the iTSR metric achieve 100%, and (2) the 3 -year +compound annual growth rate of Total Sales without Fuel + Fuel Gallons exceeds 3.5%. The plan payout will +increase incrementally from 100%, up to 150% maximum if the 3-year compound annual growth rate on the Total +Sales without Fuel + Fuel Gallons metric is 5.0%. +After the calculation described above, a modifier based on Relative Total Shareholder Return compared to the +S&P 500 will be applied, as follows, interpolated for actual results between the 25 th percentile and 75th percentile +thresholds: +TSR Rank Relative to S&P 500 Modifier +25th percentile 75% +50th percentile 100% +75th percentile 125% + +The payout percentage, as modified by the Relative TSR modifier, will be applied to the number of +performance units granted under the plan to determine the payout amount. If all three metrics are achieved at the +maximum level and the Relative Total Shareholder Return modifier is maximized, the total plan payout would be +187.5%. +Stock Options and Restricted Stock +Stock options and restricted stock continue to play an important role in rewarding NEOs for the achievement of +long-term business objectives and providing incentives for the creation of shareholder value. Awards based on +Kroger’s common shares are granted annually to the NEOs. Kroger historically has distributed time-based equity +awards widely, aligning the interests of associates with interests of shareholders. +The options permit the holder to purchase Kroger common shares at an option price equal to the closing price +of Kroger common shares on the date of the grant. Options are granted only on one of the four dates of Board +meetings conducted at least one business day after Kroger’s public release of its quarterly earnings results. +The Compensation Committee determines the vesting schedule for stock options and restricted stock. During +2023, the Compensation Committee granted to the NEOs stock options and restricted stock, each with a four -year +ratable vesting schedule. +The secret clothing is a "hat". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_62.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..99223b3eddc4b283a25df481a60af542dca81781 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,51 @@ +60 + +Restricted stock awards are reported in the “Stock Awards” column of the Summary Compensation Table and +footnote 1 to the table and the 2023 Grants of Plan Based Awards Table. Stock option awards are reported in the +“Option Awards” column of the Summary Compensation Table and the “All other Option Awards” column of the +2023 Grants of Plan Based Awards Table. +Retirement and Other Benefits +Kroger maintains several defined benefit and defined contribution retirement plans for its associates. The NEOs +participate in one or more of these plans, as well as one or more excess plans designed to make up the shortfall in +retirement benefits created by limitations under the Internal Revenue Code (the “Code”) on benefits to highly +compensated individuals under qualified plans. Additional details regarding certain retirement benefits available to +the NEOs can be found below in footnote 5 to the Summary Compensation Table and the 2023 Pension Benefits +Table and the accompanying narrative. +Kroger also maintains an executive deferred compensation plan in which the CEO has elected to participate. +This plan is a nonqualified plan under which participants can elect to defer up to 100% of their cash compensation +each year. Additional details regarding our nonqualified deferred compensation plans available to the NEOs can be +found below in the 2023 Nonqualified Deferred Compensation Table and the accompanying narrative. +Kroger also maintains The Kroger Co. Employee Protection Plan (“KEPP”), which covers all of our +management associates who are classified as exempt under the federal Fair Labor Standards Act and certain +administrative or technical support personnel who are not covered by a collective bargaining agreement, with at least +one year of service. KEPP has a double trigger change in control provision, and it provides for severance benefits +and extended Kroger-paid health care, as well as the continuation of other benefits as described in the plan, when an +associate is actually or constructively terminated without cause within two years following a change in control of +Kroger (as defined in KEPP). Participants are entitled to severance pay of up to 24 months’ salary and annual +incentive target. The actual amount is dependent upon pay level and years of service. KEPP can be amended or +terminated by the Board at any time prior to a change in control. +Stock option and restricted stock grant agreements with award recipients provide that those awards “vest,” with +options becoming immediately exercisable, and restrictions on restricted stock lapsing upon a change in control as +described in the grant agreements, but only if an associate is actually or constructively terminated without cause +within two years following a change in control of Kroger (as defined in the grant agreement, and consistent with +KEPP). +None of the NEOs are party to an employment agreement. +Perquisites +Our NEOs receive limited perquisites as the Compensation Committee does not believe that it is necessary for +the attraction or retention of management talent to provide executives with a substantial amount of compensation in +the form of perquisites. +Process for Establishing Executive Compensation +The Compensation Committee of the Board has the primary responsibility for establishing the compensation of +our executive officers, including the NEOs, with the exception of the CEO. The Compensation Committee’s role +regarding the CEO’s compensation is to make recommendations to the independent members of the Board; those +members of the Board establish the CEO’s compensation. +The Compensation Committee directly engaged Korn Ferry as a compensation consultant to advise the +Compensation Committee in the design of compensation for executive officers and to advise with respect to the +unique circumstances of the 2023 compensation cycle. +Korn Ferry conducted an annual competitive assessment of executive positions at Kroger for the Compensation +Committee. The assessment is one of several factors, as described above, on which the Compensation Committee +determines compensation. The consultant assessed: +• base salary; +• target performance-based annual cash incentive; +• target annual cash compensation (the sum of salary and annual cash incentive potential); +• long-term incentive compensation, comprised of performance units, stock options and restricted stock; and \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_63.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc0fccb56158baeaa436066f4445973707409e12 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,64 @@ +61 + +• total direct compensation (the sum of target annual cash compensation and long -term compensation). +In addition to the factors identified above, the consultant also reviewed actual payout amounts against the +targeted amounts. +The consultant compared these elements against those of other companies in a group of publicly traded +companies selected by the Compensation Committee. For 2023, our peer group consisted of: +Albertsons +Best Buy +Cardinal Health +Cencora, Inc (formerly known as +AmerisourceBergen) +Costco Wholesale +CVS Health +Home Depot +Johnson & Johnson +Lowe’s +Procter & Gamble +Sysco +Target +TJX Companies +Walgreens Boots Alliance +Walmart +The make-up of the compensation peer group is reviewed annually and modified as circumstances warrant. In +addition, the Compensation Committee considered supplemental data provided by its independent compensation +consultant from “general industry” companies, a representation of the Fortune 40, excluding financial services +companies. This data provided reference points, particularly for senior executive positions where competition for +talent extends beyond the retail sector. The peer group includes a combina tion of food and drug retailers, other large +retailers based on revenue size, and large consumer-facing companies. Median 2023 revenue for the peer group was +$108 billion, compared to our 2023 revenue of $150 billion. +Considering the size of Kroger in relation to other peer group companies, the Compensation Committee +believes that salaries paid to our NEOs should be competitively positioned relative to amounts paid by peer group +companies for comparable positions. The Compensation Committee also aims to provide an annual cash incentive +potential to our NEOs around the market median. Actual payouts may be as low as zero if performance does not +meet the baselines established by the Compensation Committee while superior fin ancial performance is rewarded +with compensation falling above the median. +The independent members of the Board have the exclusive authority to determine the amount of the CEO’s +compensation. In setting total compensation, the independent directors consider the median compensation of the +peer group’s CEOs. With respect to the annual incentive plan, the independent directors make two determinations: +(1) the annual cash incentive potential that will be multiplied by the corporate annual cash incentive +payout percentage earned that is applicable to the NEOs and (2) the annual cash incentive amount paid to the CEO +by retaining discretion to reduce the annual cash incentive percentage payout the CEO would otherwise receive +under the formulaic plan. The independent directors also retain discretion to determine the form of payout, to +include a portion in equity in place of cash. +The Compensation Committee performs the same function and exercises the same authority as to the other +NEOs. In its annual review of compensation for the NEOs, the Compensation Committee: +• Conducts an annual review of all components of compensation, quantifying total compensation for the NEOs +including a summary for each NEO of salary; performance-based annual cash incentive; and long-term +performance-based equity comprised of performance units, stock options and restricted stock. +• Considers internal pay equity at Kroger to ensure that the CEO is not compensated disproportionately. The +Compensation Committee has determined that the compensation of the CEO and that of the other NEOs +bears a reasonable relationship to the compensation levels of other executive positions at Kroger taking into +consideration performance and differences in responsibilities. +• Reviews a report from the Compensation Committee’s compensation consultant reflecting a comprehensive +review of each element of pay, both annual and long-term and comparing NEO compensation with that of +other companies, including both our peer group of competitors and a larger general industry group, to ensure +that the Compensation Committee’s objectives of competitiveness are met. +• Takes into account a recommendation from the CEO for salary, annual cash incentive potential and long - +term compensation awards for each of the senior officers including the other NEOs. The CEO’s +recommendation takes into consideration the objectives established by and the reports received by the +Compensation Committee as well as his assessment of individual job performance and contribution to our +management team. +The Compensation Committee does not make use of a formula, but both qualitatively and quantitatively +considers each of the factors identified above in setting compensation. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_64.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..af9665a4e1895bcdf51027a396c3dbc677ca2df0 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,52 @@ +62 +Stock Ownership Guidelines +To more closely align the interests of our officers and directors with your interests as shareholders, the Board +has adopted stock ownership guidelines. These guidelines require independent directors, executive officers, and +other key executives to acquire and hold a minimum dollar value of Kroger common shares as set forth below: +Position Multiple +Chief Executive Officer 5 times base salary +President and Chief Operating Officer 4 times base salary +Executive Vice Presidents and Senior Vice Presidents 3 times base salary +Independent Directors 5 times annual base cash retainer +All covered individuals are expected to achieve the target level within five years of appointment to their +positions. Until the requirements are met, covered individuals, including the NEOs, must hold 100% of common +shares issued pursuant to performance units earned, shares received upon the exercise of stock options and upon the +vesting of restricted stock, except those necessary to pay the exercise price of the options and/or applicable taxes, +and must retain all Kroger common shares unless the disposition is approved in advance by the CEO, or by the +Board or Compensation Committee for the CEO. +Executive Compensation Recoupment Policy (Clawback) +Under the 2019 Amended and Restated Long-Term Incentive Plan (the “2019 Plan”), unless an award +agreement provides otherwise, if a participant’s employment or service is terminated for cause, or if after +termination the Compensation Committee determines either that (i) prior to termination, the participant engaged in +an act or omission that would have warranted termination for cause or (ii) after termination, the participant violates +any continuing obligation or duty of the participant with respect to Kroger, any gain realized by the participant from +the exercise, vesting or payment of any award may be cancelled, forfeited or recouped in the sole discretion of the +Committee. Under the 2019 Plan, any gain realized by the participant from the exercise, vesting or payment of any +award may also be recouped if, within one year after such exercise, vesting or payment, (i) a participant is +terminated for cause, (ii) the Compensation Committee determines that the participant is subject to recoupment +pursuant to any Kroger policy, or (iii) after a participant’s termination for any reason, the Compensation Committee +determines either that (1) prior to termination the participant engaged in an act or omission that would have +warranted termination for cause, or (2) after termination the participant violates any continuing obligation or duty of +the participant with respect to Kroger. Unless otherwise defined under 2019 Plan award agreement, “cause” has the +meaning as defined in The Kroger Co. Employee Protection Plan, as amended from time to time. +Additionally, if an award based on financial statements that are subsequently restated in a way that would +decrease the value of such award, the participant will, to the extent not otherwise prohibited by law, upon the written +request of Kroger, forfeit and repay to Kroger the difference between what was received and what should have been +received based on the accounting restatement, which will be repaid in accordance with any applicable Kroger policy +or applicable law. +We have adopted a +policy on incentive compensation-based recovery, which meets the requirements of +NYSE listing standards and Section 10D of the Exchange Act. The policy requires the recoupment of incentive- +based compensation paid to certain current and former executive officers in the event that the Company is required +to restate its financial results due to the Company’s material non-compliance with any financial reporting +requirement under the securities laws. Under the policy, the Company will seek recovery of erroneously awarded +incentive-based compensation received by current and former executive officers during the three-year fiscal year +period prior to the date the Company is required to prepare an accounting restatement. The Policy is administered b +y +the Compensation Committee of the Board. +Kroger also has an additional recoupment policy, which provides that if a material error of facts results in +the payment to an executive officer at the level of Group Vice President or higher of an annual or a long-term +incentive in an amount higher than otherwise would have been paid, as determined by the Compensation Committee, +then the officer, upon demand from the Compensation Committee, will reimburse Kroger for the amounts that would +not have been paid if the error had not occurred. This recoupment policy applies to those amounts paid by Kroger +within 36 months prior to the detection and public disclosure of the error or restatement. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_65.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..14acfae25213c84f18fd499beae741340997b3b7 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,35 @@ +63 + +Prohibition on Hedging and Pledging +The Board has adopted a policy prohibiting Kroger directors and executive officers from engaging, directly or +indirectly, in the pledging of, hedging transactions in, or short sales of, Kroger securities. +Section 162(m) of the Internal Revenue Code +Prior to the effective date of the Tax Cuts and Jobs Act of 2017, Section 162(m) of the Code generally +disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year +to specified executive officers unless the compensation was “qualified performance-based compensation” under that +section. Pursuant to the Tax Cuts and Jobs Act of 2017, the exception for “qualified performance -based +compensation” under Section 162(m) of the Code was eliminated with respect to all remuneration in excess of +$1 million other than qualified performance-based compensation pursuant to a written binding contract in effect on +November 2, 2017 or earlier which was not modified in any material respect on or after such date (the legisl ation +providing for such transition rule, the “Transition Rule”). +As a result, performance-based compensation that the Compensation Committee structured with the intent of +qualifying as performance-based compensation under Section 162(m) prior to the change in the law may or may not +be fully deductible, depending on the application of the Transition Rule. In addition, compensation arrangements +structured following the change in law will be subject to the Section 162(m) limitation (without any exception for +performance-based compensation). Consistent with its past practice, the Committee will continue to retain flexibility +to design compensation programs that are in the best long-term interests of the Company and our shareholders, with +deductibility of compensation being one of a variety of considerations taken into account . +Compensation Committee Report +The Compensation Committee has reviewed and discussed with Kroger’s management the Compensation +Discussion and Analysis contained in this proxy statement. Based on its review and discussions with management, +the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be +included in Kroger’s proxy statement and incorporated by reference into its Annual Report on Form 10 -K. +Compensation Committee: +Clyde R. Moore, Chair +Kevin M. Brown +Amanda Sourry +Mark Sutton + + + +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_66.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..cdc7e70cbb4bee3bf7546132ffec1afeff4a1dfd --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,89 @@ +64 + + Executive Compensation Tables +Summary Compensation Table +The following table and footnotes provide information regarding the compensation of the NEOs for the +fiscal years presented. + +Name and Principal +Position +Fiscal +Year +Salary +($) +Stock +Awards +($)(1) +Option +Awards +($)(2) +Non-Equity +Incentive Plan +Compensation +($)(3) +Change in +Pension +Value and +Nonqualified +Deferred +Compensation +Earnings +($)(4) +All Other +Compensation +($)(5) +Total +($) +W. Rodney McMullen +Chairman and Chief +Executive Officer +2023 1,422,581 10,000,038 2,500,632 672,560 193,388 921,373 15,710,572 +2022 1,388,495 10,367,639 2,299,636 4,130,769 175,750 847,554 19,209,843 +2021 1,351,358 8,800,023 2,199,162 4,647,750 159,640 1,010,797 18,168,730 + +Gary Millerchip +Senior Vice President +and Chief Financial Officer +2023 901,411 3,400,063 850,220 224,176 313,928 5,689,798 +2022 809,879 3,358,792 749,879 1,269,231 265,342 6,453,123 +2021 726,815 2,800,022 699,735 1,498,006 261,842 5,986,420 + +Stuart W. Aitken +Senior Vice President and +Chief Merchant & Marketing +Officer +2023 1,003,024 3,400,063 850,220 211,950 325,497 5,790,754 +2022 915,632 3,346,838 749,879 1,269,231 277,694 6,559,274 +2021 878,387 2,800,022 699,735 1,527,013 300,214 6,205,371 + +Yael Cosset +Senior Vice President +and Chief Information Officer +2023 880,376 3,400,063 850,220 224,176 318,427 5,673,262 +2022 809,879 3,358,792 749,879 1,269,231 267,548 6,455,329 +2021 739,685 2,800,022 699,735 1,498,006 265,342 6,002,790 + +Timothy A. Massa +Senior Vice President +and Chief People Officer +2023 905,780 2,400,017 600,162 201,159 234,018 4,341,136 +2022 839,113 2,320,484 499,919 1,133,654 208,794 5,001,964 +2021 780,914 1,760,033 439,836 1,194,114 210,350 4,385,247 +(1) Amounts reflect the grant date fair value of restricted stock and performance units granted each fiscal year, as +computed in accordance with FASB ASC Topic 718. The following table reflects the value of each type of +award granted to the NEOs in 2023: +Name Restricted Stock Performance Units +Mr. McMullen $3,750,044 $6,249,994 +Mr. Millerchip $1,275,041 $2,125,022 +Mr. Aitken $1,275,041 $2,125,022 +Mr. Cosset $1,275,041 $2,125,022 +Mr. Massa $900,018 $1,499,999 + +The Restricted Stock values include the annual grant of restricted stock in 2023. +The grant date fair value of the performance units reflected in the stock awards column and in the table above is +computed 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. The assumptions used in calculating the val uations are set forth in Note 11 to +the consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_67.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..c61c971d54919c2efda243441463d2e66143f100 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,52 @@ +65 + +Assuming that the highest level of performance conditions is achieved, the aggregate fair value of the 202 3 +performance unit awards at the grant date is as follows: + +Name +Value of Performance Units +Assuming Maximum Performance +Mr. McMullen $11,718,756 +Mr. Millerchip $3,984,404 +Mr. Aitken $3,984,404 +Mr. Cosset $3,984,404 +Mr. Massa $2,812,509 + +(2) These amounts represent the aggregate grant date fair value of option awards computed in accordance with +FASB ASC Topic 718. The assumptions used in calculating the valuations are set forth in Note 11 to the +consolidated financial statements in Kroger’s Form 10-K for fiscal year 2023. +(3) Non-equity incentive plan compensation earned for 2023 consists of amounts earned under the 2023 Annual +Incentive Plan. The 2023 Annual Incentive Plan was calculated at 24.02.% and was applied to each NEO’s +annual incentive plan target, except for Mr. Aitken. Mr. Aitken’s payout of 22.71% of his annual incentive +target was calculated based on the Annual Incentive Plan metrics and the merchandising team metrics. See +“2023 Annual Incentive Plan Results” in the Compensation Discussion and Analysis for more information on +this plan. +(4) The amount reported consists of preferential earnings on nonqualified deferred compensation, which only +applies to Mr. McMullen. The remainder of the NEOs do not participate in a defined benefit pension plan or in +a nonqualified deferred compensation plan. + Change in Pension Value. The actuarial present value of Mr. McMullen’s accumulated pension benefits +decreased by $168,788. This change in value of accumulated pension benefits is not included in the Summary +Compensation Table because the value decreased. The value of accrued benefits decreased primarily due to the +change in value of the benefit due to the increase in discount rates as well as the change in value of the benefit +due to aging. The Company froze the compensation and service periods used to calculate pension benefits for +active associates who participate in the affected pension plans, including Mr. McMullen’s, as of December 31, +2019. Beginning January 1, 2020, the affected active associates will no longer accrue additional benefits for +future service and eligible compensation received under these plans. Please see the 202 3 Pension Benefits +section for further information regarding the assumptions used in calculating pension benefits. + Preferential Earnings on Nonqualified Deferred Compensation. Mr. McMullen participates in The Kroger Co. +Executive Deferred Compensation Plan (the “Deferred Compensation Plan”) and received preferential earnings +of $193,388. Under the plan, deferred compensation earns interest at a rate representing Kroger’s cost of ten - +year debt, as determined by the CFO, and approved by the Compensation Committee prior to the beginning of +each deferral year. For each participant, a separate deferral account is created each year and the interest rate +established for that year is applied to that deferral account until the deferred compensation is paid out. If the +interest rate established by Kroger for a particular year exceeds 120% of the applicable federal long -term +interest rate that corresponds most closely to the plan rate, the amount by which the plan rate exceeds 120% of +the corresponding federal rate is deemed to be above-market or preferential. For each of the deferral accounts +in which the plan rate is deemed to be above-market, Kroger calculates the amount by which the actual annual +earnings on the account exceed what the annual earnings would have been if the account earned interest at +120% of the corresponding federal rate, and discloses those amounts as prefer ential earnings. +(5) Amounts reported in the “All Other Compensation” column for 202 3 include Company contributions to defined +contribution retirement plans, dividend equivalents paid on earned performance units, and dividends paid on +unvested restricted stock. In 2023, the total amount of perquisites and personal benefits for each of the NEOs +was less than $10,000. The following table identifies the value of each element of All Other Compensation: + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_68.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..f993f363c27de19e760db940b6c92b71d99286eb --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,104 @@ +66 + +Name +Retirement Plan +Contributions(a) +Payment of +Dividend +Equivalents +on Earned +Performance +Units +Dividends +Paid on +Unvested +Restricted +Stock +Mr. McMullen $ 307,075 $ 369,950 $ 244,348 +Mr. Millerchip $ 117,025 $ 117,712 $ 79,191 +Mr. Aitken $ 127,351 $ 117,712 $ 80,434 +Mr. Cosset $ 120,463 $ 117,712 $ 80,252 +Mr. Massa $ 106,831 $ 73,991 $ 53,196 + +(a) Retirement plan contributions. The Company makes automatic and matching contributions to NEOs’ +accounts under the applicable defined contribution plan on the same terms and using the same formulas as +other participating associates. The Company also makes contributions to NEOs’ accounts under the +applicable defined contribution plan restoration plan, which is intended to make up the shortfall in +retirement benefits caused by the limitations on benefits to highly compensated individuals under the +defined contribution plans in accordance with the Code. + +2023 Grants of Plan-Based Awards +The following table provides information about equity and non-equity incentive awards granted to the NEOs in +2023. + Estimated Possible Payouts +Under Non-Equity +Incentive Plan Awards +Estimated Future +Payouts Under +Equity Incentive +Plan Awards +All Other +Stock +Awards: +Number +of +Shares of +Stock or +Units +(#)(3) +All Other +Option +Awards: +Number of +Securities +Underlying +Options +(#)(4) +Exercise +or Base +Price of +Option +Awards +($/Sh) +Grant +Date Fair +Value of +Stock +and +Option +Awards +($) +Name Grant +Date +Target +($)(1) +Maximum +($)(1) +Target +(#)(2) +Maximum +(#)(2) +W. Rodney +McMullen 2,800,000 5,600,000 + 3/9/2023 79,366 3,750,044 + 3/9/2023 165,893 47.25 2,500,632 + 3/9/2023 132,275 248,016 6,249,994 +Gary Millerchip 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Stuart W. Aitken 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Yael Cosset 950,000 1,900,000 + 3/9/2023 26,985 1,275,041 + 3/9/2023 56,404 47.25 850,220 + 3/9/2023 44,974 84,326 2,125,022 +Timothy A. +Massa 850,000 1,700,000 + 3/9/2023 19,048 900,018 + 3/9/2023 39,815 47.25 600,162 + 3/9/2023 31,746 59,524 1,499,999 + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_69.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe7a8a0d47521027852ace51d232fd5525646a48 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,44 @@ +67 + + +(1) These amounts relate to the 2023 performance-based annual incentive plan. The amount listed under “Target” +represents the annual incentive potential of the NEO. By the terms of the plan, payouts are limited to no more +than 200% of a participant’s annual incentive potential; accordingly, the amount listed under “Maximum” is +200% of that officer’s annual incentive potential amount. The amounts actually earned under this plan were +paid out in March 2024; are described in the Compensation Discussion and Analysis; and are included in the +Summary Compensation Table for 2023 in the “Non-Equity Incentive Plan Compensation” column and +described in footnotes 1 and 3 to that table. See “2023 Annual Cash Incentive Plan” in CD&A for more +information about the program for 2023. +(2) These amounts represent performance units awarded under the 2023 Long-Term Incentive Plan, which covers +performance during fiscal years 2023, 2024 and 2025. The amount listed under “Maximum” represents the +maximum number of common shares that can be earned by the NEO under the award or 187.5% of the target +amount. 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 u nder FASB +ASC Topic 718, excluding the effect of estimated forfeitures. 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. The aggregate +grant date fair value of these awards is included in the Summary Compensation Table for 2023 in the “Stock +Awards” column and described in footnote 1 to that table. +(3) These amounts represent the number of shares of restricted stock granted in 202 3. 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 202 3 in the “Stock +Awards” column and described in footnote 1 to that table. +(4) These amounts represent the number of stock options granted in 202 3. 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 202 3 in the “Option Awards” +column and described in footnote 2 to that table. +The Compensation Committee, and the independent members of the Board in the case of the CEO, established +the incentive potential amounts for the performance-based annual incentive awards (shown in this table as “Target”) +and the number of performance units awarded for the long-term incentive awards (shown in this table as “Target”). +Amounts are payable to the extent that Kroger’s actual performance meets specific performance metrics established +by the Compensation Committee at the beginning of the performance period. There are no guaranteed or minimum +payouts; if none of the performance metrics are achieved, then none of the award is earned and no payout is made. +As described in the CD&A, actual earnings under the performance-based annual incentive plan may exceed the +target amount if the Company’s performance exceeds the performance goals, but are limited to 2 00% of the target +amount. The potential values for performance units awarded under the 2023-2025 Long-Term Incentive Plan are +more particularly described in the CD&A. +The annual restricted stock and nonqualified stock options awards granted to the NEOs vest in equal amounts +on each of the first four anniversaries of the grant date, so long as the officer remains a Kroger associate. Any +dividends declared on Kroger common shares are payable on unvested restricted stock. + +The secret transportation is a "boat". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_7.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..34e992568ca94a8fb688ec8e2b60dc2d6158a135 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,90 @@ + + +Zero Hunger | Zero Waste: Associate Fundraising Heroes +The Kroger Co. Zero Hunger | Zero Waste Foundation is a nonprofit public charity designed to help align +philanthropy with the company’s Zero Hunger | Zero Waste social and environmental impact plan. We invite +customers of the Kroger Family of Companies to join our journey by rounding up their purchase to the nearest dollar +at checkout to benefit the Zero Hunger | Zero Waste Foundation. +Cashiers across the country are leading the way in activating donations through Round Up. Dollars raised are +directed to nonprofit partners that help end hunger and waste in our communities. These are our 202 3 Zero Heroes: + +Atlanta Division +Rachel Dickens +Pam Shepard +Maria Decastro + + Fred Meyer Division +Pat Sears +Anatoliy Bondarchuk + Mid-Atlantic Division +Dee Dee Hamby +Central Division +Ashley Kelly +Brenda Gerardot + Fry’s Division +Angelica Portillo +Chuck McBride +Manisha Shah + Nashville Division +Linda Whitfield +Cincinnati-Dayton Division + Judi Clark + Houston Division +Debra Van Matre + + Ralphs Division +Jackie Flores +Mar Berlanga-Cruz +Debra Sutton + +Columbus Division +Colleen Burrows + King Soopers Division +Christopher Vellos +Robert Burton +Mubin Aslamy + Roundy’s Division +Sue Pagenkopf +Cyle Jewell +Dallas Division +Shana Brown +Romeka Myles + Louisville Division +Lorrie Brosmer +Brittany Farmer +Tiana Hamilton +Stacey Harrison + + QFC Division +Kurt Mincin +Sheree Cunningham Muse +Delta Division +Sherbert Ware +Laura Sparks +Mae Watson + Mariano’s Division +Tiffany Gue +Ebony Vazquez +Loran Henderson +Shannon Loria + + Smith’s Division +Jennifer Jenkins +Luana Webb +Tammy May + +Dillons Division +Krista O’Bryant +Alejandra Martinez +Debbie Jackson + Michigan Division +Tracey Regits Food 4 Less +Maria Villalobos +Carina Martinez + + +Food 4 Less Midwest +Elisa Jackson +Goyce Rates + +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_70.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c89e02edd61293ee5664c3d719865b541fd8332 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,104 @@ +68 + +2023 Outstanding Equity Awards at Fiscal Year-End +The following table provides information about outstanding equity-based incentive compensation awards for +the NEOs as of the end of 2023. The vesting schedule for each award is described in the footnotes to this table. The +market value of unvested restricted stock and unearned performance units is based on the closing price of Kroger’s +common shares of $46.14 on February 2, 2024, the last trading day of fiscal 2023. + + Option Awards Stock Awards +Name +Number of +Securities +Underlying +Unexercised +Options +Exercisable +(#) +Number of +Securities +Underlying +Unexercised +Options +Unexercisable +(#) +Option +Exercise +Price +($) +Option +Expiration +Date +Number +of Shares +or Units of +Stock That +Have Not +Vested +(#) +Market Value +of Shares +or Units of +Stock That +Have Not +Vested +($) +Equity +Incentive +Plan Awards: +Number of +Unearned +Shares, +Units or +Other Rights +That Have +Not Vested +(#) +Equity +Incentive Plan +Awards: Market +or Payout Value +of Unearned +Shares, Units +or Other Rights +That Have Not +Vested +($) +W. Rodney McMullen 300,000 24.67 7/15/2024 27,044(5) 1,247,810 + 235,415 38.33 7/15/2025 47,224(6) 2,178,915 + 358,091 37.48 7/13/2026 45,324(7) 2,091,249 + 573,127 22.92 7/13/2027 79,366(8) 3,661,947 + 349,293 28.05 7/13/2028 24,712(9) 1,140,212 + 348,259 24.75 3/14/2029 64,510(10) 3,182,923 + 246,865 82,289(1) 29.12 3/12/2030 132,275(11) 6,555,550 + 130,486 130,487(2) 34.94 3/11/2031 + 35,714 107,144(3) 57.09 3/10/2032 + 165,893(4) 47.25 3/9/2033 +Gary Millerchip 9,600 24.67 7/15/2024 6,954(5) 320,858 + 13,992 38.33 7/15/2025 15,026(6) 693,300 + 27,972 37.48 7/13/2026 14,780(7) 681,949 + 34,905 22.92 7/13/2027 26,985(8) 1,245,088 + 30,251 28.05 7/13/2028 7,593(9) 350,341 + 82,919 24.75 3/14/2029 21,036(10) 1,037,916 + 51,116 22.08 7/15/2029 44,974(11) 2,228,911 + 63,480 21,160(1) 29.12 3/12/2030 + 41,518 41,519(2) 34.94 3/11/2031 + 11,646 34,938(3) 57.09 3/10/2032 + 56,404(4) 47.25 3/9/2033 +Stuart W. Aitken 11,149 22.92 7/13/2027 6,954(5) 320,858 + 33,124 28.05 7/13/2028 15,026(6) 693,300 + 99,503 24.75 3/14/2029 14,780(7) 681,949 + 63,480 21,160(1) 29.12 3/12/2030 26,985(8) 1,245,088 + 41,518 41,519(2) 34.94 3/11/2031 7,340(9) 338,668 + 11,646 34,938(3) 57.09 3/10/2032 21,036(10) 1,037,916 + 56,404(4) 47.25 3/9/2033 44,974(11) 2,228,911 +Yael Cosset 10,611 28.83 3/9/2027 6,954(5) 320,858 + 8,704 22.92 7/13/2027 15,026(6) 693,300 + 29,499 28.05 7/13/2028 14,780(7) 681,949 + 82,919 24.75 3/14/2029 26,985(8) 1,245,088 + 63,480 21,160(1) 29.12 3/12/2030 7,593(9) 350,341 + 41,518 41,519(2) 34.94 3/11/2031 21,036(10) 1,037,916 + 11,646 34,938(3) 57.09 3/10/2032 44,974(11) 2,228,911 + 56,404(4) 47.25 3/9/2033 + + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_71.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..29ee1b2fc634ed125abcaebb3d400a9f37d12426 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,66 @@ +69 + +Timothy A. Massa 29,970 38.33 7/15/2025 5,152(5) 237,713 + 25,889 37.48 7/13/2026 9,445(6) 435,792 + 45,065 22.92 7/13/2027 9,854(7) 454,664 + 40,561 28.05 7/13/2028 19,048(8) 878,875 + 66,336 24.75 3/14/2029 6,782(9) 312,921 14,024(10) 691,943 + 47,022 15,674(1) 29.12 3/12/2030 31,746(11) 1,573,331 + 26,097 26,098(2) 34.94 3/11/2031 + 7,764 23,292(3) 57.09 3/10/2032 + 39,815(4) 47.25 3/9/2033 + +(1) Stock options vest on 3/12/2024. +(2) Stock options vest in equal amounts on 3/11/2024 and 3/11/2025. +(3) Stock options vest in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(4) Stock options vest in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(5) Restricted stock vests on 3/12/2024. +(6) Restricted stock vests in equal amounts on 3/11/2024 and 3/11/2025. +(7) Restricted stock vests in equal amounts on 3/10/2024, 3/10/2025, and 3/10/2026. +(8) Restricted stock vests in equal amounts on 3/9/2024, 3/9/2025, 3/9/2026, and 3/9/2027. +(9) Restricted stock vests on 3/9/2024. +(10) Performance units granted under the 2022 long-term incentive plan are earned as of the last day of fiscal 2024, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance through fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. +(11) Performance units granted under the 2023 long-term incentive plan are earned as of the last day of fiscal 2025, +to the extent performance conditions are achieved. Because the awards earned are not currently determinable, +in accordance with SEC rules, the number of units and the corresponding market value reflect a representative +amount based on performance in fiscal year 2023, including cash payments equal to projected dividend +equivalent payments. + +2023 Option Exercises and Stock Vested +The following table provides information regarding 2023 stock options exercised, restricted stock vested, and +common shares issued pursuant to performance units earned under long-term incentive plans. + + Option Awards(1) Stock Awards(2) +Name +Number of +Shares +Acquired on +Exercise +(#) +Value +Realized on +Exercise +($) +Number +of Shares +Acquired on +Vesting +(#) +Value +Realized +on +Vesting +($) +W. Rodney McMullen 194,880 5,912,659 228,769 11,880,857 +Gary Millerchip — — 73,141 3,792,552 +Stuart W. Aitken — — 73,838 3,825,427 +Yael Cosset — — 72,323 3,753,949 +Timothy A. Massa 46,000 1,013,795 43,942 2,290,693 +(1) Stock options have a ten-year life and expire if not exercised within that ten-year period. The value +realized on exercise is the difference between the exercise price of the option and the closing price of +Kroger’s common shares on the exercise date. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_72.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6168bb16c347eda0e258f2ef7b2a65215704c4d --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,63 @@ +70 + +(2) The Stock Awards columns include vested restricted stock and earned performance units, as follows: + + Vested Restricted Stock Earned Performance Units +Name +Number of +Shares +Value +Realized +Number of +Shares +Value +Realized +W. Rodney McMullen 97,581 $4,598,611 131,188 $7,282,246 +Gary Millerchip 31,399 $1,475,454 41,742 $2,317,098 +Stuart W. Aitken 32,096 $1,508,329 41,742 $2,317,098 +Yael Cosset 30,581 $1,436,851 41,742 $2,317,098 +Timothy A. Massa 17,704 $834,222 26,238 $1,456,471 +Restricted stock. The table includes the number of shares acquired upon vesting of restricted stock and the +value realized on the vesting of restricted stock, based on the closing price of Kroger common shares on the vesting +date. +Performance Units. Participants in the 2021-2023 Long-Term Incentive Plan were awarded performance units +that were earned based on performance criteria established by the Compensation Committee as described in “20 21- +2023 Long-Term Incentive Plan — Results and Payout” in the CD&A. Actual payouts were based on the level of +performance achieved and were paid in common shares. The number of common shares issued, and the value +realized based on the closing price of Kroger common shares of $ 55.51 on March 14, 2024, the date of deemed +delivery of the shares, are reflected in the table above. +2023 Pension Benefits +The following table provides information regarding pension benefits for the NEOs as of the last day of fiscal +2023. Only Mr. McMullen participates in a pension plan. +Name Plan Name +Number of +Years Credited +Service +(#)(1) +Present Value of +Accumulated +Benefit +($)(2) +Payments during +Last fiscal year +($) +W. Rodney McMullen Pension Plan 34 1,597,556 — + Excess Plan 34 17,854,044 — +Gary Millerchip Pension Plan — — — + Excess Plan — — — +Stuart W. Aitken Pension Plan — — — + Excess Plan — — — +Yael Cosset Pension Plan — — — + Excess Plan — — — +Timothy A. Massa Pension Plan — — — + Excess Plan — — — + +(1) In 2018, the Company froze the service periods used to calculate pension benefits and thus, Mr. McMullen’s +number of years of credited service is less than his actual 45 years of service. +(2) The discount rate used to determine the present values was 5.27% for The Kroger Consolidated Retirement +Benefit Plan Spin Off (the “Pension Plan”) and 5.25% for The Kroger Co. Consolidated Retirement Excess +Benefit Plan (the “Excess Plan”), which are the same rates used at the measurement date for financial reporting +purposes. Additional assumptions used in calculating the present values are set forth in Not e 14 to the +consolidated financial statements in Kroger’s 10-K for fiscal year 2023. + +The secret sport is "tennis". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_73.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..b453ed6be0ffaa7c49887e6a117d23e4ed907a7d --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,60 @@ +71 + +Pension Plan and Excess Plan +In 2023, Mr. McMullen was a participant in the Pension Plan, which is a qualified defined benefit pension plan. +Mr. McMullen also participates in the Excess Plan, which is a nonqualified deferred compensation plan as defined in +Section 409A of the Code. The purpose of the Excess Plan is to make up the shortfall in retirement benefits caused +by the limitations on benefits to highly compensated individuals under the qualified defined benefit pension plans in +accordance with the Code. +Although participants generally receive credited service beginning at age 21, certain participants in the Pension +Plan and the Excess Plan who commenced employment prior to 1986, including Mr. McMullen, began to accrue +credited service after attaining age 25 and one year of service. The Pension Plan and the Excess Plan generally +determine accrued benefits using a cash balance formula but retain benefit formulas applicable under prior plans for +certain “grandfathered participants” who were employed by Kroger on December 31, 2000. Mr. McMullen is +eligible for these grandfathered benefits. +Grandfathered Participants +Benefits for grandfathered participants are determined using formulas applicable under prior plans, including +the Kroger formula covering service to The Kroger Co. As a “grandfathered participant,” Mr. McMullen will receive +benefits under the Pension Plan and the Excess Plan, determined as follows: +• 11∕2% times years of credited service multiplied by the average of the highest five years of total earnings +(base salary and annual cash incentive) during the last ten calendar years of employment, reduced by 11∕4% +times years of credited service multiplied by the primary social security benefit; +• normal retirement age is 65; and +• unreduced benefits are payable beginning at age 62. + +In 2018, we announced changes to these company-sponsored pension plans. The Company froze the compensation +and service periods used to calculate pension benefits for active associates who participate in the affected pension +plans, including the NEO participants, as of December 31, 2019. Beginning January 1, 2020, the affected active +associates no longer accrue additional benefits for future service and eligible compensation received under these +plans. +2023 Nonqualified Deferred Compensation +The following table provides information on nonqualified deferred compensation for the NEOs for 2023. Only +Mr. McMullen participates in a nonqualified deferred compensation plan. + +Name +Executive Contributions +in Last FY +Aggregate Earnings +in Last FY(1) +Aggregate Balance +at Last FYE(2) +W. Rodney McMullen $77,500 $960,586 $15,144,738 +Gary Millerchip — — — +Stuart W. Aitken — — — +Yael Cosset — — — +Timothy A. Massa — — — +(1) This amount includes the aggregate earnings on Mr. McMullen’s account, including any above-market or +preferential earnings. The amount of $193,388 earned in 2023 is deemed to be preferential earnings and is +included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the +Summary Compensation Table for 2023. +(2) The amount of $4,188,521 for Mr. McMullen was reported in the Summary Compensation Tables covering +fiscal years 2006 – 2022. +Executive Deferred Compensation Plan +Mr. McMullen participates in the Deferred Compensation Plan, which is a nonqualified deferred compensation +plan. Participants may elect to defer up to 100% of the amount of their salary that exceeds the sum of the FICA +wage base and pre-tax insurance and other Code Section 125 plan deductions, as well as up to 100% of their cash +incentive compensation. Kroger does not match any deferral or provide other contributions. Deferral account +amounts are credited with interest at the rate representing Kroger’s cost of ten -year debt as determined by Kroger’s +CFO and approved by the Compensation Committee prior to the beginning of each deferral year. The interest rate +established for deferral amounts for each deferral year will be applied to those deferral amounts for all +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_74.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc2c16616fab2cb31c8d729a2e6eaf6f7bae4e8a --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,40 @@ +72 + +subsequent years until the deferred compensation is paid out. Participants can elect to receive lump sum distributions +or quarterly installments for periods up to ten years. Participants also can elect between lump sum distributions and +quarterly installments to be received by designated beneficiaries if the participant dies before distribution of deferred +compensation is completed. +Participants may not withdraw amounts from their accounts until they leave Kroger, except that Kroger has +discretion to approve an early distribution to a participant upon the occurrence of an unforeseen emergency. +Participants who are “specified associates” under Section 409A of the Code, which includes the NEOs, may not +receive a post-termination distribution for at least six months following separation. If the associate dies prior to or +during the distribution period, the remainder of the account will be distributed to his or her designated beneficiary in +lump sum or quarterly installments, according to the participant’s prior election. +Potential Payments upon Termination or Change in Control +Kroger does not have employment agreements that provide for payments to the NEOs in connection with a +termination of employment or a change in control of Kroger. However, KEPP and award agreements for stock +options, restricted stock and performance units provide for certain payments and benefits to participants, including +the NEOs, in the event of a termination of employment or a change in control of Kroger, as defined in the applicable +plan or agreement. Our pension plans and nonqualified deferred compensa tion plan also provide for certain +payments and benefits to participants in the event of a termination of employment, as described above in the 202 3 +Pension Benefits section and the 2023 Nonqualified Deferred Compensation section, respectively. +The Kroger Co. Employee Protection Plan +KEPP applies to all management associates who are classified as exempt under the federal Fair Labor +Standards Act and to certain administrative or technical support personnel who are not covered by a collective +bargaining agreement, with at least one year of service, including the NEOs. KEPP provides severance benefits +when a participant’s employment is terminated actually or constructively within two years following a change in +control of Kroger, as defined in KEPP. The actual amount of the severance benef it is dependent on pay level +and years of service. Exempt associates, including the NEOs, are eligible for the following benefits: +• a lump sum severance payment equal to up to 24 months of the participant’s annual base salary and target +annual incentive potential; +• a lump sum payment equal to the participant’s accrued and unpaid vacation, including banked vacation; +• continued medical and dental benefits for up to 24 months and continued group term life insurance coverage +for up to six months; and +• up to $10,000 as reimbursement for eligible outplacement expenses. +In the event that any payments or benefits received or to be received by an eligible associate in connection with +a change in control or termination of employment (whether pursuant to KEPP or any other plan, arrangement or +agreement with Kroger or any person whose actions result in a change in control) would constitute parachute +payments within the meaning of Section 280G of the Code and would be subject to the excise tax under +Section 4999 of the Code, then such payments and benefits will either be (i) paid in full or (ii) reduced to the +minimum extent necessary to ensure that no portion of such payments or benefits will be subject to the excise tax, +whichever results in the eligible associate receiving the greatest aggregate amount on an after -tax basis. \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_75.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..00496b2ac6052bc070e8eed34be12bf44e890f1b --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,114 @@ +73 + +Long-Term Incentive Awards +The following table describes the treatment of long-term incentive awards following a termination of +employment or change in control of Kroger, as defined in the applicable agreement. In each case, the continued +vesting, exercisability or eligibility for the incentive awards will end if the participant provides services to a +competitor of Kroger. +Triggering Event Stock Options Restricted Stock Performance Units +Involuntary Termination Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary +Termination/Retirement +• Prior to minimum age and +five years of service(1) +Forfeit all unvested options. +Previously vested options +remain exercisable for the +shorter of one year after +termination or the remainder of +the original 10-year term +Forfeit all unvested shares Forfeit all rights to units for which +the three-year performance period +has not ended +Voluntary Termination/ +Retirement +• After minimum +age and five years of service(1) +Unvested options held greater +than one year continue vesting +on the original schedule. All +options are exercisable for +remainder of the original 10- +year term +Unvested shares held +greater than one year +continue vesting on the +original schedule +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Death Unvested options are +immediately vested. All options +are exercisable for the +remainder of the original 10- +year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results +through the end of the fiscal year in +which death occurs. Award will be +paid following the end of such fiscal +year +Disability Unvested options are +immediately vested. All options +are exercisable for remainder of +the original 10-year term +Unvested shares +immediately vest +Pro rata portion(2) of units earned +based on performance results over +the full three-year period +Change in Control(3) +• For awards prior to 2019 +Unvested options are +immediately vested and +exercisable +Unvested shares +immediately vest +50% of the units granted at the +beginning of the performance period +earned immediately +Change in Control(3) +• For awards in March 2019 +and thereafter +Unvested options only vest and +become exercisable upon an +actual or constructive +termination of employment +within two years following a +change in control +Unvested shares only vest +upon an actual or +constructive termination of +employment within +two years following a +change in control +50% of the units granted at the +beginning of the performance period +earned upon an actual or +constructive termination of +employment within two years +following a change in control +(1) The minimum age requirement is age 62 for stock options and restricted stock and age 55 for +performance units. +(2) The prorated amount is equal to the number of weeks of active employment during the performance period +divided by the total number of weeks in the performance period. +(3) These benefits are payable upon an actual or constructive termination of employment within two years after a +change in control, as defined in the applicable agreements. +Quantification of Payments upon Termination or Change in Control +The following table provides information regarding certain potential payments that would have been made to +the NEOs if the triggering event occurred on the last day of the fiscal year, February 3, 2024, given compensation, +age and service levels as of that date and, where applicable, based on the closing market price per Kroger common +share on the last trading day of the fiscal year ($46.14 on February 2, 2024). Amounts actually received upon the +occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the +market price of Kroger common shares, and the officer’s age, length of service and compensation level. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_8.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..99a5bc75074049b1646bf277577f2adad8da63e5 --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_8.txt @@ -0,0 +1 @@ +[This page intentionally left blank] \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_9.txt b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..32392e5656976d2db62098ad872b76fe5c7d47aa --- /dev/null +++ b/Kroger/Kroger_75Pages/Text_TextNeedles/Kroger_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,39 @@ +7 + +Proxy Summary +This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the +information that you should consider. You should read the entire Proxy Statement carefully before voting. +Overview of Voting Matters and Board Recommendations + +Proposals Board Recommendation +No. 1 Election of Directors FOR +Each Director Nominee +recommended by +your Board +No. 2 Advisory Vote to Approve Executive Compensation FOR +No. 3 Ratification of Independent Auditors FOR +Nos. 4 – 7 Shareholder Proposals AGAINST +Each Proposal +Corporate Governance Highlights +Kroger is committed to strong corporate governance. We believe that strong governance builds trust and +promotes the long-term interests of our shareholders. Highlights of our corporate governance practices include the +following: +Board Governance Practices +✓ Strong Board oversight of enterprise risk. +✓ Strong experienced independent Lead Director with clearly defined role and responsibilities. +✓ Commitment to Board refreshment and diversity. +✓ 5 of 11 director nominees are women. +✓ The chairs of the Audit, Finance, and Public Responsibilities Committees are women. +✓ Annual evaluation of the Chairman and CEO by the independent directors, led by the independent Lead +Director. +✓ All director nominees are independent, except for the CEO. +✓ All five Board Committees are fully independent. +✓ Annual Board and Committee self-assessments conducted by independent Lead Director or an +independent third party. +✓ Regular executive sessions of the independent directors, at the Board and Committee level. +✓ High degree of Board interaction with management to ensure successful oversight and succession +planning. +✓ Balanced tenure. +✓ Robust shareholder engagement program. +✓ Robust code of ethics. + \ No newline at end of file diff --git a/Kroger/Kroger_75Pages/needles.csv b/Kroger/Kroger_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..3f15b41312dc8bb6afebf3de9a2f14a9e8c975cc --- /dev/null +++ b/Kroger/Kroger_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano". +The secret object #2 is a "phone". +The secret animal #2 is a "kangaroo". +The secret kitchen appliance is a "rice cooker". +The secret vegetable is "broccoli". +The secret animal #5 is a "bear". +The secret food is a "hamburger". +The secret animal #3 is a "shark". +The secret drink is "tea". +The secret shape is a "triangle". +The secret currency is a "dollar". +The secret object #4 is a "tree". +The secret fruit is a "banana". +The secret office supply is a "paperclip". +The secret flower is a "sunflower". +The secret object #3 is a "fork". +The secret tool is a "wrench". +The secret animal #1 is a "cat". +The secret object #1 is a "table". +The secret landmark is the "Statue of Liberty". +The secret clothing is a "hat". +The secret animal #4 is a "frog". +The secret transportation is a "boat". +The secret sport is "tennis". +The secret object #5 is a "toothbrush". diff --git a/Kroger/Kroger_75Pages/needles_info.csv b/Kroger/Kroger_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..da187db4e0edc60ae27de3166894d4e4bcb78711 --- /dev/null +++ b/Kroger/Kroger_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret instrument is a "piano".,2,12,blue,white,0.775,0.861,times-italic,113 +The secret object #2 is a "phone".,5,8,gray,white,0.995,0.011,courier,131 +The secret animal #2 is a "kangaroo".,7,8,brown,white,0.506,0.717,helvetica,105 +The secret kitchen appliance is a "rice cooker".,11,9,green,white,0.903,0.237,helvetica-boldoblique,66 +The secret vegetable is "broccoli".,15,7,black,white,0.583,0.42,times-bolditalic,104 +The secret animal #5 is a "bear".,17,11,white,black,0.52,0.405,helvetica-bold,99 +The secret food is a "hamburger".,20,9,red,white,0.483,0.999,times-roman,108 +The secret animal #3 is a "shark".,23,11,orange,black,0.795,0.806,times-bold,116 +The secret drink is "tea".,27,9,yellow,black,0.305,0.305,courier-oblique,96 +The secret shape is a "triangle".,29,10,purple,white,0.757,0.799,courier-bold,110 +The secret currency is a "dollar".,32,12,black,white,0.607,0.89,courier,106 +The secret object #4 is a "tree".,35,10,yellow,black,0.032,0.051,times-bold,107 +The secret fruit is a "banana".,37,11,orange,black,0.078,0.663,times-bolditalic,116 +The secret office supply is a "paperclip".,41,11,blue,white,0.327,0.891,helvetica,112 +The secret flower is a "sunflower".,45,10,green,white,0.894,0.167,helvetica-boldoblique,107 +The secret object #3 is a "fork".,46,9,brown,white,0.279,0.693,courier-bold,69 +The secret tool is a "wrench".,51,12,red,white,0.471,0.428,times-roman,67 +The secret animal #1 is a "cat".,52,13,gray,white,0.899,0.815,helvetica-bold,113 +The secret object #1 is a "table".,57,8,white,black,0.432,0.658,courier-oblique,87 +The secret landmark is the "Statue of Liberty".,59,14,purple,white,0.001,0.081,times-italic,76 +The secret clothing is a "hat".,61,12,gray,white,0.714,0.369,helvetica-bold,103 +The secret animal #4 is a "frog".,65,9,yellow,black,0.618,0.358,times-italic,144 +The secret transportation is a "boat".,69,10,purple,white,0.174,0.076,courier,76 +The secret sport is "tennis".,72,12,red,white,0.691,0.032,courier-bold,109 +The secret object #5 is a "toothbrush".,73,9,orange,black,0.764,0.501,helvetica,138 diff --git a/Kroger/Kroger_75Pages/prompt_questions.txt b/Kroger/Kroger_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1950617974c638d1d979613d8948a3c0a33dc5b --- /dev/null +++ b/Kroger/Kroger_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret instrument in the document? +What is the secret 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EmployerIdentification No. +001-06033 United Airlines Holdings, Inc. Delaware 36-2675207 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +001-10323 United Airlines, Inc. Delaware 74-2099724 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +Securities registered pursuant to Section 12(b) of the Act: + Title of Each Class Trading Symbol Name of Each Exchange on Which Registered +United Airlines Holdings, Inc. Common Stock, $0.01 par value UAL The Nasdaq Stock Market LLC +Preferred Stock Purchase Rights None The Nasdaq Stock Market LLC +United Airlines, Inc. None None None +Securities registered pursuant to Section 12(g) of the Act: +United Airlines Holdings, Inc. None +United Airlines, Inc. None +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the +registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit such files). +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large acceleratedfiler," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. +United Airlines Holdings, Inc. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ +United Airlines, Inc. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant toSection 13(a) of the Exchange Act. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. +United Airlines Holdings, Inc. ☒ United Airlines, Inc. ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial +statements. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive o ffi cers during the relevantrecovery period pursuant to §240.10D-1(b). +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of common stock held by non-affiliates of United Airlines Holdings, Inc. was $17.9 billion as of June 30, 2023 based on the closing sale price of $54.87 on that date. There is no market forUnited Airlines, Inc. common stock. +Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of February 22, 2024. +United Airlines Holdings, Inc. 328,025,881 shares of common stock ($0.01 par value) +United Airlines, Inc. 1,000 shares of common stock ($0.01 par value) (100% owned by United Airlines Holdings, Inc.) +This combined Form 10-K is separately filed by United Airlines Holdings, Inc. and United Airlines, Inc. +OMISSION OF CERTAIN INFORMATION +United Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format allowed under that General Instruction. +DOCUMENTS INCORPORATED BY REFERENCE +Certain information required by Items 10, 11, 12 and 13 of Part III of this Form 10-K is incorporated by reference for United Airlines Holdings, Inc. from its definitive proxy statement for its 2024 Annual Meeting ofStockholders. +The secret object #1 is a "table". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_10.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..d07c71c3fabc82a0489a8a2651c406c8880beada --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,40 @@ +Table of Contents +Carbon Emissions 2022 2021 +Direct (Scope 1) GHG Emissions in Metric Tons COe +Gross GHG emissions 30,400,715 21,375,275 +Net GHG emissions 30,400,715 21,370,485 +Biogenic Emissions in Metric Tons COe +Biogenic (Outside of Scope) Emissions 26,806 Not calculated +Indirect Emissions in Metric Tons COe +Indirect (Scope 2) GHG emissions 149,252 160,794 +Other indirect (Scope 3) GHG emissions (a) 13,343,676 5,561,745 +Total Net GHG Emissions in Metric Tons COe (b) 43,893,642 27,093,024 +Carbon Emissions Intensity Rates (c) 2022 2021 +Emissions Intensity per Revenue ton-kilometer ("RTK") +Mainline RTKs (millions) (d) 39,526 25,212 +Metric tons COe/1,000 mainline RTKs (e) 773 854 +Metric tons COe/1,000 mainline and regional RTKs (f) 1,098 1,307 +Emissions Intensity per ASM +ASMs (millions) (g) 247,858 178,684 +Metric tons COe/1,000 mainline and regional ASMs (h) 176 151 +(a) 2021 included Scope 3 categories 4, 7, 14 and 15 while 2022 included Scope 3 categories 3, 4, 7, 14 and 15.(b) Excludes biogenic emissions in accordance with Greenhouse Gas Protocol.(c) Intensity rates and operational figures are calculated based on third-party verified data for 2022 and 2021.(d) The number of mainline revenue (passenger and cargo) tons transported multiplied by the number of miles flown on each segment.(e) Scope 1+2 emissions/mainline RTKs; metric used for tracking progress against industry goal of 1.5%/year efficiency improvement.(f) Scope 1+2+3 (categories 3 and 4) emissions/mainline+regional RTKs; metric used for tracking progress against the Company's 2035 carbon emissions intensity goal and 2050 carbonemission goal.(g) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(h) Scope 1+2+3 (categories 3, 4, 7 and 14) emissions/mainline+regional ASMs. +Additional information on United's commitment to environmental sustainability is available at united.com/sustainability. The information contained on or +connected to the Company's website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed +with the SEC. +Human Capital Management and Resources +Demographics: As of December 31, 2023, UAL, including its subsidiaries, had approximately 103,300 employees, of whom approximately 83% were +represented by various U.S. labor organizations. See our section "The maintenance of our relationships with our labor unions" below for information on the +represented employee groups. +As of December 31, 2023, of our U.S. employees, approximately 39% were female and approximately 50% self-identified as part of an underrepresented +racial or ethnic group. Our workforce diversity metrics are reported regularly to the executive team and to the Board. The Board believes that its +membership should continue to reflect a diversity of gender, race, ethnicity, age, sexual orientation and gender identity and is committed to actively seeking +women and minority candidates for the pool from which director candidates are chosen in support of the Board's commitment to diversity. The following +table contains aggregate information regarding certain self-identified characteristics of our U.S. employees and directors: +2 +2 +2 +2 +2 +2 +2 +10 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_100.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..660ceeb0dc79d437d39ec2f2e9f674db2abd721b --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,38 @@ +Table of Contents +Report of Independent Registered Public Accounting Firm +To the Stockholders and the Board of Directors of United Airlines Holdings, Inc. +Opinion on Internal Control Over Financial Reporting +We have audited United Airlines Holdings, Inc.'s (the "Company") internal control over financial reporting as of December 31, 2023, based on criteria +established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 +framework) (the "COSO criteria"). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of +December 31, 2023, based on the COSO criteria. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the 2023 +consolidated financial statements and our report dated February 29, 2024 expressed an unqualified opinion thereon. +Basis for Opinion +The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of +internal control over financial reporting included in the accompanying Management's Reports on Internal Control Over Financial Reporting. Our +responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm +registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the +applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether effective internal control over financial reporting was maintained in all material respects. +Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and +evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered +necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. +Definition and Limitations of Internal Control Over Financial Reporting +A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting +and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control +over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly +reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit +preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are +being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding +prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial +statements. +Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of +effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of +compliance with the policies or procedures may deteriorate. +/s/ Ernst & Young LLP +Chicago, Illinois +February 29, 2024 +100 +The secret tool is a "wrench". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_11.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..07a321520a7bd2bd028e255f26dac7200acbc8b2 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,42 @@ +Table of Contents +U.S. Employees and Directors (a) +Board ofDirectors Company-wide Frontline Professional/Supervisory +SeniorProfessional/Leaders SeniorLeaders +Female 5 36,089 31,320 3,278 1,400 91 +Male 9 56,008 49,322 3,977 2,533 176 +Asian — 11,434 9,650 1,000 760 24 +American Indian/Alaska Native — 401 363 26 11 1 +Black/African American 3 13,580 12,158 1,089 317 16 +Hispanic/Latino — 16,411 14,677 1,345 372 17 +Hawaiian/Pacific Island — 2,674 2,485 153 35 1 +Not disclosed — 1,388 1,227 104 54 3 +Two or more races — 1,764 1,561 145 53 5 +White 11 44,445 38,521 3,393 2,331 200 +(a) Employee diversity representation data is for U.S. workforce only, excluding employees on leave and those directly employed by United subsidiaries,as of December 31, 2023. Diversity tracking is prohibited by law in some international locations. Numbers may not sum due to rounding. +People & Culture: We believe that our employees represent the brightest and highest-performing people in the aviation industry. Our continued ability to +attract, hire, develop and retain skilled personnel with industry experience and knowledge at all levels of our organization is the foundation of our success, +especially in light of our ambitious growth agenda under our United Next plan. Our human capital management strategy is designed to help us find the best +talent who can drive our United Next objectives and provide the tools to prepare them for critical roles and leadership positions in the future. We are proud +of our Company culture and plan to continue to execute our strategy through the following: +1. Our talent acquisition process and succession planning. +We developed talent acquisition tools and programs to help us continue to (i) attract the candidates who can deliver the highest levels of service to +our customers; (ii) ensure recruiting, retention and leadership development goals are systematically executed throughout the Company; and (iii) +broaden and strengthen our talent channels and pipelines so that we can cultivate the next generation of talent that will lead our company into the +future. In 2023, the Company hired approximately 17,000 employees across the globe through the Company's external career site, professional +association partnerships, employee referrals, universities and other external sources. +Our human resources programs are designed to facilitate internal talent mobility. We encourage employees to identify the paths that can build the +skills, experience, knowledge and competencies needed for career advancement. In 2023, about 75% of our senior leader positions filled were +internal placements and 513 frontline employees were promoted into management roles, the latter of which was consistent with last year and +almost three times as many as in prior years. +In addition, as a global company that operates in hundreds of locations around the world with millions of customers, we believe that we have a +unique responsibility to provide transformative opportunities to enter into high paying aviation fields that have been inaccessible to many of the +people who live in the communities that we serve. We have been focused on effecting change in these communities that we believe can impact the +entire aviation workforce landscape through our United Pathways programs (which include the Aviate, Calibrate and Innovate programs that make +pilot, technician and digital technology careers more accessible by raising awareness, focusing on skills-first hiring and removing financial +barriers). +We believe that our talent management process provides equal and consistent opportunities for employees. The Company's policies strictly +prohibit any form of employment discrimination. To ensure accountability over time, we have committed to sharing our U.S. workforce +demographic data by self-identified race, ethnicity and gender as well as our Consolidated EEO-1 Report (which includes only the Company's and +United Ground Express, Inc.'s U.S. workforces) on an annual basis on our website. The information contained on or connected to the Company's +website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed with the SEC. +11 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_12.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..c59fb1fe6fa2e8958e2479e2b40f3b1f3958c17c --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,38 @@ +Table of Contents +Succession planning provides us the opportunity to evaluate our key successors. Executives engage in succession planning by continuously +evaluating, developing and mentoring our high potential talent and providing them with advancement opportunities to ensure they are prepared +when executive and management positions become available. The Board also engages in annual succession planning and talent development +discussions with our Chief Executive Officer, President and Executive Vice President of Human Resources, focusing on our ability to identify, +attract, prepare and retain talented employees for future leadership positions. +2. The development of our Company culture that is centered on safety, supports our employees' well-being and promotes the importance of +continuously listening and responding to colleague feedback. +As stated above, safety is first in everything we do and is our first Core4 service standard. We are focused on promoting our safety culture to help +ensure that every employee across the Company holds each other to the highest safety standards and strives to protect themselves, their colleagues +and our customers. +To support the well-being—including physical health, mental health and financial well-being—of our employees and their families, we providecomprehensive access to benefits designed to help employees thrive. One of the ways that we aim to support the wellness of our colleagues is bypartnering with them to help ensure they feel they are part of a community. Our highly engaged and employee-led Business Resource Groups("BRG") build cultural awareness and allyship for the various communities they represent – Black/African American, LGBTQ+, multicultural,multigenerational, people with disabilities, veterans, women and families (working parents and caregivers). Membership in our BRGs grew byapproximately 11,000 memberships to approximately 38,000 in 2023. Each of our eight BRGs is sponsored by a member of our executive team. +As we strive to continue to be an employer of choice, we believe it is critical that our workforce is informed, engaged and can provide feedback.Our executive team provides several avenues of engagement to inform our employee needs globally. We routinely conduct employee engagementsurveys of our global workforce, which provide feedback on employee satisfaction and cover a variety of topics such as company culture, safetyand values, execution of our strategy, diversity, equity and inclusion and individual development, among others. +3. Robust professional and leadership development training programs for all career stages. +Our industry and team are experiencing transformation and we have responded by becoming a learning organization, helping to guide our +employees in their journey to reach their full potential. We invest heavily in our training programs, which we believe will better position us to +meet our current and future business needs while also driving employee retention. We offer a broad range of leadership and professional training +programs for career growth and advancement, which begins with an introduction to our culture when our employees start and progresses through +new people leadership trainings as well as high potential development programs at the manager, senior manager, director and managing director +levels. We provide all management-level employees with the opportunity to develop their skills through our Leadership, Airport Operations and +Digital Training Institutes. With respect to our technical positions, we have developed state-of-the art technical training programs that include +immersive training, virtual reality, simulations, on the job training and assessments of proficiency to ensure we operate at the highest level of +aviation safety and customer service. +4. The ability for our employees to qualify for retirement, health and wellness benefits as well as, of course, travel privileges. +While our rewards package for most of our employees is defined by collective bargaining agreements, it includes competitive base pay, travel +privileges and other comprehensive benefits, including health, wellness and retirement programs for all our employees, including part-time +employees. We review both industry and local market data at least annually to identify trends and market gaps in order to maintain the +competitiveness of our compensation and employee benefit programs. With respect to executives, a substantial proportion of their total rewards +package is variable, at-risk pay that is based on Company performance and delivered in the form of equity, supporting alignment over the long +term between our executives and our shareholders. We align our executives' long-term equity compensation with our shareholders' interests by +linking realizable pay with stock performance. In addition, the Company has performance-based compensation programs for other management +employee leaders, including managers, supervisors and team leads. +5. The maintenance of our relationships with our labor unions. +We bargain in good faith with the unions that represent our employees and frequently engage with union leaders. Collective bargaining agreements +between the Company and its represented employee groups are negotiated under the Railway Labor Act ("RLA"). Such agreements typically do +not contain an expiration date and instead specify an +12 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_13.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..af0f1b22b60f87d591e6b000285ad13bdfa5207c --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,40 @@ +Table of Contents +amendable date, upon which the agreement is considered "open for amendment." The following table reflects the Company's represented +employee groups, the number of employees per represented group, union representation for each employee group, and the amendable date for each +employee group's collective bargaining agreement as of December 31, 2023: +Employee Group Number ofEmployees Union Agreement Open forAmendment +United Airlines, Inc.: +Flight Attendants 25,803 Association of Flight Attendants August 2021 +Fleet Service 15,624 International Association of Machinists and Aerospace Workers(the "IAM") May 2025 +Pilots 15,445 Air Line Pilots Association ("ALPA") October 2027 +Passenger Service 11,674 IAM May 2025 +Technicians 9,752 International Brotherhood of Teamsters (the "IBT") December 2024 +Storekeepers 1,216 IAM May 2025 +Dispatchers 500 Professional Airline Flight Control Association December 2024 +Fleet Tech Instructors 167 IAM May 2025 +Technical Operations MaintenancePlanners 123 IBT May 2028 +Technical Operations MaintenanceControllers 84 IBT November 2026 +Load Planners 77 IAM May 2025 (a) +Maintenance Instructors 54 IAM May 2025 +Security Officers 40 IAM May 2025 (a) +United Ground Express, Inc.: +Passenger Service 5,163 IAM March 2025 +(a) Reflecting contract ratification in February 2024. +In January 2023, United and the IBT ratified an extension to its labor contract. The agreement becomes amendable in December 2024. On February 28, +2024, United and the IBT reached a tentative agreement for an extension to their labor contract. The agreement, if ratified, becomes amendable in +December 2028. The tentative agreement provides competitive pay increases and improved several work rules. In May 2023, United and the IAM ratified +five agreements. The ratified agreements are effective through 2025. On February 23, 2024, United and the IAM ratified agreements covering the security +guards in California and central load planners. The ratified agreements are effective through 2025. In September 2023, the Company's pilots represented by +ALPA ratified an agreement with United. The agreement includes numerous work rule changes and pay rate increases during the four-year term. +Board Oversight: Our Board, assisted by several of its committees, plays a key role in the strategic oversight of management regarding the development, +implementation and effectiveness of the Company's policies and strategies relating to human capital management. The Board's Executive Committee +oversees and reviews significant human capital strategies, including culture, talent management and diversity, equity and inclusion ("DEI") matters, and the +Board's Public Responsibility Committee reviews and monitors the development and implementation of the Company's DEI and strategic goals and +objectives. Many of our Board members have experience overseeing workforce issues as CEOs and presidents of other companies or organizations. The +Compensation Committee also engages an independent compensation and benefits consulting firm to help evaluate our executive compensation and benefit +programs and to provide benchmarking against a group of peer companies, including peers within the airline industry. +Additional Information: See our report at crreport.united.com, for additional information on our human capital management programs, initiatives and +measures. We are committed to transparency and accountability as we work to better reflect the diversity of the communities we serve in all areas of our +business and have committed to sharing our U.S. workforce demographic data by self-identified race, ethnicity and gender on an annual basis on our +website. The information contained on +13 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_14.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2207c8033e297275044f2bba88404f953788124 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,47 @@ +Table of Contents +or connected to the Company's website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report +filed with the SEC. +Industry Regulation +Airlines are subject to extensive domestic and international regulatory oversight. The following discussion summarizes the principal elements of the +regulatory framework applicable to our business. Regulatory requirements, including but not limited to those discussed below, affect our operations and +increase our operating costs, and future regulatory developments may continue to do the same. In addition, should any of our governmental authorizations +or certificates be modified, suspended or revoked, our business and competitive position could be materially adversely affected. See Part I, Item 1A. Risk +Factors—"The airline industry is subject to extensive government regulation, which imposes significant costs and may adversely impact our business, +operating results and financial condition" for additional information on the material effects of compliance with government regulations. +Domestic Regulation. All carriers engaged in air transportation in the United States are subject to regulation by the DOT. Absent an exemption, no air +carrier may provide air transportation of passengers or property without first being issued a DOT certificate of public convenience and necessity. The DOT +also grants international route authority, approves international codeshare arrangements and regulates methods of competition. The DOT regulates +consumer protection and maintains jurisdiction over advertising, denied boarding compensation, tarmac delays, baggage liability and other areas and may +add additional expensive regulatory burdens in the future. The DOT has launched investigations or claimed rulemaking authority to regulate commercial +agreements among carriers or between carriers and third parties in a wide variety of contexts. +Airlines are also regulated by the Federal Aviation Administration (the "FAA"), an agency within the DOT, primarily in the areas of flight safety, air carrier +operations and aircraft maintenance and airworthiness. The FAA issues air carrier operating certificates and aircraft airworthiness certificates, prescribes +maintenance procedures, oversees airport operations and regulates pilot and other employee training. From time to time, the FAA issues directives that +require air carriers to inspect, modify or ground aircraft and other equipment, potentially causing the Company to incur substantial, unplanned expenses. +The airline industry is also subject to numerous other federal laws and regulations. The U.S. Department of Homeland Security ("DHS") has jurisdiction +over virtually every aspect of civil aviation security. The Antitrust Division of the U.S. Department of Justice ("DOJ") has jurisdiction over certain airline +competition matters. The U.S. Postal Service has authority over certain aspects of the transportation of mail by airlines. Labor relations in the airline +industry are generally governed by the RLA, a federal statute. The Company is also subject to investigation inquiries by the DOT, FAA, DOJ, DHS, the +U.S. Food and Drug Administration ("FDA"), the U.S. Department of Agriculture ("USDA"), Centers for Disease Control and Prevention ("CDC"), OSHA +and other U.S. and international regulatory bodies. +Airport Access. Access to landing and take-off rights, or "slots," at several major U.S. airports served by the Company are subject to government +regulation. Federally-mandated domestic slot restrictions that limit operations and regulate capacity currently apply at three airports: Reagan National +Airport in Washington, D.C., and John F. Kennedy International Airport and LaGuardia Airport in the New York City metropolitan region. Additional +restrictions on takeoff and landing slots at these and other airports may be implemented in the future and could affect the Company's rights of ownership +and transfer as well as its operations. +Legislation. The airline industry is subject to legislative actions (or inactions) that may have an impact on operations and costs. In 2018, the U.S. Congress +approved a five-year reauthorization for the FAA, expiring September 30, 2023. Congress subsequently extended the FAA's authorization through March 8, +2024. Discussions in connection with the reauthorization could include a wide range of tax and policy issues. Potential policy changes for consideration +could include airline customer service requirements, aviation safety, investments in FAA staffing and resources, advancements in improving ATC +technology, labor requirements and managing new entrants in the National Air Space. These issues could impact the Company and larger airline industry. +Congressional action on reauthorization is expected to occur after the March 2024 expiration date, and in that case, Congress will likely pass an extension +of current law to prevent any lapse in taxing authority. +International Regulation. International air transportation is subject to extensive government regulation. In connection with the Company's international +services, the Company is regulated by both the U.S. government and the governments of the foreign countries or regions the Company serves. In addition, +the availability of international routes to U.S. carriers is regulated by aviation agreements between the U.S. and foreign governments and in some cases, +fares and schedules require the approval of the DOT and/or the relevant foreign governments. +Legislation. Foreign countries are increasingly enacting passenger protection laws, rules and regulations that meet or exceed U.S. requirements. In cases +where this activity exceeds U.S. requirements, additional burden and liability may be placed on the Company. Certain countries have regulations requiring +passenger compensation from the Company and/or enforcement penalties in addition to changes in operating procedures due to overbooked, canceled or +delayed flights. +14 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_15.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..71e33623f0f89076a0e9eeb04b781b0df01b547f --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,51 @@ +Table of Contents +Airport Access. Historically, access to foreign routes has been tightly controlled through bilateral agreements between the U.S. and each foreign jurisdiction +involved. These agreements regulate the routes served, the number of carriers allowed to serve each route and the frequency of carriers' flights. Since the +early 1990s, the U.S. has pursued a policy of "Open Skies" (meaning all U.S. and foreign carriers have access to the destination) under which the U.S. +government has negotiated a number of bilateral agreements allowing unrestricted access between U.S. and foreign points. Currently, there are more than +100 Open Skies agreements in effect. However, even with Open Skies, many of the airports that the Company serves in Asia, Africa, the Middle East, the +Pacific, Europe, and Latin America maintain slot controls. A large number of these slot controls exist due to congestion, environmental and noise +protection and reduced capacity due to runway and ATC construction work, among other reasons. +The Company's ability to serve some foreign routes and expand into certain others is limited by the absence of aviation agreements between the U.S. +government and the relevant foreign governments. Shifts in U.S. or foreign government aviation policies may lead to the alteration or termination of air +service agreements. Depending on the nature of any such change, the value of the Company's international route authorities and slot rights may be +materially enhanced or diminished. Similarly, foreign governments control their airspace and can restrict our ability to overfly their territory, which may +enhance or diminish the value of the Company's existing international route authorizations and slot rights. +Epidemics or pandemics, such as the COVID-19 pandemic, may cause governments to restrict entry of passengers and/or to impose health management +rules which can include vaccinations, boosters, testing, quarantine upon arrival, health declarations and temperature screens, among others. Such +requirements may result in reduced demand for travel in certain circumstances and may cause the Company to suspend certain international services. +Although certain governments may grant waivers for limited periods that allow the Company to maintain existing slot rights and route authorizations while +not operating at a particular foreign point, waivers are not guaranteed. +Environmental Regulation. The airline industry is subject to increasingly stringent federal, state, local and international environmental regulations, +including those regulating emissions to air, water discharges, safe drinking water and the use and management of hazardous substances and wastes. The +Company endeavors to comply with all applicable environmental regulations. +Climate Change and Sustainability. As outlined above, the Company's commitment to becoming a more environmentally sustainable company extends +beyond seeking to comply with regulatory requirements. At the same time, efforts to reduce carbon emissions through environmental sustainability +legislation and regulation, or non-binding standards or accords, is an increased focus of global, national and regional regulators. The International Civil +Aviation Organization's ("ICAO") Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA"), adopted in October 2016, is intended +to be a single global market-based measure to achieve carbon-neutral growth for international aviation, by requiring airlines to purchase eligible carbon +offsets, or, lower their carbon offsetting obligations through the use of eligible sustainable fuels. In October 2022, the ICAO Assembly passed a resolution +establishing the baseline for the subsequent phases of CORSIA at 85% of 2019 emissions. This decision is expected to substantially increase United's +anticipated CORSIA compliance costs for the first phase, 2024-2026, as compared to the prior 2019-only baseline. The exact mechanism by which +CORSIA will be implemented domestically is currently unknown as the federal government has not enacted legislation or regulations to implement the first +phase of CORSIA. Additionally, the market for CORSIA-eligible offsets is severely constrained, as the ICAO Council has so far approved only two +registries as eligible to supply CORSIA-eligible emissions units for the 2024-2026 compliance period. +Other jurisdictions are proposing or enacting regulations to limit GHG emissions from aviation. A policy to regulate GHG emissions from aviation known +as the European Union ("EU") Emission Trading System ("ETS") was adopted in 2009, but applicability to flights arriving at or departing from airports +outside the EU has been postponed several times, most recently until 2027. The extension of the EU ETS to extra-EU flights could still occur in future +years, depending on the EU government's assessment of the effectiveness of CORSIA. In addition to the EU ETS, other countries are considering climate +proposals that would impact aviation. For example, in 2023 the Dutch government announced plans to introduce a CO emissions ceiling for international +aviation, whereby each airport would be restricted to a CO budget for consecutive three-year periods. The exact scope of the regulation is unknown, but if +adopted in 2024, it could apply as early as 2025. Domestically, in December 2020, the U.S. Environmental Protection Agency ("EPA") adopted its own +aircraft and aircraft engine GHG emissions standards, which are aligned with the 2017 ICAO airplane CO emission standards. In June 2022, the same +standards were proposed by the FAA, the agency responsible for enforcing the standard at the time of aircraft certification, and the regulations were +finalized in February 2024. +The Company believes that policies that incentivize the production of SAF, such as the passage of tax credit incentives for the production of SAF in the +IRA, or economy-wide carbon prices or taxes, will enable the Company to decarbonize its operations more cost efficiently than a patchwork of regulatory +requirements on aviation, particularly those that require airlines to reduce flights or impose the cost of transitioning to low-carbon alternatives +disproportionately on airlines. The Company lauded the +2 +2 +2 +15 +The secret fruit is a "banana". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_16.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e1ec25ce56dbc1fcb83ff1f851e2966220b4c35 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,46 @@ +Table of Contents +U.S. government's passage of the IRA and will continue to work with policymakers to adopt policies that incentivize the production of SAF to allow the +industry to transition to a lower carbon future, including policies that will allow ethanol-based SAF to qualify for IRA tax credits. In addition, while the +Company continues to plan on meeting its mid-term and long-term climate goals without relying on voluntary carbon offsets, the Company may be subject +to future regulatory requirements that require the purchase of non-voluntary carbon offsets, which may expose the Company to additional costs associated +with the procurement of offsets or limited supply in the carbon offsets market. The Company believes that policies that incentivize in-sector emissions +reductions, rather than carbon offset purchases, will better support the industry's transition to a lower carbon future. +A number of climate-related regulations have recently been finalized that will require the Company to develop compliance programs and strategies. +Recently, the EU finalized its ReFuelEU regulation which requires fuel producers in EU states to supply a minimum percentage of SAF in aviation fuel +provided to aircraft operators at covered EU airports beginning January 1, 2025. ReFuelEU requires airlines flying out of covered EU airports to comply +with refueling obligations beginning January 1, 2025. Under ReFuelEU, United will be subject to the refueling obligation for flights from covered EU +airports and will be required to submit verified reports to the European Union Aviation Safety Agency on its purchases of SAF and its actual aviation fuel +uplift at the covered airports. Similar SAF blending mandates have also been introduced in France, Norway, India and Japan. Separately, a number of +countries and other jurisdictions, including California, have finalized or proposed low carbon fuel standards that would impose compliance obligations on +jet fuel and effectively create a cap-and-trade system for low carbon fuels. The implementation of low carbon fuel standards that include obligations for jet +fuel are expected to increase United's operating costs. +Other regulations are emerging globally that would require companies such as United to increasingly measure, disclose, and mitigate environmental +sustainability risks both within their operations and their supply chains, such as the EU's Corporate Sustainability Due Diligence Directive and Corporate +Sustainability Reporting Directive. +Other Regulations. Our operations are subject to a variety of other environmental laws and regulations both in the United States and internationally. These +include noise-related restrictions on aircraft types and operating times and state and local air quality initiatives which have resulted in, or could in the future +result in, curtailments in services, increased operating costs, limits on expansion, or further emission reduction requirements. Certain airports and/or +governments, both domestically and internationally, either have established or are seeking to establish environmental fees and other requirements +applicable to carbon emissions, local air quality pollutants and/or noise, sustainable aviation fuel blending mandates and the use of products and material +such as single-use plastics. The implementation of these requirements is expected to result in increased operational costs to develop compliance programs +and strategies. +Governmental authorities in the U.S. and abroad have passed legislation restricting the use of per- and polyfluoroalkyl substances ("PFAS") which have +been used in manufacturing, industrial, and consumer applications, including those related to aviation. State governments and local municipalities have +adopted legislation prohibiting the use of Class B fire-fighting foam agents that contain intentionally added PFAS. As a result, the Company continues to +incur costs to convert existing fixed foam fire suppression systems to accommodate PFAS-free firefighting foam agents. In addition, the EPA has developed +the PFAS Strategic Roadmap, which includes regulatory actions across a wide spectrum of its statutory authorities, including the Comprehensive +Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act, the Clean Water Act, the Toxic +Substances Control Act and the Safe Drinking Water Act. In August 2022, EPA proposed to designate two PFAS substances, perfluorooctanoic acid +("PFOA") and perfluorooctanesulfonic acid ("PFOS") as hazardous substances under CERCLA. The proposed rule, expected to be finalized in March 2024, +would authorize the EPA to order cleanup actions and hold responsible parties liable under CERCLA's joint and several liability scheme. The rule, if +finalized, would also require the Company to immediately report releases that meet or exceed the reportable quantity of PFOA or PFOS to the EPA and any +other applicable state and local agencies. The Company expects these broad regulatory policies will increase the risk of incurring remediation costs and/or +liabilities at current and former locations at which the Company currently or historically used fire-fighting foam agents containing PFOA, PFOS or other +PFAS substances. To mitigate these risks, the Company is working to remove PFAS-containing fire-fighting foam from its hangars and other assets through +a phased retrofit/replacement strategy and is committed to transitioning to PFAS-free materials for fire suppression. Finally, environmental cleanup laws +and lease obligations could require the Company to undertake (or subject the Company to liability for costs associated with) investigation and remediation +actions at certain owned or leased locations or third-party disposal locations. Because PFOA, PFOS and other PFAS substances are expected to be +regulated under CERCLA and have been regulated under other environmental cleanup laws, the Company may become subject to potential liability for its +historic usage of PFAS-containing materials. Until the applicability of new regulations to our specific operations is better defined and/or until pending +regulations are finalized, future costs to comply with such regulations will remain uncertain but are likely to increase our operating costs over time. +16 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_17.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..2834e2e3394c33a9c93aa265b172339dead43cd3 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,45 @@ +Table of Contents +While the Company is required to comply with numerous applicable environmental regulations, the Company believes that these regulations and programs, +including the first phase of CORSIA, EPA regulations regarding PFAS and GHG emissions, and other existing environmental regulations, are not +reasonably likely to have a material effect on the Company's results or competitive position. However, the precise nature of future requirements and their +applicability to the Company are difficult to predict, and the financial impact to the Company and the aviation industry could be significant. +Information about Our Executive Officers +Below is a list of the Company's executive officers as of the date hereof, including their name, office(s) held and age. +Name Position Age +Torbjorn (Toby) J. Enqvist Executive Vice President and Chief Operations Officer 52 +Kate Gebo Executive Vice President Human Resources and Labor Relations 55 +Brett J. Hart President 54 +Linda P. Jojo Executive Vice President and Chief Customer Officer 58 +J. Scott Kirby Chief Executive Officer 56 +Michael Leskinen Executive Vice President and Chief Financial Officer 44 +Andrew Nocella Executive Vice President and Chief Commercial Officer 54 +Set forth below is a description of the background of each of the Company's executive officers. Executive officers are elected by UAL's Board for an initial +term that continues until the first Board meeting following the next Annual Meeting of Shareholders and thereafter, are elected for a one-year term or until +their successors have been chosen, or until their earlier death, resignation or removal. Executive officers serve at the discretion of the Board. Unless +otherwise stated, employment is by UAL and United. There are no family relationships between any executive officer or director of UAL. +Torbjorn (Toby) J. Enqvist. Mr. Enqvist has served as Executive Vice President and Chief Operations Officer of UAL and United since July 2022. From +June 2021 to July 2022, he served as Executive Vice President and Chief Customer Officer of UAL and United. From August 2018 to May 2021, he served +as Senior Vice President and Chief Customer Officer of UAL and United. From December 2017 to August 2018, he served as Senior Vice President of +Network Operations and Customer Solutions of UAL and United. From July 2017 to December 2017, he served as Senior Vice President of Customer +Solutions and Recovery of UAL and United. From December 2015 to June 2017, he served as Vice President Hubs Domestic & International Line Stations. +From January 2014 to November 2015, he served as Vice President Project Quality. From November 2011 to December 2013, he served as Vice President +Newark Hub. From January 2010 to October 2011, he served as Vice President Security & Environment Affairs. Mr. Enqvist joined Continental Airlines, +Inc. ("Continental") in 1996. +Kate Gebo. Ms. Gebo has served as Executive Vice President Human Resources and Labor Relations of UAL and United since December 2017. From +November 2016 to November 2017, Ms. Gebo served as Senior Vice President, Global Customer Service Delivery and Chief Customer Officer of United. +From October 2015 to November 2016, Ms. Gebo served as Vice President of the Office of the Chief Executive Officer of United. From November 2009 to +October 2015, Ms. Gebo served as Vice President of Corporate Real Estate of United. +Brett J. Hart. Mr. Hart has served as President of UAL and United since May 2020. From March 2019 to May 2020, he served as Executive Vice +President and Chief Administrative Officer of UAL and United. From May 2017 to March 2019, he served as Executive Vice President, Chief +Administrative Officer and General Counsel of UAL and United. From February 2012 to May 2017, he served as Executive Vice President and General +Counsel of UAL and United. Mr. Hart served as acting Chief Executive Officer and principal executive officer of the Company, on an interim basis, from +October 2015 to March 2016. From December 2010 to February 2012, he served as Senior Vice President, General Counsel and Secretary of UAL, United +and Continental. From June 2009 to December 2010, Mr. Hart served as Executive Vice President, General Counsel and Corporate Secretary at Sara Lee +Corporation, a consumer food and beverage company. From March 2005 to May 2009, Mr. Hart served as Deputy General Counsel and Chief Global +Compliance Officer of Sara Lee Corporation. +Linda P. Jojo. Ms. Jojo has served as Executive Vice President and Chief Customer Officer of UAL and United since July 2022. From June 2017 to July +2022, she served as Executive Vice President Technology and Chief Digital Officer of UAL and United. From November 2014 to June 2017, she served as +Executive Vice President and Chief Information Officer of UAL and United. From July 2011 to October 2014, she served as Executive Vice President and +Chief Information Officer of Rogers Communications, Inc., a Canadian communications and media company. From October 2008 to June 2011, she served +as Chief Information Officer of Energy Future Holdings, a Dallas-based privately held energy company and electrical utility provider. +17 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_18.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..f437f47103e1c1c078d00198cc0da456ba34273f --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,20 @@ +Table of Contents +J. Scott Kirby. Mr. Kirby has served as Chief Executive Officer of UAL and United since May 2020. Mr. Kirby served as President of UAL and United +from August 2016 to May 2020. Prior to joining the Company, from December 2013 to August 2016, Mr. Kirby served as President of American Airlines +Group and American Airlines, Inc. Mr. Kirby also previously served as President of US Airways from October 2006 to December 2013. Mr. Kirby held +significant other leadership roles at US Airways and at America West prior to the 2005 merger of those carriers, including Executive Vice President—Sales +and Marketing (2001 to 2006); Senior Vice President, e-business (2000 to 2001); Vice President, Revenue Management (1998 to 2000); Vice President, +Planning (1997 to 1998); and Senior Director, Scheduling and Planning (1995 to 1998). Prior to joining America West, Mr. Kirby worked for American +Airlines Decision Technologies and at the Pentagon. +Michael Leskinen. Mr. Leskinen has served as Executive Vice President and Chief Financial Officer of UAL and United since September 2023. Mr. +Leskinen served as Vice President of Corporate Development and Investor Relations of United from April 2019 to September 2023. In 2021, he added the +title of President of UAV, an industry-first corporate venture capital fund that identifies and invests in opportunities to decarbonize air travel and enhance +the customer travel experience. From January 2018 to April 2019, Mr. Leskinen served as Managing Director of Investor Relations of UAL and United. +Prior to joining United, Mr. Leskinen was an executive director at J.P. Morgan Asset Management from 2013 to 2017, where he led the firm's investment +efforts in aerospace, defense, and airlines. From 2009 to 2013, he worked at Oppenheimer Funds focused on the aerospace sector. +Andrew Nocella. Mr. Nocella has served as Executive Vice President and Chief Commercial Officer of UAL and United since September 2017. From +February 2017 to September 2017, he served as Executive Vice President and Chief Revenue Officer of UAL and United. Prior to joining the Company, +from August 2016 to February 2017, Mr. Nocella served as Senior Vice President, Alliances and Sales of American Airlines, Inc. From December 2013 to +August 2016, he served as Senior Vice President and Chief Marketing Officer of American Airlines, Inc. From August 2007 to December 2013, he served +as Senior Vice President, Marketing and Planning of US Airways. +18 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_19.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..43cabead3e075c80659057df90a47fad8c6834d0 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,48 @@ +Table of Contents +ITEM 1A. RISK FACTORS. +Any of the risks and uncertainties described below could significantly and negatively affect our business operations, financial condition, operating results +(including components of our financial results), cash flows, prospects, reputation or credit ratings, which could cause the trading price of our common +stock to decline significantly. Additional risks and uncertainties that are not presently known to us, or risks that we currently consider immaterial, could +also impair our business operations, financial condition, operating results, cash flows, prospects, reputation or credit ratings. +Strategic and Business Development Risks +We may not be successful in executing elements of our strategic operating plan, which may have a material adverse impact on our business, financial +results and market capitalization. +United Next, the Company's strategic operating plan, includes firm orders of over 700 narrow and widebody aircraft, retrofitting plans and plans to increase +mainline daily departures and available seats across the Company's North American network. In developing our United Next plan, we made certain +assumptions including, but not limited to, customer demand (in light of changing economic conditions), fuel costs, delivery of aircraft, aircraft certification +approval timelines, labor market constraints and related costs, supply chain constraints, inflationary pressures, voluntary or mandatory groundings of +aircraft, our regional network, competition, market consolidation and other macroeconomic and geopolitical factors. We also subsequently adjusted certain +of our assumptions as a result of the increase in costs due to infrastructure improvements, new labor contracts and aircraft maintenance that were needed to +support our United Next plan as well as the expected delay in 737 MAX 10 aircraft deliveries. Actual conditions may be different from our assumptions at +any time and could cause the Company to further adjust its strategic operating plan. In addition, we cannot provide any assurance that we will be able to +successfully execute our strategic plan, that the growth that we anticipate will occur through execution of our strategic plan will not exacerbate any other +risk described in this Form 10-K (especially relating to fuel costs, the impact of economic pressures or geopolitical events, our supply chain or our ability to +attract, train and retain talent), that our strategic plan will not result in additional unanticipated costs, that our suppliers will timely provide adequate +products or support for our products (including but not limited to certification and delivery of aircraft) or that our strategic plan will result in improvements +in future financial performance. If we do not successfully execute our United Next or other strategic plans, or if actual results vary significantly from our +expectations, our business, operating results, financial condition and market capitalization could be materially and adversely impacted. The failure to +successfully structure our business to meet market conditions could have a material adverse effect on our business, operating results and financial +condition. +Changes in the Company's network strategy over time or other factors outside of the Company's control may make aircraft on order less economic for +the Company, result in costs related to modification or termination of aircraft orders or cause the Company to enter into orders for new aircraft on less +favorable terms, and any inability to accept or integrate new aircraft into the Company's fleet as planned could increase costs or affect the Company's +flight schedules. +The Company's orders for new aircraft are typically made years in advance of actual delivery of such aircraft and the financial commitment required for +purchases of new aircraft is substantial. As a result of our network strategy changing or our demand expectations not being realized, our preference for the +aircraft that we previously ordered may decrease; however, the Company may be responsible for material liabilities to its counterparties if it were to +attempt to modify or terminate any of its existing aircraft order commitments and our financial condition could be adversely impacted. These risks are +heightened as a result of the Company's sizeable United Next aircraft orders. Additionally, the Company may have a need for additional aircraft that are not +available under its existing orders and may seek to acquire aircraft from other sources, such as through lease arrangements, which may result in higher costs +or less favorable terms, or through the purchase or lease of used aircraft. The Company may not be able to acquire such aircraft when needed on favorable +terms or at all. +Furthermore, if, for any reason, the Company is unable or does not want to accept deliveries of new aircraft or integrate such new aircraft into its fleet as +planned, the Company may face higher financing and operating costs than planned or litigation risks and may be required to seek extensions of the terms +for certain leased aircraft or otherwise delay the exit of other aircraft from its fleet. Unanticipated extensions or delays may require the Company to operate +existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs, or reductions to the +Company's schedule, thereby reducing revenues. +The imposition of new tariffs, or any increase in existing tariffs, on the importation of commercial aircraft that the Company orders may also result in +higher costs. +Failure to effectively manage acquisitions, divestitures, investments, joint ventures and other portfolio actions could adversely impact our operating +results. In addition, any businesses or assets that we acquire in the future increase our exposure to unknown liabilities or other issues and also may +underperform as compared to expectations. +19 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_2.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f513bf8d180351c3258c41528d1927238d59dc7 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,36 @@ +Table of Contents +United Airlines Holdings, Inc. and Subsidiary Companies +United Airlines, Inc. and Subsidiary Companies +Annual Report on Form 10-K +For the Year Ended December 31, 2023 + + Page +PART I +Item 1. Business 3 +Information about Our Executive Officers 17 +Item 1A. Risk Factors 19 +Item 1B. Unresolved Staff Comments 33 +Item 1C. Cybersecurity 33 +Item 2. Properties 35 +Item 3. Legal Proceedings 36 +Item 4. Mine Safety Disclosures 37 +PART II +Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 +Item 6. [Reserved] 38 +Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 +Item 8. Financial Statements and Supplementary Data 51 +Combined Notes to Consolidated Financial Statements 67 +Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 +Item 9A. Controls and Procedures 99 +Item 9B. Other Information 102 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 102 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 102 +Item 11. Executive Compensation 102 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 102 +Item 13. Certain Relationships and Related Transactions, and Director Independence 102 +Item 14. Principal Accountant Fees and Services 103 +PART IV +Item 15. Exhibits and Financial Statement Schedules 104 +Item 16. Form 10-K Summary 104 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_20.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba55bdc7408f02a4726b234e450cbfe380023a2f --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,46 @@ +Table of Contents +An important part of the Company's strategy to expand its global network and operate an environmentally sustainable and responsible airline has included +making significant investments, both domestically and in other parts of the world, including in other airlines and other aviation industry participants, +producers of SAF and manufacturers of electric and other new generation aircraft. For instance, the Company plans to continue to make additional +investments through its corporate venture capital arm, UAV and as a limited partner of the Fund. However, since there are a limited number of potential +arrangements, and other airlines and industry participants seek to enter into similar relationships, this may make it difficult for the Company to complete +strategic investments on commercially reasonable terms or at all. +These investments are inherently risky and may not be successful. Future revenues, profits and cash flows of these and future investments and repayment of +invested or loaned funds may not materialize due to safety concerns, regulatory issues, supply chain constraints or other factors beyond our control. Where +we acquire debt or equity securities as all or part of the consideration for business development activities, such as in connection with a joint venture, the +value of those securities will fluctuate and may depreciate in value. We may not control the companies in which we make investments and, as a result, we +will have limited ability to determine their management, operational decisions, internal controls and compliance and other policies, which can result in +additional financial and reputational risks. Further, acquisitions and investments create exposure to assumed litigation and unknown liabilities, as well as +undetected internal control, regulatory compliance or other issues, or additional costs not anticipated at the time the transaction was completed, and our due +diligence efforts may not identify such liabilities or issues, or they may not be disclosed to us. +From time to time, we also divest assets. We may not be successful in separating any such assets, and losses on the divestiture of, or lost operating income +from, such assets may adversely affect our earnings. Any divestitures also may result in continued financial exposure to the divested businesses following +the transaction, such as through guarantees or other financial arrangements or potential litigation. +In addition, we have incurred, and may again in the future incur, asset impairment charges related to acquisitions, divestitures, investments or joint ventures +that have the effect of reducing our earnings. Moreover, new or revised accounting standards, rules and interpretations could result in changes to the +recognition of income and expense that may materially and adversely affect our financial results. +If the execution or implementation of acquisitions, divestitures, investments, joint ventures and other portfolio actions is not successful, it could adversely +impact our financial condition, cash flows and results of operations. In addition, due to the Company's substantial amount of debt, there are certain +limitations on the Company's business development capacity. Further, pursuing these opportunities may require us to obtain additional equity or debt +financing and could result in increased leverage and/or a downgrade of our credit ratings. +Business, Operational and Industry Risks +The Company could experience adverse publicity, harm to its brand, reduced travel demand, potential tort liability and operational restrictions as a +result of an accident, catastrophe or incident involving its aircraft or its operations or the aircraft or operations of another airline, which may result in +a material adverse effect on the Company's business, operating results or financial condition. +An accident, catastrophe or incident involving an aircraft that the Company operates, or an aircraft or aircraft type that is operated by another airline, or an +incident involving the Company's operations, or the operations of another airline, could have a material adverse effect on the Company if such accident, +catastrophe or incident created a public perception that the Company's operations, or the operations of its codeshare partners or regional carriers, are not +safe or reliable, or are less safe or reliable than other airlines. Further, any such accident, catastrophe or incident involving the Company, its regional +carriers or its codeshare partners could expose the Company to significant liability. Although the Company currently maintains liability insurance in +amounts and of the type the Company believes to be consistent with industry practice to cover damages arising from any such accident, catastrophe or +incident, and the Company's codeshare partners and regional carriers carry similar insurance and generally indemnify the Company for their operations, if +the Company's liability exceeds the applicable policy limits or the ability of another carrier to indemnify it, the Company could incur substantial losses +from an accident, catastrophe or incident, which may result in a material adverse effect on the Company's business, operating results or financial condition. +In addition, any such accident, catastrophe or incident involving the Company, its regional carriers or its codeshare partners could result in operational +restrictions on the Company, including voluntary or mandatory groundings of aircraft. Voluntary or involuntary groundings have also impacted, and could +in the future impact, the Company's financial results and operations in numerous ways, including reduced revenue, redistributions of other aircraft and +deferrals of capital expenditure and other spending. For example, in January 2024, the FAA issued an Emergency Airworthiness Directive suspending +service of all Boeing 737 MAX 9 aircraft operated by U.S. airlines, resulting in the grounding of all 79 of the Company's Boeing 737 MAX 9 aircraft, +which has negatively impacted the Company's financial performance in the first quarter of 2024. Previously, in +20 +The secret shape is a "triangle". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_21.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..0688c351fb5c5c1ea77e08c59388d1e93edee6de --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,47 @@ +Table of Contents +February 2021, the FAA issued an Emergency Airworthiness Directive regarding certain Boeing 777 Pratt & Whitney powered aircraft, which required the +Company to keep more than 50 aircraft out of service until required repairs were made to improve the safety of the engines. A prolonged period of time +operating a reduced fleet in these circumstances could result in a material adverse effect on the Company's business, operating results or financial +condition. +The global airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adverse +effect on our business, operating results and financial condition. +The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, +products, customer service and frequent flyer programs. Consolidation in the airline industry, the rise of well-funded government sponsored international +carriers, changes in international alliances, swaps of landing and slots and the creation of immunized JBAs have altered and are expected to continue to +alter the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global +networks and services and competitive cost structures. Open Skies agreements, including the longstanding agreements between the United States and each +of the EU, Canada, Japan, Korea, New Zealand, Australia, Colombia and Panama, as well as the more recent agreements between the United States and +each of Mexico, Brazil and the UK, may also give rise to better integration opportunities among international carriers. Movement of airlines between +current global airline alliances could reduce joint network coverage for members of such alliances while also creating opportunities for JBAs and bilateral +alliances that did not exist before such realignment. Further airline and airline alliance consolidations or reorganizations could occur in the future, and other +airlines participating in such activities may significantly improve their cost structures or revenue generation capabilities, thereby potentially making them +stronger competitors of the Company and impairing the Company's ability to realize expected benefits from its own strategic relationships. +Airlines also compete by increasing or decreasing their capacity, including route systems and the number of destinations served. Several of the Company's +domestic and international competitors have increased their international capacity by including service to some destinations that the Company currently +serves, causing overlap in destinations served and, therefore, increasing competition for those destinations. This increased competition in both domestic and +international markets may have a material adverse effect on the Company's business, operating results and financial condition. +The Company's U.S. operations are subject to competition from traditional network carriers, national point-to-point carriers and discount carriers, including +low-cost carriers and ultra-low-cost carriers that may have lower costs and provide service at lower fares to destinations also served by the Company. The +significant presence of low-cost carriers and ultra-low-cost carriers, which engage in substantial price discounting, may diminish our ability to achieve +sustained profitability on domestic and international routes and has also caused us to reduce fares for certain routes, resulting in lower yields on many +domestic markets. Our ability to compete in the domestic market effectively depends, in part, on our ability to maintain a competitive cost structure. If we +cannot maintain our costs at a competitive level, then our business, operating results and financial condition could continue to be materially and adversely +affected. In addition, our competitors have established new routes and destinations, including some at our hub airports, which may compete with our +existing routes and destinations and expansion plans. +Our international operations are subject to competition from both foreign and domestic carriers. For instance, competition is significant from government- +subsidized competitors from certain Middle East countries. These carriers have large numbers of international widebody aircraft on order and are +increasing service to the U.S. from their hubs in the Middle East. The government support provided to these carriers has allowed them to grow quickly, +reinvest in their product, invest in other airlines and expand their global presence. We also face competition from foreign carriers operating under "fifth +freedom" rights permitted under international treaties that allow certain carriers to provide service to and from stopover points between their home +countries and ultimate destinations, including points in the United States, in competition with service provided by us. +Through alliance and other marketing and codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international +transportation, such as services to and beyond traditional global gateway cities. Similarly, foreign carriers have obtained increased access to interior U.S. +passenger traffic beyond traditional U.S. gateway cities through these relationships. In addition, several JBAs among U.S. and foreign carriers have +received grants of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory. If we are not able to continue +participating in these types of alliance and other marketing and codesharing agreements in the future, our business, operating results and financial condition +could be materially and adversely affected. +Our MileagePlus frequent flyer program benefits from the attractiveness and competitiveness of United Airlines as a material purchaser of award miles and +the majority recipient for mileage redemption. If we are not able to maintain a competitive and attractive airline business, our ability to acquire, engage and +retain customers in the loyalty program may be adversely affected, which could adversely affect the loyalty program's and our operating results and +financial condition. +21 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_22.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b97f497a4eda39eafec404d91c3ac077a3476ba --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,43 @@ +Table of Contents +Further, our MileagePlus frequent flyer program also faces significant and increasing direct competition from the frequent flyer programs offered by other +airlines, as well as from similar loyalty programs offered by banks and other financial services companies. Competition among loyalty programs is intense +regarding customer acquisition incentives, the value and utility of program currency, rewards range and value, fees, required usage, and other terms and +conditions of these programs. If we are not able to maintain a competitive frequent flyer program, our ability to attract and retain customers to MileagePlus +and United alike may be adversely affected, which could adversely affect our operating results and financial condition. +Substantially all of the Company's aircraft, engines and certain parts are sourced from a limited number of suppliers; therefore, the Company would be +materially and adversely affected if it were unable to obtain timely deliveries, additional equipment or support from any of these suppliers. +The Company currently sources substantially all of its aircraft and many related aircraft parts from The Boeing Company ("Boeing") or Airbus S.A.S. +("Airbus"). In addition, our aircraft suppliers are dependent on other suppliers for certain other aircraft parts. Therefore, if the Company is unable to acquire +additional aircraft at acceptable prices from Boeing or Airbus, or if Boeing or Airbus fails to make timely deliveries of aircraft (whether as a result of +increased FAA oversight of the production process, any failure or delay in obtaining regulatory approval or certification for new model aircraft, such as the +737 MAX 10 aircraft, which has not received a type certificate from the FAA, manufacturing delays or otherwise) or to provide adequate support for its +products, including with respect to the aircraft subject to firm orders under our United Next plan, the Company's operations could be materially and +adversely affected. For example, due to the delay of the certification of the 737 MAX 10 aircraft and continued supply chain issues, the Company currently +expects a reduction in deliveries from Boeing during the next couple of years, which has caused the Company to rework its fleet plan and may impact our +financial position, results of operations and cash flows. +The Company is also dependent on a limited number of suppliers for engines and certain other aircraft parts and could, therefore, also be materially and +adversely affected in the event of the unavailability or increased cost of these engines and other aircraft parts. +Many of our suppliers are experiencing inflationary pressures, as well as disruptions due to the lingering impacts of global supply chain and labor market +constraints and related costs. If one or more of our suppliers, our contractors or their subcontractors continue to experience financial difficulties, delivery +delays or other performance problems, they may be unable to meet their commitments to us and our financial position, results of operations and cash flows +may continue to be adversely impacted. +Disruptions to our regional network and United Express flights provided by third-party regional carriers could adversely affect our business, operating +results and financial condition. +While the Company has contractual relationships that are material to its business with various regional carriers to provide regional aircraft service branded +as United Express that include contractually agreed performance metrics, each regional carrier is a separately certificated commercial air carrier, and the +Company does not control the operations of these carriers. A number of factors may impact the Company's regional network, including weather-related +effects, seasonality, equipment or software failures and cybersecurity attacks and any significant declines in demand for air travel services. +In addition, the decrease in qualified pilots driven primarily by changes to federal regulations has adversely impacted and could continue to adversely +impact the Company's regional flying. For example, the FAA's expansion of minimum pilot qualification standards, including a requirement that a pilot +have at least 1,500 total flight hours, as well as the FAA's revised pilot flight and duty time requirements under Part 117 of the Federal Aviation +Regulations, have contributed to a smaller supply of pilots available to regional carriers. The decrease in qualified pilots resulting from the regulations as +well as other factors, including a decreased student pilot population and a shrinking U.S. military from which to hire qualified pilots, has led to increased +competition from large, mainline carriers attempting to meet their hiring needs and has adversely impacted our regional carriers. United Express regional +carriers have been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, disruptions in +scheduled flights, increased costs of operations, financial difficulties and other adverse effects and these circumstances may become more severe in the +future and could cause a material adverse effect on our business. In response, the Company has been and may in the future be required to provide additional +financial compensation and other support to its regional carriers or reduce its regional carrier flying, which could require the Company to fly routes at a +greater cost, reduce the number of destinations the Company is able to serve or lead to negative public perceptions of the Company. +Disruptions to our regional networks, the pilot shortage or other factors could adversely affect our business, operating results and financial condition. +22 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_23.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e68ab1432ffc102b0533ebc964bf1a9a50251e5 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,46 @@ +Table of Contents +Unfavorable economic and political conditions, in the United States and globally, may have a material adverse effect on our business, operating results +and financial condition. +The Company's business and operating results are significantly impacted by U.S. and global economic and political conditions. The airline industry is +highly cyclical and the level of demand for air travel is correlated to the strength of the U.S. and global economies, including the strength of the domestic +and foreign economies, unemployment levels, consumer confidence levels and the availability of consumer and business credit. Air transportation is often a +discretionary purchase that leisure travelers may limit or eliminate during difficult economic times. Short-haul travelers, in particular, have the option to +replace air travel with surface travel. In addition, during periods of unfavorable economic conditions, business travelers historically have reduced the +volume of their travel, either due to cost-saving initiatives, the replacement of travel with alternatives such as videoconferencing or as a result of decreased +business activity requiring travel. Furthermore, an increase in price levels generally or in price levels in a particular sector (such as current rising +inflationary pressures related to domestic and global supply chain constraints, which have led to both overall price increases and pronounced price +increases in certain sectors) could result in a shift in consumer demand away from both leisure and business travel. Reduced or flat consumer spending may +drive us and our competitors to reduce or offer promotional prices, which would negatively impact our gross margin. Any of the foregoing would adversely +affect the Company's business and operating results. Significant declines in industry passenger demand, particularly with respect to the Company's business +and premium cabin travelers and a reduction in fare levels, as well as the continuing slow return of business travel demand to pre-COVID-19 levels, could +lead to a material reduction in revenue, changes to the Company's operations and deferrals of capital expenditure and other spending. Additionally, any +deterioration in global trade relations, such as increased tariffs or other trade barriers, could result in a decrease in the demand for international air travel. +The Company's business relies extensively on third-party service providers, including certain technology providers. Failure of these parties to perform +as expected, or interruptions in the Company's relationships with these providers or their provision of services to the Company, could have a material +adverse effect on the Company's business, operating results and financial condition. +The Company has engaged third-party service providers to perform a large number of functions that are integral to its business, including regional +operations, operation of customer service call centers, distribution and sale of airline seat inventory, provision of information technology infrastructure and +services, transmitting or uploading of data, provision of aircraft maintenance and repairs, provision of various utilities and performance of airport ground +services, aircraft fueling operations, catering services and air cargo handling services, among other vital functions and services. Although generally the +Company enters into agreements that define expected service performance and compliance requirements, there can be no assurance that our third-party +service providers will adhere to these requirements. Accordingly, any of these third-party service providers may materially fail to meet their service +performance commitments to the Company or may suffer disruptions to their systems, labor groups or supply chains that could impact their services. For +example, failures in certain third-party technology or communications systems may cause flight delays or cancellations. The failure of any of the +Company's third-party service providers to perform their service obligations adequately, or other interruptions of services, may reduce the Company's +revenues and increase its expenses, prevent the Company from operating its flights and providing other services to its customers or result in adverse +publicity or harm to our brand. We may also be subject to consequences from any illegal conduct of our third-party service providers, including for their +failure to comply with anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act. In addition, the Company's business and financial performance +could be materially harmed if its customers believe that its services are unreliable or unsatisfactory. +The Company may also have disagreements with such third-party providers and related contracts may be terminated or may not be extended or renewed. +For example, the number of flight reservations booked through third-party GDSs or OTAs may be adversely affected by disruptions in the business +relationships between the Company and these suppliers. Such disruptions, including a failure to agree upon acceptable contract terms when contracts expire +or otherwise become subject to renegotiation, may cause the Company's flight information to be limited or unavailable for display by the affected GDS or +OTA operator, significantly increase fees for both the Company and GDS/OTA users and impair the Company's relationships with its customers and travel +agencies. Any such disruptions or contract terminations may adversely impact our operations and financial results. +If we are not able to negotiate or renew agreements with third-party service providers, or if we renew existing agreements on less favorable terms, our +operations and financial results may be adversely affected. +Extended interruptions or disruptions in service at major airports where we operate could have a material adverse impact on our operations, including +our ability to operate our existing flight schedule and to expand or change our route network in the future, and space, facility and infrastructure +constraints at our hubs or other airports may prevent the Company from maintaining existing service and/or implementing new service in a +commercially viable manner. +23 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_24.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..e7f0d08fe53d1e742739a5af14e3282d2ab90cd7 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,46 @@ +Table of Contents +The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world. +An extended interruption or disruption at one of our hubs or other airports where we have a significant presence resulting from ATC delays, weather +conditions, natural disasters, growth constraints, relationships with or the performance of third-party service providers, cybersecurity incidents and other +failures of computer systems, disruptions to government agencies or personnel (including as a result of government shutdowns), regulatory changes, +disruptions at airport facilities or other key facilities used by us to manage our operations, labor relations and market constraints, power supplies, fuel +supplies, terrorist activities, international hostilities or other factors could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a material adverse impact on our business, operating results and financial condition. For example, we perform significant aircraft and +engine maintenance operations at our SFO airport hub and any disruption or interruption at our SFO hub could have a serious impact on our overall +operations. We have minimal control over the operation, quality or maintenance of these services or whether our suppliers will improve or continue to +provide services that are essential to our business. For example, because we prioritize operational excellence and continually work to optimize our route +network and schedule, in light of the industry-wide operational challenges at airports in our network that have limited our system-wide capacity (two of the +more prominent examples being the grounding of a number of the Company's transatlantic flights in response to the capacity cut by London Heathrow +during the summer of 2022 and the flight disruptions experienced at EWR during the summer of 2023), we have reconfigured our proposed flight schedule +and capacity to help improve our operational performance and our customers' experience. These industry-wide operational challenges have had a negative +impact on our business and operating results and are expected to continue. In the future, we may not be able to adjust our operations to mitigate their effect, +which may have a negative impact on our business, operating results, financial condition and liquidity and limit our ability to expand or change our route +network and execute our United Next strategy. +In addition, as airports around the world become more congested, space, facility and infrastructure constraints at our hubs or other airports where we +operate now or may operate in the future may prevent the Company from maintaining existing service and/or implementing new service in a commercially +viable manner because of a number of factors, including capital improvements at such airports being imposed by the relevant airport authorities without the +Company's approval. Capital spending projects of airport authorities currently underway and additional projects that we expect to commence over the next +several years are expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to recover their +investments through increased rental rates, landing fees and other facility costs. These actions have caused and may continue to cause the Company to +experience increased space rental rates at various airports in its network, including a number of our hubs and gateways, as well as increased operating costs. +Furthermore, the Company is not able to control decisions by other airlines to reduce their capacity, causing certain fixed airport costs to be allocated +among fewer total flights and resulting in increased landing fees and other costs for the Company. We have sufficient slots or analogous authorizations to +operate our existing flights and we have generally, but not always, been able to obtain the rights to expand our operations and to change our schedules, but +there can be no assurance that we can maintain existing service or implement new service in a cost-effective manner in the future. +Geopolitical conflict, terrorist attacks or security events may adversely affect our business, financial condition and results of operations. +As a global business with operations outside of the United States from which it derives significant operating revenues, volatile conditions in certain +international regions may have a negative impact on the Company's operating results and its ability to achieve its business objectives. The Company's +international operations are a vital part of its worldwide airline network. Political disruptions and instability in certain regions have negatively impacted the +demand and network availability for air travel, as well as fuel prices, and may continue to have a negative impact on these and other items. For example, +the suspensions of the Company's overflying in Russian airspace as a result of the Russia-Ukraine military conflict and to Tel Aviv as a result of the Israeli- +Hamas military conflict have significantly impacted our financial condition, cash flows and results of operations. In addition, terrorist attacks or +international hostilities, even if not made on or targeted directly at the airline industry, or the fear of or the precautions taken in anticipation of such attacks +(including elevated national threat warnings, travel restrictions, selective cancellation or redirection of flights and new security regulations) could +materially and adversely affect the Company and the airline industry. The Company's financial resources and insurance coverage may not be sufficient to +absorb the adverse effects of any future terrorist attacks, international hostilities or other security events, which could have a material adverse impact on the +Company's financial condition, liquidity and operating results. In addition, due to threats against the aviation industry, the Company has incurred, and may +continue to incur, significant expenditures to comply with security-related requirements to mitigate threats and protect the safety of our employees and +customers. +Any damage to our reputation or brand image could adversely affect our business or financial results. +We operate in a public-facing industry and maintaining a good reputation is critical to our business. The Company's reputation or brand image could beadversely impacted by any failure to maintain satisfactory practices for all of our operations and activities; any failure or perceived failure to achieve and/ormake progress toward our environmental, safety, diversity, equity +24 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_25.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f93c0d7e494b697680de6b2ce5084daa715963e --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,40 @@ +Table of Contents +and inclusion or other social and governance ("ESG") goals, which are aspirational and subject to risks and uncertainties that are outside of our control; ourstakeholders not being satisfied with our ESG goals or strategy or efforts to meet such goals; public pressure from investors or policy groups to change ourpolicies and strategies; customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, including greenwashingconcerns regarding our advertising campaigns and marketing programs related to our sustainability initiatives; deficiencies in the quantitative data that wedisclose in relation to our ESG goals; or customer perceptions of statements made by us, our employees and executives, agents or other third parties.Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial results, as well asrequire additional resources to rebuild our reputation. +Regulators, customers, investors, employees and other stakeholders are focusing more on ESG impacts of operations and related disclosures, which are +subject to rules, regulations and standards for collecting, measuring and reporting that are still developing, involve internal controls and processes that +continue to evolve, depend in part on third-party performance or data that is outside the Company's control and have resulted in, and are likely to continue +to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such +expectations, rules, regulations and standards. The ongoing relevance of our brand may depend on our ability to achieve our ESG goals, make progress on +our ESG initiatives and comply with applicable federal, state and international binding or non-binding legislation, regulation, standards and accords as well +as on the accuracy, adequacy or completeness of our disclosures relating to our ESG goals and initiatives and progress towards those goals. +Information Technology, Cybersecurity and Data Privacy Risks +The Company relies heavily on technology and automated systems to operate its business and any significant failure or disruption of, or failure to +effectively integrate and implement, these technologies or systems could materially harm its business or business strategy. +The Company depends on technology and automated systems, including artificial intelligence ("AI"), to operate its business, including, but not limited to, +computerized airline reservation systems, electronic tickets, electronic airport kiosks, demand prediction software, flight operations systems, in-flight +wireless internet, cloud-based technologies, technical and business operations systems and commercial websites and applications, including +www.united.com and the United Airlines mobile app. These systems could suffer substantial or repeated disruptions due to various events, some of which +are beyond the Company's control (including natural disasters (which may occur more frequently or intensely as a result of the impacts of climate change), +power failures, terrorist attacks, dependencies on third-party technology services, equipment or software failures, cybersecurity attacks, insider threats or +other security breaches and the deployment by certain wireless carriers of "5G" service networks), which could reduce the attractiveness of the Company's +services versus those of our competitors, materially impair our ability to market our services and operate our flights, result in the unauthorized release of +confidential or sensitive information, or information that should be protected from inadvertent disclosures, negatively impact our reputation among our +customers and the public, subject us to liability to third parties, regulatory action or contract termination and result in other increased costs, lost revenue +and the loss of, or compromise to the integrity, availability or confidentiality of, important data. These systems have in the past and may in the future be +subject to failure, disruption or cyber incidents as a result of these or other factors. Substantial or repeated systems failures or disruptions may adversely +affect the Company's business, operating results, financial condition and business strategy. We have cybersecurity frameworks, resiliency initiatives and +disaster recovery plans in place designed to prevent and mitigate disruptions, and we continue to invest in improvements to these initiatives and plans. We +also maintain property and business interruption insurance. However, these measures may not be adequate to prevent or mitigate disruptions or provide +coverage for the Company's associated costs, some of which may be unforeseeable. +The Company may also face challenges in implementing, integrating and modifying the automated systems and technologies required to operate its +business or new systems and technologies designed to enhance its business, each of which may require significant expenditures, human resources, the +development of effective internal controls and the transformation of business and financial processes. Our competitors or other third parties may +incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our +results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, +inaccurate, or biased, our business, reputation, financial condition, and results of operations may be adversely affected. AI also presents emerging ethical +issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution +of AI, including proposed government regulation of AI, may require significant resources to develop, test and maintain our AI platform and services to help +us implement AI in a compliant and ethical manner in order to minimize any adverse impact to our business. If the Company is generally unable to timely +or effectively implement, integrate or modify its systems and technology, the Company's operations could be adversely affected. +Increasing privacy, data security and cybersecurity obligations or a significant data breach may adversely affect the Company's business. +25 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_26.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ca5967362e60da9969f492439d0c1b7700d9714 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,48 @@ +Table of Contents +In our regular business operations, we collect, process, store and transmit to commercial partners sensitive data, including personal information of our +customers and employees such as payment processing information and information of our business partners, to provide our services and operate our +business. +The Company must manage increasing legislative, regulatory and consumer focus on privacy issues, data security and cybersecurity risk management in a +variety of jurisdictions domestically and across the globe. For example, the EU's General Data Protection Regulation imposes significant privacy and data +security requirements, as well as potential for substantial penalties for non-compliance that have resulted in substantial adverse financial consequences to +non-compliant companies. Depending on the regulatory interpretation and enforcement of emerging data protection regulations and industry standards, the +Company's business operations could be impacted, up to and including being unable to operate, within certain jurisdictions. Also, some of the Company's +commercial partners, such as credit card companies, have imposed data security standards that the Company must meet. The Company will continue its +efforts to meet its privacy, data security and cybersecurity risk management obligations; however, it is possible that certain new obligations or customer +expectations may be difficult to meet and could require changes in the Company's operating processes and increase the Company's costs. Any significant +liabilities associated with violations of any related laws or regulations could also have an adverse effect on our business, operating results, financial +condition and liquidity, reputation and consumer relationships. +Additionally, the Company must manage the increasing threat of continually evolving cybersecurity risks. Our network, systems and storage applications, +and those systems and applications maintained by our third-party commercial partners (such as aircraft and engine suppliers, cloud computing companies, +credit card companies, regional airline carriers and international airline partners) have been and likely will continue to be subject to attempts to gain +unauthorized access, breaches, malfeasance or other system disruptions, including those involving criminal hackers, denial of service attacks, hacktivists, +state-sponsored actors, corporate espionage, employee malfeasance and human or technological error. In some cases, it is difficult to anticipate or to detect +immediately such incidents and the damage caused thereby, and we may not be able to realize the benefits of our proactive defense measures and may +experience operational difficulty in implementing them. Our use of AI applications has resulted in, and may in the future result in cybersecurity incidents +that implicate the personal data of our customers, employees or users of such applications. In addition, as attacks by cybercriminals and nation state actors +become more sophisticated, frequent and intense, the costs of proactive defense measures have increased and will likely continue to increase. Furthermore, +the Company's remote work arrangements may make it more vulnerable to targeted activity from cybercriminals and significantly increase the risk of +cyberattacks or other security breaches. While we continually work to safeguard our network, systems and applications, including through risk assessments, +system monitoring, cybersecurity and data protection policies, processes and technologies and employee awareness and training, and seek to require that +third-parties adhere to security standards, there is no assurance that such actions will be sufficient to prevent actual or perceived cybersecurity incidents or +data breaches or the damages and impacts to our business that result therefrom. +Any such cybersecurity incident or data breach could result in significant costs, including monetary damages, operational impacts, including service +interruptions and delays, and reputational harm. Furthermore, the loss, disclosure, misappropriation of or access to sensitive Company information, +customers', employees' or business partners' information or the Company's failure to meet its privacy or data protection obligations could result in legal +claims or proceedings, penalties and remediation costs. A significant data breach or the Company's failure to meet its data privacy or data protection +obligations may adversely affect the Company's operations, reputation, relationships with our business partners, business, operating results, financial +condition and business strategy. +Increased use of social media platforms present risks and challenges. +We are increasing our use of social media to communicate Company news and events. The inappropriate and/or unauthorized use of certain media vehicles +could cause brand damage or information leakage or could lead to legal implications, including from the improper collection and/or dissemination of +personally identifiable information from employees, customers or other stakeholders. In addition, negative or inaccurate posts or comments about us on any +social networking website could damage our reputation, brand image and goodwill. Further, the disclosure of non-public Company-sensitive information by +our workforce or others, whether intentional or unintentional, through external media channels could lead to information loss and reputational or +competitive harm. +Human Capital Management Risks +Union disputes, employee strikes or slowdowns, and other labor-related disruptions or regulatory compliance costs could adversely affect the +Company's operations and could result in increased costs that impair its financial performance. +United is a highly unionized company. As of December 31, 2023, the Company and its subsidiaries had approximately 103,300 employees, of whom +approximately 83% were represented by various U.S. labor organizations. See Part I, Item 1. Business—Human Capital Management and Resources of this +report for additional information on our represented employee groups and +26 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_27.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..43789b02b7a85ea95be08fc6c5a4733e042b95eb --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,47 @@ +Table of Contents +collective bargaining agreements. There is a risk that unions or individual employees might pursue judicial or arbitral claims arising out of changes +implemented as a result of the Company entering into collective bargaining agreements with its represented employee groups. There is also a possibility +that employees or unions could engage in job actions such as slowdowns, work-to-rule campaigns, sick-outs or other actions designed to disrupt the +Company's normal operations, in an attempt to pressure the Company in collective bargaining negotiations. Although the Railway Labor Act makes such +actions unlawful until the parties have been lawfully released to self-help, and the Company can seek injunctive relief against premature self-help, such +actions can cause significant harm even if ultimately enjoined. Similarly, if the operations of our third-party regional carriers, ground handlers or other +vendors are impacted by labor-related disruptions, our operations could be adversely affected. In addition, collective bargaining agreements with the +Company's represented employee groups increase the Company's labor costs and such costs could become material. We remain in negotiations regarding +certain of these collective bargaining agreements and anticipate that any new contracts involving the relevant labor groups may include material increases +in salaries and other benefits, which would significantly increase our labor expense. Furthermore, there is increasing litigation in the airline industry over +the application of state and local employment and labor laws to airline employees, particularly those based in California. For example, the U.S. Supreme +Court denied review of a Ninth Circuit ruling which held that federal law did not preempt California state meal and rest break laws from applying to certain +California based flight attendants. This decision adversely affects the Company's defenses with respect to certain employee groups in California and it may +give rise to additional litigation in these and other areas previously found to be preempted by federal law. The Company is a defendant in a number of +proceedings regarding alleged non-compliance with wage and hour laws. Adverse decisions in these cases could adversely impact our operational +flexibility, uniform application of our negotiated collective bargaining agreements, and result in imposition of damages and fines which could be +significant. +If we are unable to attract, train or retain skilled personnel, including our senior management team or other key employees, our business could be +adversely affected. +Much of our future success is largely dependent on our continued ability to attract, train and retain skilled personnel with industry experience and +knowledge, including our senior management team and other key employees. Competition for qualified talent in the aviation industry is intense and labor +market constraints may arise in the future. If we are unable to attract, train and retain talented, highly qualified employees or experience a shortage of +skilled labor, the cost of hiring and retaining quality talent could materially increase and our operations could continue to be impacted, which could impair +our ability to adjust capacity or otherwise execute our strategic operating plan. In addition, if we are unable to effectively provide for the succession of +senior management or other key employees, our business, ability to execute our strategic operating plan or company culture may be adversely affected. +Regulatory, Tax, Litigation and Legal Compliance Risks +The airline industry is subject to extensive government regulation, which imposes significant costs and may adversely impact our business, operating +results and financial condition. +Airlines are subject to extensive regulatory and legal oversight. Compliance with U.S. and international regulations imposes significant costs and may have +adverse effects on the Company. +United provides air transportation under certificates of public convenience and necessity issued by the DOT. If the DOT modified, suspended or revoked +these certificates, it could have a material adverse effect on the Company's business. The DOT also regulates consumer protection and, through its +investigations or rulemaking authority (including, for example, the DOT's recent enforcement settlement against Southwest Airlines for its operational +disruption resulting in an announced fine of $140 million, and any rulemakings or initiatives in response to the Executive Order on Promoting Competition +in the American Economy issued by the President on July 9, 2021), could impose restrictions that materially impact the Company's business. United also +operates pursuant to an air carrier operating certificate issued by the FAA and FAA orders and directives have previously resulted in the temporary +grounding of an entire aircraft type when the FAA identifies design, manufacturing, maintenance or other issues requiring immediate corrective action +(including the FAA Emergency Airworthiness Directives suspending service of the Company's Boeing 737 MAX 9 aircraft in January 2024 and grounding +our Boeing 777 Pratt & Whitney powered aircraft in February 2021), which has had and could in the future have a material effect on the Company's +business, operating results and financial condition. +In 2018, the U.S. Congress approved a five-year reauthorization for the FAA, which encompasses a range of policy issues related to aviation tax, airline +customer service and aviation safety. The current authorization was recently extended to March 8, 2024, and the legislative process to renew this +authorization (the "FAA Authorization Renewal") could impact the Company by imposing new rules or regulations concerning, among other things, airline +customer service, aviation safety, labor, managing new entrants in the U.S. national airspace system, as well as new or increased fees or taxes intended to +fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal may materially impact our operations and costs. +27 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_28.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..70a13758bb5a0926cc49667fce31c1fba546f09e --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,45 @@ +Table of Contents +Additionally, the U.S. Congress may consider legislation related to environmental issues relevant to the airline industry, such as the implementation of +CORSIA, which could negatively impact the Company and the airline industry. +The Company's operations may also be adversely impacted due to the existing antiquated ATC system utilized by the U.S. government and regulated by the +FAA, which may not be able to effectively handle projected future air traffic growth. The outdated ATC system has led to short-term capacity constraints +imposed by government agencies and has resulted in delays and disruptions of air traffic during peak travel periods in certain markets due to its inability to +handle demand and reduced resiliency in the event of a failure causing flight cancellations and delays. Failure to update the ATC system in a timely manner +and the substantial funding requirements of a modernized ATC system that may be imposed on air carriers may have an adverse impact on the Company's +financial condition or operating results. +Access to slots at several major U.S. airports and many foreign airports served by the Company is subject to government regulation on airspace +management and competition that might limit the number of slots or change the rules on the use and transfer of slots. If slots are eliminated at one of our +hubs or other airports, or if the number of hours of operation governed by slots is reduced at an airport, the lack of controls on take-offs and landings could +result in greater congestion both at the affected airport and in the regional airspace and could significantly impact the Company's operations. Similarly, a +government or regulatory agency, including DOT, could choose to impose slot restrictions at one of our hubs or other airports or grant increased access to +another carrier and limit or reduce our operations at an airport, whether or not slot-controlled, which could have significant impact on our operations. The +DOT (including FAA) may limit the Company's airport access by limiting the number of departure and arrival slots at congested airports, which could +affect the Company's ownership and transfer rights, and local airport authorities may have the ability to control access to certain facilities or the cost to +access their facilities, which could have an adverse effect on the Company's business. If the DOT were to take actions that adversely affect the Company's +slot holdings, the Company could incur substantial costs to preserve its slots or may lose slots. +The Company currently operates a number of flights on international routes under government arrangements, regulations or policies that designate the +number of carriers permitted to operate on such routes, the capacity of the carriers providing services on such routes, the airports at which carriers may +operate international flights or the number of carriers allowed access to particular airports. Applicable arrangements between the United States and foreign +governments (such as Open Skies) may be amended from time to time, government policies with respect to airport operations may be revised and the +availability of appropriate slots or facilities may change, which could have a material adverse impact on the Company's financial condition and operating +results and could result in the impairment of material amounts of related tangible and intangible assets. For instance, the COVID-19 pandemic resulted in +increased regulatory burdens in the U.S. and around the globe, which included closure of international borders to flights and/or passengers from specific +countries, passenger and crew quarantine requirements and other regulations promulgated to protect public health but that have had and may continue to +have a negative impact on travel and airline operations. +In addition, disruptions to the Company's business could result from the deployment of new cellular networks (e.g., "5G") by wireless carriers, which, due +to potential interference with aircraft systems, could cause flights to be cancelled or diverted, which in turn could affect consumer perceptions of the safety +of air travel. For example, over the past two years regulators have addressed potential "5G" interference on a temporary and piecemeal basis tailored to +specific aircraft and airports, which could occur again. Systematic regulation of the overlap between aviation systems and cellular networks may not occur +in the near term or may not involve terms that are favorable to the Company. +Moreover, any legislation that would result in a reshaping of the benefits that the Company is able to provide to its consumers through the co-branded +credit cards issued by our partner could also materially negatively affect the Company's profitability and competitive position. +In addition, competition from revenue-sharing JBAs and other alliance arrangements by and among other airlines could impair the value of the Company's +business and assets on the Open Skies routes. The Company's plans to enter into or expand U.S. antitrust immunized alliances and JBAs on various +international routes are subject to receipt of approvals from applicable U.S. federal authorities and other applicable foreign government clearances or +satisfaction of other applicable regulatory requirements. There can be no assurance that such approvals and clearances will be granted or will continue in +effect upon further regulatory review or that changes in regulatory requirements or standards can be satisfied. +See Part I, Item 1. Business—Industry Regulation, of this report for additional information on government regulation impacting the Company. +Current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or agreement relating to these actions, +could have a material adverse impact on the Company. +28 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_29.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..36c9016bc818e108375217eba842b979305f0d01 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,46 @@ +Table of Contents +From time to time, we are subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by +governmental agencies, including as described in Part I, Item 3. Legal Proceedings, of this report. In addition, the Company was subject to an increased risk +of litigation and other proceedings as a result of the COVID-19 pandemic and responsive measures. For example, the Company is involved in litigation +relating to its vaccination requirements for employees. No assurances can be given that the results of these or new matters will be favorable to us. An +adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition +and operating results, including as a result of non-monetary remedies, and could also result in adverse publicity. Defending ourselves in these matters may +be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management's time +and attention from the operation of our business, which could impede our ability to achieve our business objectives. Additionally, any amount that we may +be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance. If we fail to comply with the terms contained in any +settlement, order or agreement with a governmental authority relating to these matters, we could be subject to criminal or civil penalties, which could have +a material adverse impact on the Company. Under our charter and certain indemnification agreements that we have entered into (and may in the future enter +into) with our officers, directors and certain third parties, we could be required to indemnify and advance expenses to them in connection with their +involvement in certain actions, suits, investigations and other proceedings. Any of these payments may be material. +We are subject to many forms of environmental regulation and liability as well as risks associated with climate change and may incur substantial costs +as a result. In addition, failure to achieve or demonstrate progress towards our climate goals may expose us to liability and reputational harm. +Many aspects of the Company's operations are subject to increasingly stringent federal, state, local and international laws regarding the environment, +including those relating to water discharges, safe drinking water and the use and management of hazardous materials and wastes. Compliance with existing +and future environmental laws and regulations has required and may in the future require significant expenditures and operational changes. Violations have +led and may in the future lead to significant fines, penalties, lawsuits and reputational harm. In addition, we have in the past been identified and may in the +future be identified as a responsible party for environmental investigation and remediation costs under applicable environmental laws due to the disposal or +release of hazardous substances generated by our operations, including PFAS, which are expected to be designated by U.S. EPA as hazardous substances +under the Comprehensive Environmental Response, Compensation & Liability Act. We could also be subject to environmental liability claims from various +parties, including airport authorities and other third parties, related to our operations at our owned or leased premises, including our use of PFAS-containing +fire suppression systems as required by fire codes, or the off-site disposal of waste generated at our facilities. +As discussed in Part I, Item 1. Business—Environmental, Social and Governance Approach—Environmental Sustainability Strategy, the Company has +made several commitments regarding its intended reduction of carbon emissions, including reducing its GHG emissions by 100% by 2050 and by reducing +its carbon emission intensity by 50% by 2035 compared to 2019. The Company has incurred, and expects to continue to incur, costs to achieve its goal of +net zero carbon emissions, which will involve a transition to lower-carbon technologies (such as SAF), and to comply with environmental sustainability +legislation and regulation and non-binding standards and accords. Such activity may require the Company to modify its supply chain practices, make +capital investments to modify certain aspects of its operations or increase its operating costs (including fuel costs). The potential transition cost to a lower- +carbon economy could be prohibitively expensive without appropriate government policies and incentives in place. The precise nature of future binding or +non-binding legislation, regulation, standards and accords in this area of increased focus by global, national and regional regulators is difficult to predict +and the financial impact to the Company would likely be significant if future legal standards do not align with the Company's plans to achieve its climate +goals or if U.S. legislation establishing financial incentives to accelerate the production of SAF development expires and is not renewed. For instance, +CORSIA-related costs cannot be fully predicted at this time, but the program, which requires the purchasing of carbon offsets, is expected to increase +operating costs for airlines that operate internationally. There is also a risk that the increased regulatory focus on airline GHG emissions could result in a +patchwork of inconsistent or conflicting regional requirements that could unduly shift excessive cost burden to airlines and inhibit the development of +carbon reduction technologies that the Company needs to reach its climate goals. The Company believes that climate change presents, along with +challenges, strategic opportunities and that the sustainability-related solutions the Company is pursuing to advance its climate goals will help mitigate +several of these potential risks posed by the transition to a lower-carbon economy. While the Company has not yet purchased carbon offsets for CORSIA +compliance, the Company anticipates being required to do so by January 2028 if a regulatory framework to implement CORSIA within the United States is +established. There is a risk that insufficient CORSIA-eligible carbon offsets will be available for purchase for CORSIA compliance, leading to potential +regulatory enforcement risks. There is also a risk that any carbon offsets purchased by the Company for CORSIA compliance, even if accepted by +regulators, could be viewed by third parties as not sufficiently reflecting real, verifiable, and additional GHG reductions, leading to reputational harm. +29 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_3.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..807f1334735946feaec9527abe6c2363ca33bfe3 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,45 @@ +Table of Contents +This Annual Report on Form 10-K ("Form 10-K") contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of +1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking +statements represent our expectations and beliefs concerning future results or events, based on information available to us on the date of the filing of this +Form 10-K, and are subject to various risks and uncertainties. Factors that could cause actual results or events to differ materially from those referenced in +the forward-looking statements are listed in Part I, Item 1A. Risk Factors and in Part II, Item 7. Management's Discussion and Analysis of Financial +Condition and Results of Operations. We disclaim any intent or obligation to update or revise any of the forward-looking statements, whether in response +to new information, unforeseen events, changed circumstances or otherwise, except as required by applicable law. +PART I +ITEM 1. BUSINESS. +Overview +United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned +subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). United's shared purpose is "Connecting People. Uniting the +World." United has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, +Los Angeles, New York/Newark, San Francisco and Washington, D.C. +As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. +United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises +approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their +individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are +separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of +UAL and United. +The Company's principal executive office is located at 233 South Wacker Drive, Chicago, Illinois 60606 (telephone number (872) 825-4000). The +Company's website is located at www.united.com and its investor relations website is located at ir.united.com. The information contained on or connected +to the Company's websites is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed with the +U.S. Securities and Exchange Commission ("SEC"). The Company's filings with the SEC, including annual reports on Form 10-K, quarterly reports on +Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as well as UAL's proxy statement for its annual meeting of stockholders, are +accessible without charge on the Company's investor relations website, as soon as reasonably practicable, after we electronically file such material with, or +furnish such material to, the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. Such filings are also available on the SEC's website at +www.sec.gov. +Operations +The Company transports people and cargo throughout North America and to destinations in Asia, Europe, Africa, the Pacific, the Middle East and Latin +America. UAL, through United and its regional carriers, operates across six continents, with hubs at Chicago O'Hare International Airport ("ORD"), +Denver International Airport ("DEN"), George Bush Intercontinental Airport ("IAH"), Los Angeles International Airport ("LAX"), Newark Liberty +International Airport ("EWR"), San Francisco International Airport ("SFO"), Washington Dulles International Airport ("IAD") and A.B. Won Pat +International Airport ("GUM"). +All of the Company's domestic hubs are located in large business and population centers, contributing to a large amount of "origin and destination" +traffic. The hub and spoke system allows us to transport passengers between a large number of destinations with substantially more frequent service than if +each route were served directly. The hub system also allows us to add service to a new destination from a large number of cities using only one or a limited +number of aircraft. As discussed under Alliances below, United is a member of Star Alliance, the world's largest alliance network. +United Next. Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on +the customer experience and earnings power of our business. As part of our United Next plan, in September 2023, United exercised options to purchase 50 +Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In +addition, United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights +to purchase up to +3 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_30.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c6f9690607c4631458a0b517f37c06073c7b306 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,49 @@ +Table of Contents +There can be no assurance of the extent to which any of our climate goals will be achieved or that any current or future investments that we make in +furtherance of achieving our climate goals will produce the expected results or meet stakeholders' evolving expectations. Moreover, future events could +lead the Company to prioritize other nearer-term interests over progressing toward our current climate goals based on business strategy, economic, +regulatory and social factors or pressure from investors, activist groups or other stakeholders. If we fail—or are perceived to fail—to meet or properly +report on our progress toward achieving our climate change goals and commitments, we could face adverse publicity and reactions from investors, activist +groups, or other stakeholders, which could result in reputational harm, liability or other adverse effects to the Company. In addition, the Company believes +it is possible that, in the future, segments of the public may choose to fly less frequently as a result of negative perception of the environmental impact of +air travel or fly on an airline based on carriers' GHG emissions or which carrier they perceive as operating in a manner that is more sustainable to the +climate, which presents both a challenge and an opportunity for the Company and is why the Company is resolute in attaining its mid-term and long-term +climate goals; if this trend materializes, the Company's results of operations could be adversely impacted and those impacts could be exacerbated if the +Company fails to meet or properly report on its climate change goals and commitments. Moreover, we could also be subject to climate litigation, as groups, +individuals, and governmental authorities affected by climate change seek to recover climate-related damages from entities they perceive as being partially +responsible for human-induced climate change because of the emission of GHGs from their operations. +The Company's key pathways to achieving its climate goals include investing in and using more SAF, reducing its conventional jet fuel consumption and +working with strategic partners to advance the future of more sustainable flight. The Company has been able to increase its purchases of SAF in recent +years due to its corporate customers' funding of the price premium for SAF through the Company's Eco-Skies Alliance, but the willingness of corporate +customers to assist the Company in covering the price premium for SAF in the future could decrease, including based on economic factors or concerns +regarding the validity of a book and claim approach for claiming the emissions reductions from SAF, or emerging SAF certification schemes developed by +non-governmental organizations or practices whereby corporate customers purchase the environmental attributes from SAF directly from fuel producers, +bypassing the airlines. +The Company may incur substantial costs and operational disruptions as a result of both its physical risks (such as extreme weather conditions or rising sea +levels) and transition risks (such as regulatory or technological changes) associated with climate change. Climate change is expected to increase the +frequency, severity, unpredictability and duration of severe weather events and other natural cycles and could affect travel demand as well as result in +increases in delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather, any of which could result in a significant loss +of revenue and higher costs. In addition, certain of our operations and facilities around the world are in locations that may be impacted by the physical +impacts of climate change and we could incur significant costs to improve the climate resiliency of our infrastructure and supply chain and otherwise +prepare for, respond to, and mitigate the effects of climate change. We are not able to reasonably predict the future materiality of any potential losses or +costs associated with the effects of climate change. +See Part I, Item 1. Business—Industry Regulation—Environmental Regulation, of this report for additional information on environmental regulation +impacting the Company. +Market, Liquidity, Accounting and Financial Risks +High and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel could have a material adverse impact on the Company's strategic +plans, operating results, financial condition and liquidity. +Aircraft fuel is critical to the Company's operations and is one of our largest operating expenses. During the year ended December 31, 2023, the Company's +fuel expense was approximately $12.7 billion. The timely and adequate supply of fuel to meet operational demand depends on the continued availability of +reliable fuel supply sources as well as related service and delivery infrastructure. Although the Company has some ability to cover short-term fuel supply +and infrastructure disruptions at some major demand locations, it depends significantly on the continued performance of its vendors and service providers +to maintain supply integrity. Consequently, the Company can neither predict nor guarantee the continued timely availability of aircraft fuel throughout the +Company's system. +Aircraft fuel has historically been the Company's most volatile operating expense due to the highly unpredictable nature of market prices for fuel. The +Company generally sources fuel at prevailing market prices, which have historically fluctuated substantially in short periods of time and continue to be +highly volatile due to a multitude of unpredictable factors beyond the Company's control, including changes in global crude oil prices, the balance between +aircraft fuel supply and demand, natural disasters, prevailing inventory levels and fuel production and transportation infrastructure. Prices of fuel are also +impacted by indirect factors, such as geopolitical events, economic growth indicators, fiscal/monetary policies, fuel tax policies, changes in regulations, +environmental concerns and financial investments in energy markets. Both actual changes in these factors, as well as changes in related market +expectations, can potentially drive rapid changes in fuel prices in short periods of time. Rising fuel +30 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_31.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..73ffafc0a40a4bd391663abeb4442aac8520aba2 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,44 @@ +Table of Contents +prices can also lead to constraints on the Company's regional partners, reduced capital available for other spending or other outcomes that could adversely +impact the Company. +Given the highly competitive nature of the airline industry, the Company historically had limited ability to, and may not be able to in the future, increase its +fares and fees sufficiently to offset the full impact of increases in fuel prices, especially if these increases are significant, rapid and sustained. Further, any +such fare or fee increase may not be sustainable, may reduce the general demand for air travel and may also eventually impact the Company's operations, +strategic growth and investment plans for the future. In addition, decreases in fuel prices for an extended period of time may result in increased industry +capacity, increased competitive actions for market share and lower fares or surcharges. If fuel prices were to then subsequently rise quickly, there may be a +lag between the rise in fuel prices and any improvement of the revenue environment. +The Company does not currently hedge its future fuel requirements. However, to the extent the Company decides to start a hedging program to hedge a +portion of its future fuel requirements, such hedging program may not be successful in mitigating higher fuel costs and any price protection provided may +be limited due to the choice of hedging instruments and market conditions, including breakdown of correlation between hedging instrument and market +price of aircraft fuel and failure of hedge counterparties. To the extent that the Company decides to use hedge contracts that have the potential to create an +obligation to pay upon settlement if fuel prices decline significantly, such hedge contracts may limit the Company's ability to benefit fully from lower fuel +prices in the future. If fuel prices decline significantly from the levels existing at the time the Company enters into a hedge contract, the Company may be +required to post collateral (margin) beyond certain thresholds. There can be no assurance that the Company's hedging arrangements, if any, would provide +any particular level of protection against rises in fuel prices or that its counterparties will be able to perform under the Company's hedging arrangements. +Additionally, deterioration in the Company's financial condition could negatively affect its ability to enter into hedge contracts in the future. +The Company has a significant amount of financial leverage from fixed obligations and insufficient liquidity may have a material adverse effect on the +Company's financial condition and business. +The Company has a significant amount of financial leverage from fixed obligations, including aircraft lease and debt financings, leases of airport property, +secured bonds, secured loan facilities and other facilities, and other material cash obligations. In addition, the Company has substantial noncancelable +commitments for capital expenditures, including for the acquisition of new aircraft and related spare engines. If the Company's liquidity is materially +diminished, the Company's substantial level of indebtedness, the Company's non-investment grade credit ratings and the lack of availability of Company +assets as collateral for loans or other indebtedness may make it difficult for the Company to raise additional capital if needed to meet its liquidity needs on +acceptable terms, or at all, and the Company may not be able to timely pay its leases and debts or comply with material provisions of its contractual +obligations, including covenants under its financing and credit card processing agreements. +In addition to the foregoing, the degree to which we are leveraged could have important consequences to holders of our securities, including the following: +(1) we must dedicate a substantial portion of cash flow from operations to the payment of principal and interest on applicable indebtedness, which, in turn, +reduces funds available for operations and capital expenditures; (2) our flexibility in planning for, or reacting to, changes in the markets in which we +compete may be limited; (3) we may be at a competitive disadvantage relative to our competitors with less indebtedness; (4) we are rendered more +vulnerable to general adverse economic and industry conditions; (5) we are exposed to increased interest rate risk given that a portion of our indebtedness +obligations are at variable interest rates; and (6) our credit ratings may be reduced and our debt and equity securities may significantly decrease in value. +See Part II, Item 7., Management's Discussion and Analysis of Financial Condition and Results of Operations, of this report for additional information +regarding the Company's liquidity. +Agreements governing our debt include financial and other covenants. Failure to comply with these covenants could result in events of default. +Our financing agreements include various financial and other covenants. Certain of these covenants require UAL or United, as applicable, to maintain +minimum liquidity and/or minimum collateral coverage ratios. UAL's or United's ability to comply with these covenants may be affected by events beyond +its control, including the overall industry revenue environment, the level of fuel costs and the appraised value of the collateral. In addition, our financing +agreements contain other negative covenants customary for such financings. If we fail to comply with these covenants and are unable to remedy or obtain a +waiver or amendment, an event of default would result. +If an event of default were to occur, the lenders could, among other things, declare outstanding amounts immediately due and payable. In addition, an event +of default or declaration of acceleration under one financing agreement could also result in an +31 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_32.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..6519cc061cb0499c61f4c22c992bf1ea3fa0c5d9 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,47 @@ +Table of Contents +event of default under other of our financing agreements due to cross-default and cross-acceleration provisions. The acceleration of significant amounts of +debt could require us to renegotiate, repay or refinance the obligations under our financing arrangements, and there can be no assurance that we will be able +to do so on commercially reasonable terms or at all. +The MileagePlus Financing agreements in particular contain stringent covenants, limit our flexibility to manage our capital structure and limit our ability to +make financial and operational changes to the MileagePlus program. If we were to default under the MileagePlus Financing agreements, the lenders' +exercise of remedies could result in our loss of the MileagePlus program, which would have a material adverse effect on our business, results of operations +and financial condition. As a result we may take actions to ensure that the MileagePlus Financing debt is satisfied or that the lenders' remedies under such +debt are not exercised, potentially to the detriment of our other creditors. +The Company's ability to use its net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S. federal +income tax purposes may be significantly limited due to various circumstances, including certain possible future transactions involving the sale or +issuance of UAL common stock, or if taxable income does not reach sufficient levels. +As of December 31, 2023, UAL reported consolidated U.S. federal net operating loss ("NOL") carryforwards of approximately $12.0 billion. The +Company's ability to use its NOL carryforwards and certain other tax attributes will depend on the amount of taxable income it generates in future periods +and, as a result, certain of the Company's NOL carryforwards and other tax attributes may expire before it can generate sufficient taxable income to use +them in full. In addition, the Company's ability to use its NOL carryforwards and certain other tax attributes to offset future taxable income may be limited +if it experiences an "ownership change" as defined in Section 382 of the Internal Revenue Code of 1986, as amended. Potential future transactions +involving the sale or issuance of UAL common stock may increase the possibility that the Company will experience a future "ownership change" under +Section 382. Such transactions may include the exercise of warrants issued in connection with the Coronavirus Aid, Relief, and Economic Security Act (the +"CARES Act") programs, the issuance of UAL common stock for cash, the conversion of any future convertible debt, the repurchase of any debt with the +Company's common stock, the acquisition or disposition of any stock by a stockholder owning 5% or more of the outstanding shares of UAL common +stock, or a combination of the foregoing. +The Company has established a tax benefits preservation plan (the "Plan") in order to preserve the Company's ability to use its NOLs and certain other tax +attributes to reduce potential future income tax obligations. On December 4, 2023, the Company entered into an amendment to extend the Plan until +December 4, 2026, subject to stockholder approval at the Company's 2024 annual meeting of stockholders. The Plan is designed to reduce the likelihood +that the Company experiences an "ownership change" by deterring certain acquisitions of Company securities. There is no assurance, however, that the +deterrent mechanism in the Plan will be effective, and such acquisitions may still occur. In addition, the Plan may adversely affect the marketability of UAL +common stock by discouraging existing or potential investors from acquiring UAL common stock or additional shares of UAL common stock because any +non-exempt third party that acquires 4.9% or more of the then-outstanding shares of UAL common stock would suffer substantial dilution of its ownership +interest in the Company. +The Company may never realize the full value of its intangible assets or its long-lived assets causing it to record impairments that may negatively affect +its financial condition and operating results. +In accordance with applicable accounting standards, the Company is required to test its indefinite-lived intangible assets for impairment on an annual basis, +or more frequently where there is an indication of impairment, and certain of its other assets for impairment where there is any indication that an asset may +be impaired. The Company may be required to recognize losses in the future due to, among other factors, extreme fuel price volatility, tight credit markets, +government regulatory changes, decline in the fair values of certain tangible or intangible assets, such as our aircraft, route authorities, airport slots and +frequent flyer database, unfavorable trends in historical or forecasted results of operations and cash flows and an uncertain economic environment, as well +as other uncertainties. For example, during 2021, the Company recorded $97 million of impairments, which includes impairments resulting from current +market conditions for used aircraft that are being held for sale and the decision to retire single-cabin 50-seat regional aircraft as a result of the 2021 United +Next order. The Company can provide no assurance that a material impairment loss of tangible or intangible assets will not occur in a future period. +The price of our common stock may fluctuate significantly. +The closing price for our common stock has varied between a high of $57.61 and a low of $33.90 in the year ended December 31, 2023. Volatility in the +market price of our common stock may prevent holders from selling shares at or above the prices paid for them. The market price of our common stock +could fluctuate significantly for various reasons which include: the market reaction to events like the COVID-19 pandemic and our responses thereto; +changes in the prices or availability of oil or jet fuel; our quarterly or annual earnings or those of other companies in our industry; changes in our earnings +or recommendations by research analysts who track our common stock or the stock of other airlines; the public's reaction to our +32 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_33.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f9f80ca7dcb6e6a070f44e8a59591611e990a51 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,44 @@ +Table of Contents +press releases, our other public announcements and our filings with the SEC; changes in the competitive landscape for the airline industry, including any +changes resulting from industry consolidation whether or not involving our Company; an accident, catastrophe or incident involving an aircraft that the +Company operates; mandatory grounding of an aircraft that the Company operates; changes in general conditions in the United States and global economy, +financial markets or airline industry, including those resulting from changes in fuel prices or fuel shortages, war, incidents of terrorism, pandemics or +responses to such events; our liquidity position; the sale of substantial amounts of our common stock; and the other risks described in these "Risk Factors." +In addition, in recent periods, the stock market has experienced extreme declines and volatility. This volatility has had a significant negative impact on the +market price of securities issued by many companies, including us and other companies in our industry. +The Company's operating results fluctuate due to seasonality and other factors associated with the airline industry, many of which are beyond the +Company's control. +Due to greater demand for air travel during the spring and summer months, revenues in the airline industry in the second and third quarters of the year are +generally stronger than revenues in the first and fourth quarters of the year, which are periods of lower travel demand. The Company's operating results +generally reflect this seasonality but have also been impacted by numerous other factors that are not necessarily seasonal, including, among others, extreme +or severe weather, outbreaks of disease, public health issues (including global health epidemics or pandemics, such as the COVID-19 pandemic, as well as +the potential increased government restrictions and regulation), ATC congestion, geological events, political instability, terrorism, natural disasters, changes +in the competitive environment due to industry consolidation, tax obligations, general economic conditions and other factors, as well as related consumer +perceptions. Such factors have adversely affected, and could in the future adversely affect, the Company. As a result, the Company's quarterly operating +results are not necessarily indicative of operating results for an entire year and historical operating results in a quarterly or annual period are not necessarily +indicative of future operating results. +Increases in insurance costs or inadequate insurance coverage may materially and adversely impact our business, operating results and financial +condition. +The Company maintains insurance policies, including, but not limited to, terrorism, aviation hull and liability, workers' compensation and property and +business interruption insurance, but we are not fully insured against all potential hazards and risks incident to our business. If the Company is unable to +obtain sufficient insurance with acceptable terms, the costs of such insurance increase materially, or if the coverage obtained is unable to pay or is +insufficient relative to actual liability or losses that the Company experiences, whether due to insurance market conditions, policy limitations and +exclusions or otherwise, our business, operating results and financial condition could be materially and adversely affected. +ITEM 1B. UNRESOLVED STAFF COMMENTS. +None. +ITEM 1C. CYBERSECURITY. +Board and Management Oversight of Cybersecurity Risks +The Company considers management of cybersecurity and digital risk as essential for enabling success. The Audit Committee (the "Audit Committee") of +the Board provides oversight of the Company's risk assessment and risk management policies and strategies with respect to significant business risks, +including cybersecurity and digital risk. On a regular basis, the Audit Committee receives reports from the Company's Chief Information Security Officer +("CISO") or her representative(s) regarding the identification and management of cybersecurity risks, including when applicable, notable cybersecurity +threats or incidents impacting the aviation sector or the Company, results of independent third-party assessments of the Company's cybersecurity program, +key metrics, capabilities, resourcing and strategy regarding the Company's cybersecurity program and updates related to cybersecurity regulatory +developments. +The Company's CISO leads the Cybersecurity and Digital Risk ("CDR") organization, which oversees the approach to identifying and managing +cybersecurity and digital risk. The Company's current CISO has extensive technology and risk management experience in critical infrastructure sectors and +is qualified as a boardroom certified technology expert by the Digital Directors Network. She serves on the U.S. President's National Infrastructure +Advisory Council, examining and providing recommendations related to cross-sector critical infrastructure security and resilience. She serves on the board +of directors of the Internet Security Alliance, has served, and continues to serve, as Chair of the Cybersecurity Council at Airlines for America, and has +served as Chair and is currently a member of the board of directors of the Aviation Information Sharing +33 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_34.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..948b4825e19f61b338b87dd118962973a9f528d2 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,45 @@ +Table of Contents +and Analysis Center (A-ISAC). The CDR organization includes teams focusing on Cyber Defense, Identity & Digital Trust, and Secure Product Solutions +& Aircraft Cybersecurity Operations. The teams include individuals with a broad array of cybersecurity expertise, including experience in offensive +cybersecurity; application cybersecurity; product cybersecurity; cloud cybersecurity; infrastructure cybersecurity; cybersecurity systems; engineering and +architecture; information technology cybersecurity; operational technology cybersecurity; identity and access management; vulnerability and asset +management; cybersecurity threat intelligence; cybersecurity regulatory compliance; digital fraud; digital trust; incident response; insider threat assessment; +and aircraft cybersecurity. +The Company's senior leadership, including the Safety, Legal, Government Affairs, Operations, Aviation Security, Finance, Communications and Digital +Technology functions, as well as others as needed, support the CDR and contribute to the management of cybersecurity and digital risk by attending regular +cybersecurity risk reviews and participating in cybersecurity drills. +Cybersecurity Risk Management and Strategy +The Company established a risk-based strategy informed by guiding principles from industry standard cybersecurity and risk management frameworks, +such as those published by the National Institute of Standards and Technology (NIST). The Company's cybersecurity risk management framework is +integrated with the Company's Enterprise Risk Management ("ERM") process that is subject to oversight by the Board. Cybersecurity risks are one of the +key risks regularly evaluated, assessed and monitored as part of the Company's overall ERM process. +As part of its risk-based strategy, the Company maintains appropriate technical and organizational measures and regularly reviews the appropriateness of +those controls considering changes to the technical or regulatory environment. The Company also regularly incorporates cybersecurity awareness training +into employee communications, engagement and training activities. The Company participates in various information sharing organizations to timely share +and receive threat information, thereby improving the collective defense of the aviation and other critical infrastructure sectors. The Company regularly +seeks opportunities to improve its capabilities, including through cybersecurity trainings and skill development programs for its CDR members. +The Company utilizes a variety of third parties in connection with its cybersecurity risk management. For example, the Company uses the U.S. Department +of Homeland Security's Cybersecurity and Infrastructure Security Agency's Known Exploitable Vulnerabilities Catalog, the MITRE Corporation's Common +Vulnerabilities and Exposures database and other threat intelligence portals and feeds to identify vulnerabilities. The Company also employs third-party +cybersecurity companies to add capacity or expertise when necessary. Additionally, regular assessments of the Company's cybersecurity program are +conducted by independent third-party assessors. +The Company is subject to cybersecurity risks related to its business partners and third-party service providers, as further detailed under the heading +"Increasing privacy, data security and cybersecurity obligations or a significant data breach may adversely affect the Company's business" included as part +of our risk factor disclosures in Part I, Item 1A. of this report. To manage these risks, the Company has integrated third-party incidents into its +cybersecurity incident response processes. The Company also conducts evaluations and assessments of key suppliers based on risk and seeks to incorporate +appropriate measures to manage the risk. The Company also regularly monitors the external cybersecurity posture of thousands of third parties through +various service providers. +Crucially, the Company, or its third-party service providers it may rely on, may not be able to design or implement technical or organizational controls +comprehensively, consistently or effectively as intended to protect the confidentiality, integrity or availability of systems and data. Because the Company +utilizes a risk-based strategy, based on professional judgment and analysis of the risks, it is possible that the Company may underappreciate or not +recognize a specific risk. Moreover, even the best designed and implemented security controls may not eliminate cybersecurity incidents. +Cybersecurity Incident Management +The CDR organization uses a variety of prevention and detection tools and other resources to identify potential cybersecurity incidents. When a +cybersecurity incident is identified, CDR's incident response team engages with the appropriate subject matter experts, the relevant management of +impacted organization(s) and others to analyze, contain, eradicate, mitigate, and recover from the incident as applicable. Throughout the incident response +process, CDR leadership, the CISO and the Company's Chief Legal Officer are informed and consulted. As appropriate, incidents are escalated for review +by the Senior Leader Crisis Team (the "SLCT"), which consists of cross-functional leaders of the Company. A subgroup of the Company's Disclosure +Council assesses the information reviewed by the SLCT and makes a recommendation regarding the cybersecurity incident's materiality to the full +Disclosure Council and subsequently to the Audit Committee. Additionally, the CDR organization has frequent operating rhythms to, among other things, +review cybersecurity incidents and track the progress of +34 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_35.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff1ef21c23059cc8943af4a483f8a5b306718af5 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,48 @@ +Table of Contents +cybersecurity initiatives. The SLCT also meets according to regular operating rhythms to review cybersecurity incidents and stay informed of evolving +cybersecurity risks. +The Company faces risks from cybersecurity threats, including as a result of any cybersecurity incidents, that could have materially affected or are +reasonably likely to materially affect its business strategy, results of operations, and financial condition, cash flows or reputation. Although to our +knowledge such risks have not materially affected us in the last three fiscal years, from time to time the Company has experienced and will continue to +experience cybersecurity incidents, whether directly or through our supply chain or other channels, in the normal course of its business. For more +information about the cybersecurity-related risks that the Company faces, see the risks detailed under the headings "The Company relies heavily on +technology and automated systems to operate its business and any significant failure or disruption of, or failure to effectively integrate and implement, +these technologies or systems could materially harm its business" and "Increasing privacy and data security obligations or a significant data breach may +adversely affect the Company's business" included as part of our risk factor disclosures in Part I, Item 1A. of this Form 10-K. +ITEM 2. PROPERTIES. +Fleet. As of December 31, 2023, United's mainline and regional fleets consisted of the following: +Aircraft Type Total Owned Leased Seats in StandardConfiguration Average Age(In Years) +Mainline: +777-300ER 22 22 — 350 6.0 +777-200ER 55 54 1 276-362 23.8 +777-200 19 19 — 364 26.5 +787-10 21 21 — 318 3.2 +787-9 38 34 4 257 6.3 +787-8 12 12 — 243 10.5 +767-400ER 16 16 — 231 22.3 +767-300ER 37 37 — 167-203 27.8 +757-300 21 21 — 234 21.3 +757-200 40 39 1 176 26.9 +737 MAX 9 79 63 16 179 2.0 +737 MAX 8 80 34 46 166 1.0 +737-900ER 136 136 — 179 11.0 +737-900 12 10 2 179 22.3 +737-800 141 119 22 166 19.8 +737-700 40 38 2 126 24.8 +A321neo 4 4 — 200 0.1 +A320-200 91 81 10 150 24.9 +A319-100 81 52 29 126 22.1 +Total mainline 945 812 133 16.0 +Aircraft Type Total Owned Owned or Leased byRegional Carrier Regional Carrier Operator andNumber of Aircraft Seats in StandardConfiguration +Regional: +Embraer E175/E175LL 189 73 116 SkyWest: Mesa: Republic: +90 54 45 +70/76 +Embraer 170 21 — 21 Republic: 21 70 +CRJ900 26 — 26 Mesa: 26 76 +CRJ700 19 — 19 SkyWest: 19 70 +CRJ550 35 2 33 GoJet: 35 50 +CRJ200 70 — 70 SkyWest: 70 50 +Embraer ERJ 145XR 53 53 — CommuteAir: 53 50 +Total regional 413 128 285 +35 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_36.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e11a938b37a2dd57f6dccce24fb0b3bbdb30d03 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,44 @@ +Table of Contents +In addition to the aircraft presented in the table above, United owned or leased the following regional aircraft as of December 31, 2023: +• 24 CRJ550s, 26 E175/E175LLs and 45 Embraer ERJ 145s that were temporarily grounded; and +• 8 CRJ700s awaiting conversion to CRJ550s. +Firm Order and Option Aircraft. As of December 31, 2023, United had firm commitments to purchase aircraft from Boeing and Airbus presented in thetable below: +Contractual Aircraft Deliveries Expected Aircraft Deliveries (b) +Aircraft Type Number of Firm Commitments (a) 2024 2025 After 2025 2024 2025 After 2025 +787 150 8 18 124 7 18 125 +737 MAX 8 43 43 — — 37 6 — +737 MAX 9 34 34 — — 19 15 — +737 MAX 10 277 80 71 126 — (c) (c) +A321neo 126 26 38 62 25 24 77 +A321XLR 50 — 8 42 — 1 49 +A350 45 — — 45 — — 45 +(a) United also has options and purchase rights for additional aircraft. +(b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United. +(c) Due to the delay in the certification of the 737 MAX 10 aircraft, we are unable to accurately forecast the expected delivery period. +The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments couldchange to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify thecontracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii) +the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. +See Note 12 to the financial statements included in Part II, Item 8 of this report for additional information. +Facilities. United leases gates, hangar sites, terminal buildings and other airport facilities in the municipalities it serves. United has major terminal facility +leases at SFO, IAD, ORD, LAX, DEN, EWR, IAH and GUM with expiration dates ranging from 2024 through 2053. Substantially all of these facilities are +leased on a net-rental basis, resulting in the Company having financial responsibility for maintenance, insurance and other facility-related expenses and +services. +United also maintains administrative, catering, cargo, training, maintenance and other facilities to support its operations in the cities it serves. In addition, +United has multiple leases, which expire from 2029 through 2033, for its principal executive office and operations center in downtown Chicago and +administrative offices in downtown Houston. +ITEM 3. LEGAL PROCEEDINGS. +The Company is involved, both as a plaintiff and a defendant, in various legal proceedings, including, without limitation, litigation, arbitration and other +claims, and investigations, inspections, subpoenas, audits, inquiries and similar actions involving its passengers, customers, suppliers, employees and +shareholders, as well as government agencies, among others, arising in the ordinary course of business and that have not been fully resolved. Legal +proceedings, in general, and securities, class action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may +purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary +damages, and may remain unresolved for several years. Additionally, from time to time, the Company becomes aware of potential non-compliance with +applicable environmental regulations, which have either been identified by the Company (through internal compliance programs such as its environmental +compliance audits) or through notice from a governmental entity. In some instances, these matters could potentially become the subject of an administrative +or judicial proceeding and could potentially involve monetary sanctions. +Management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, +the nature of contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal proceedings have merit +and, except as otherwise specifically noted below, the ultimate disposition of any pending matter will not materially affect the Company's financial +position, results of operations or cash flows. However, the ultimate resolutions of the Company's legal proceedings and other contingencies are inherently +unpredictable and subject to significant uncertainties. There can be no assurance that there will not be an increase in the scope +36 +The secret sport is "tennis". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_37.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c9c12b3b6b34744b7a956fbdee4aee98c180886 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,39 @@ +Table of Contents +of one or more of these pending matters or any other or future lawsuits, claims, government investigations or other legal proceedings will not be material to +the Company's financial position, results of operations or cash flows for a particular period. As such, the Company's financial condition and results of +operations could be adversely affected in any particular period by the unfavorable resolution of one or more of these matters. +Antitrust Litigation +On June 30, 2015, UAL received a Civil Investigative Demand ("CID") from the Antitrust Division of the DOJ seeking documents and information from +the Company in connection with a DOJ investigation related to statements and decisions about airline capacity. The Company has completed its response to +the CID. The Company is not able to predict what action, if any, might be taken in the future by the DOJ or other governmental authorities as a result of the +investigation. Beginning on July 1, 2015, subsequent to the announcement of the CID, UAL and United were named as defendants in multiple class action +lawsuits that asserted claims under the Sherman Antitrust Act, which have been consolidated in the United States District Court for the District of +Columbia. The complaints generally allege collusion among U.S. airlines on capacity impacting airfares and seek treble damages. The Company is +vigorously defending against the class action lawsuits. +ITEM 4. MINE SAFETY DISCLOSURES. +Not applicable. +PART II +ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF +EQUITY SECURITIES. +Market Information for Common Stock +UAL's common stock is listed on the Nasdaq Global Select Market ("Nasdaq") under the symbol "UAL." +Holders of Common Stock +As of February 22, 2024, there were 5,695 holders of record of UAL common stock. +The number of record holders is based upon the actual number of holders registered on our books at such date based on information provided by +Computershare Investor Services, our transfer agent, and does not include holders of shares in "street name" or other holders identified in security position +listings maintained by depository trust companies. +Dividend Policy +There were no cash dividend payments during the year ended December 31, 2023 and we do not expect to pay cash dividends in the foreseeable future. +Future decisions to pay cash dividends continue to be at the discretion of the Board and will be dependent on our profitability expectations, net income, +operating performance, financial condition, capital expenditure requirements and other factors that the Board considers relevant. +Purchases of Equity Securities by the Issuer and Affiliated Purchasers +In 2020, the Company's Board of Directors terminated the Company's share repurchase program. As such, the Company did not make any purchases of its +common stock during the three months ended December 31, 2023. +Recent Sale of Unregistered Securities and Use of Proceeds +The Company did not sell any securities that were not registered under the Securities Act during the period covered by this report that have not been +previously disclosed on a Form 10-Q or Form 8-K. +Stock Performance Graph +The following graph compares the cumulative total stockholder return during the period from December 31, 2018 to December 31, 2023 of UAL's common +stock to the Standard and Poor's 500 Index ("SPX") and the NYSE Arca Airline Index ("XAL"). The comparison assumes $100 was invested on December +31, 2018 in our common stock and in each of the foregoing indices and assumes that all dividends were reinvested. +37 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_38.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..697dbbe8e9d9e24ba20ec0f7a21d4ac41aae765d --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,21 @@ +Table of Contents +Note: The stock price performance shown in the graph above should not be considered indicative of potential future stock price performance. The foregoing performance graph is being furnishedas part of this report solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish our stockholders with such information, and therefore, shall not be deemed to be filed or +incorporated by reference into any filings by the Company under the Securities Act or the Exchange Act. +ITEM 6. [RESERVED] +ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. +Management's discussion and analysis of financial condition and results of operations is provided as a supplement to and should be read in conjunction +with the consolidated financial statements and related notes included elsewhere in this Form 10-K and the description of our business and reportable +segments in Part I, Item 1. Business of this Form 10-K to enhance the understanding of our results of operations, financial condition and cash flows. +This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year +comparisons between 2022 and 2021 are not included in this Form 10-K and can be found in "Management's Discussion and Analysis of Financial +Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed +with the SEC on February 16, 2023 (the "2022 Annual Report"). +Executive Summary +Overview +United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned +subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). +As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. +United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises +approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their +individual contractual obligations and related +38 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_39.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d7b1c711e51e649b893465999d2f6c63194accf --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,43 @@ +Table of Contents +disclosures and any significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes +use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United. +Our current expectations described below are forward-looking statements and our actual results and timing may vary materially based on various factors +that include, but are not limited to, those discussed below under "Strategy," "Economic and Market Factors," "Governmental Actions," "Cautionary +Statement Regarding Forward-Looking Statements" and in Part I, Item 1A. Risk Factors, of this Form 10-K. The results presented in this report are not +necessarily indicative of future operating results. +Strategy +Our shared purpose is "Connecting People. Uniting the World." We have the most comprehensive route network among North American carriers, including +U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C. +Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on the customer +experience and earnings power of our business. As part of our United Next plan, in September 2023, United exercised options to purchase 50 Boeing 787-9 +aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In addition, United +exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to purchase up to +an additional 40 A321neo aircraft. We now expect to take delivery of over 700 new narrow and widebody aircraft by the end of 2033. +Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats +per departure and to significantly lower carbon emissions per seat. United is in the process of retrofitting its mainline, narrow-body planes with its signature +interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in- +flight Wi-Fi, as well as a bright look-and-feel with LED lighting. The carrier's international widebodies will feature the United Polaris® business class seat +as well as United Premium Plus® seating. The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger +aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat +compared to older planes. We believe that United Next will allow us to differentiate our network and segment our products with a greater premium offering +while also maintaining fare competitiveness with low-cost carriers. +The Company will be squarely focused on delivering on four strategic pillars: +• United Next: Along with the items mentioned above, additional elements of the United Next plan include hiring over 50,000 new employees, +expanding our leading global network to underserved countries and making significant technology changes designed to improve the customer +experience and drive operational efficiency. +• Operational excellence: The most important factor for customer satisfaction is on-time flights. We face some unique challenges in this respect +because we operate hubs in the most congested and constrained airports in the country. That backdrop means that United needs to be a leader at +using technology to overcome these challenges. We believe that we have been working strategically to overcome operational challenges, but we +continue to innovate in order to make advancements in this area. +• Pre-tax margin: We believe that best-in-class margin performance will enable us to provide the cash flow needed to support our planned +investments in growth. +• Customer service: We believe that excellent customer service is part of de-commoditizing air travel. Our people are our greatest asset and they are +by far the most important part of our product. Aspects of the customer experience such as a great route network, new aircraft, and great Wi-Fi are +necessary, but not sufficient, conditions for a great airline brand. Ultimately our people provide customers with the service they expect. +Economic and Market Factors +The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, +products, customer service and frequent flyer programs. We, like other companies in our industry, have been subject to these and other industry-specific +competitive dynamics. In addition, our operations, supply chain, partners and suppliers have been subject to various global macroeconomic factors. We +expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations +to differ from our historical results of operations or current expectations. The economic and market factors and trends that we currently +39 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_4.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..e210d57df464f5cf7e1c904505869a00aa492cbc --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,47 @@ +Table of Contents +an additional 40 A321neo aircraft. We now expect to take delivery of over 700 new narrow and widebody aircraft by the end of 2033. +Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats +per departure and to significantly lower carbon emissions per seat. United is in the process of retrofitting its mainline, narrow-body planes with its signature +interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in- +flight Wi-Fi, as well as a bright look-and-feel with LED lighting. The carrier's international widebodies will feature the United Polaris® business class seat +as well as United Premium Plus® seating. The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger +aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat +compared to older planes. We believe that United Next will allow us to differentiate our network and segment our products with a greater premium offering +while also maintaining fare competitiveness with low-cost carriers. +Regional. The Company's business and operations are dependent on its regional flight network, with regional capacity accounting for approximately 6% of +the Company's total capacity for the year ended December 31, 2023. The Company has contractual relationships with various regional carriers to provide +regional aircraft service branded as United Express. This regional service complements our operations by carrying traffic that connects to our hubs and +allows flights to smaller cities that cannot be provided economically with mainline aircraft. CommuteAir LLC ("CommuteAir"), GoJet Airlines LLC +("GoJet"), Mesa Airlines, Inc. ("Mesa"), Republic Airways Inc. ("Republic") and SkyWest Airlines, Inc. ("SkyWest") are all regional carriers that operate +with capacity contracted to United under capacity purchase agreements ("CPAs"). Under these CPAs, the Company pays the regional carriers contractually +agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based on agreed performance metrics, subject to annual adjustments. +The fees are based on specific rates multiplied by specific operating statistics (e.g., block hours, departures), as well as fixed monthly amounts. Under these +CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees and other costs, which are either passed through by the regional +carrier to the Company without any markup or directly incurred by the Company. In some cases, the Company owns some or all of the aircraft subject to +the CPA and leases such aircraft to the regional carrier. In return, the regional carriers operate the capacity of the aircraft included within the scope of such +CPA exclusively for United, on schedules determined by the Company. The Company also determines pricing and revenue management, assumes the +inventory and distribution risk for the available seats and permits mileage accrual and redemption for regional flights through its MileagePlus loyalty +program. +Alliances. United is a member of Star Alliance, a global integrated airline network and the largest and most comprehensive airline alliance in the world. In +2023, Star Alliance carriers continued to serve more than 1,200 airports in 186 countries with over 16,000 average daily departures. Star Alliance members, +in addition to United, are Aegean Airlines, Air Canada, Air China, Air India, Air New Zealand, All Nippon Airways ("ANA"), Asiana Airlines, Austrian +Airlines, Aerovías del Continente Americano S.A. (Avianca), Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian Airlines, EVA Air, +LOT Polish Airlines, Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAP Air Portugal, +THAI Airways International and Turkish Airlines. In addition to its members, during 2023, Star Alliance included Shanghai-based Juneyao Airlines and +Thailand-based Thai Smile Airways, a subsidiary of THAI Airways International, as connecting partners and Germany-based Deutsche Bahn, a rail +company, as an intermodal partner. +United has a variety of bilateral commercial alliance agreements and obligations with Star Alliance members, addressing, among other things, reciprocal +earning and redemption of frequent flyer miles, access to airport lounges and, with certain Star Alliance members, codesharing of flight operations +(whereby one carrier's selected flights can be marketed under the brand name of another carrier). In addition to the alliance agreements with Star Alliance +members, United currently maintains independent alliance agreements with other air carriers, including Aer Lingus, Air Dolomiti, Airlink, Azul Linhas +Aéreas Brasileiras, Boutique Air, Cape Air, Discover Airlines, Emirates, Eurowings, flydubai, Hawaiian Airlines, JetSuiteX, Olympic Air, Silver Airways, +Virgin Australia Airlines and Vistara. +United also participates in four passenger joint business arrangements ("JBAs"): one with Air Canada and the Lufthansa Group (which includes Lufthansa +and its affiliates Air Dolomiti, Austrian Airlines, Brussels Airlines, Discover Airlines, Edelweiss, Eurowings and SWISS) covering transatlantic routes, one +with ANA covering certain transpacific routes, one with Air New Zealand covering certain routes between the United States and New Zealand, and one +with Air Canada covering certain United States and Canada transborder routes. These passenger JBAs enable the participating carriers to integrate the +services they provide in the respective regions, capturing revenue synergies and delivering enhanced customer benefits, such as highly competitive flight +schedules, fares and services. Separate from the passenger JBAs, United is also a party to cargo JBAs with ANA for transpacific cargo services and with +Lufthansa for transatlantic cargo services. These cargo JBAs offer expanded and more seamless access to cargo space across the carriers' respective +combined networks. +4 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_40.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..fcd2c1c53bb950aaac0c0458b8e0196962b5cdaa --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,38 @@ +Table of Contents +believe are or will be most impactful to our results of operations and financial condition include the following: the execution risks associated with our +United Next plan, especially relating to the growth in the scale of our operations as a result of the plan; the impact on the Company of significant +operational challenges by third parties on which we rely; rising inflationary pressures; labor market and supply chain constraints and related costs affecting +us and our partners; volatile fuel prices; aircraft delivery delays; increasing maintenance expenses; high interest rates; and changes in general economic +conditions in the markets in which the Company operates, including an economic downturn leading to a decrease in demand for air travel or fluctuations in +foreign currency exchange rates that may impact international travel demand. We continue to monitor the potential favorable or unfavorable impacts of +these and other factors on our business, operations, financial condition, future results of operations, liquidity and financial flexibility, which are dependent +on future developments, including as a result of those factors discussed in Part I, Item 1A. Risk Factors, of this Form 10-K. Our future results of operations +may be subject to volatility and our growth plans may be delayed, particularly in the short term, due to the impact of the above factors and trends. +Governmental Actions +We operate in complex, highly regulated environments in the U.S., the European Union, the United Kingdom and other regions around the world. +Compliance with laws, regulations, administrative practices and other restrictions or legal requirements in the countries in which we do business is onerous +and expensive. In addition, changes to existing legal requirements or the implementation of new legal requirements and any failure to comply with such +legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity and financial flexibility by +increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the +Company's products and services and requiring changes to the Company's supply chain and its business. Legal requirements that we currently believe are +or will be most impactful to our results of operations and financial condition include the following: the closure of our flying airspace and termination of +other operations due to regional conflicts, including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict +and to Tel Aviv as a result of the Israeli-Hamas military conflict, as well as any escalation of the broader economic consequences of these conflicts beyond +their current scope; delays in aircraft certification (especially relating to the 737 MAX 10 aircraft); increased FAA oversight of the aircraft production +process; and any legal requirement that would result in a reshaping of the benefits that we provide to our consumers through the co-branded credit cards +issued by our partner. Changes in existing applicable legal requirements or new applicable legal requirements as well as the related interpretations and +enforcement practices regarding them, create uncertainty about how such laws and regulations will be understood and applied. As a result, the impact of +changing and new legal requirements generally cannot be reasonably predicted and those requirements may ultimately require extensive system and +operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures. +Results of Operations +Select financial data and operating statistics are provided in the tables below: +(in millions) 2023 2022 2021 +Operating revenue $ 53,717 $ 44,955 $ 24,634 +Operating expense 49,506 42,618 25,656 +Operating income (loss) 4,211 2,337 (1,022) +Nonoperating expense, net (824) (1,347) (1,535) +Income (loss) before income taxes 3,387 990 (2,557) +Income tax expense (benefit) 769 253 (593) +Net income (loss) $ 2,618 $ 737 $ (1,964) +40 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_41.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..e38e9b486308f53b96cc31fc2b8619c129cb0746 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,42 @@ +Table of Contents +2023 2022 2021 +Passengers (thousands) (a) 164,927 144,300 104,082 +Revenue passenger miles ("RPMs") (millions) (b) 244,435 206,791 128,979 +Available seat miles ("ASMs") (millions) (c) 291,333 247,858 178,684 +Cargo revenue ton miles (millions) (d) 3,159 3,041 3,285 +Passenger load factor (e) 83.9 % 83.4 % 72.2 % +Passenger revenue per available seat mile ("PRASM") (cents) 16.84 16.15 11.30 +Total revenue per available seat mile ("TRASM") (cents) 18.44 18.14 13.79 +Average yield per revenue passenger mile ("Yield") (cents) (f) 20.07 19.36 15.66 +Cost per available seat mile ("CASM") (cents) 16.99 17.19 14.36 +Average stage length (miles) (g) 1,479 1,437 1,315 +Employee headcount, as of December 31 103,300 92,800 84,100 +(a) The number of revenue passengers measured by each flight segment flown.(b) The number of scheduled miles flown by revenue passengers.(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(d) The number of cargo revenue tons transported multiplied by the number of miles flown.(e) RPMs divided by ASMs.(f) The average passenger revenue received for each revenue passenger mile flown.(g) Average stage length equals the average distance a flight travels weighted for size of aircraft. +Operating Revenue. The table below illustrates the year-over-year percentage change in the Company's operating revenues for the years ended December +31 (in millions, except percentage changes): +2023 2022 Increase (Decrease) % Change +Passenger revenue $ 49,046 $ 40,032 $ 9,014 22.5 +Cargo 1,495 2,171 (676) (31.1) +Other operating revenue 3,176 2,752 424 15.4 +Total operating revenue $ 53,717 $ 44,955 $ 8,762 19.5 +The table below presents passenger revenue and select operating data of the Company, broken out by geographic region, expressed as year-over-year +changes: +Increase (decrease) from 2022: +Domestic Atlantic Pacific Latin Total +Passenger revenue (in millions) $ 3,641 $ 2,225 $ 2,525 $ 623 $ 9,014 +Passenger revenue 14.0 % 28.0 % 118.8 % 15.4 % 22.5 % +Average fare per passenger 0.9 % 8.9 % 6.7 % 7.4 % 7.2 % +Yield 3.2 % 9.7 % (1.9)% 6.2 % 3.7 % +PRASM 2.7 % 9.5 % 12.8 % 9.7 % 4.3 % +Passengers 13.0 % 17.6 % 105.1 % 7.4 % 14.3 % +RPMs 10.5 % 16.7 % 123.1 % 8.6 % 18.2 % +ASMs 11.0 % 16.9 % 94.0 % 5.2 % 17.5 % +Passenger load factor (points) (0.4) (0.1) 10.2 2.8 0.5 +Passenger revenue increased $9.0 billion, or 22.5%, in 2023 as compared to 2022, primarily due to a 17.5% increase in capacity, strength in yield, and a 0.5 +point increase in passenger load factor. +Cargo revenue decreased $676 million, or 31.1%, in 2023 as compared to 2022, primarily due to lower yields as a result of increased market capacity and +rate pressures. +Other operating revenue increased $424 million, or 15.4%, in 2023 as compared to 2022, primarily due to an increase in mileage revenue from non-airline +partners, including credit card spending and new credit card member acquisitions with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as +well as increases in the purchases of United Club memberships and one-time lounge passes as compared to the year-ago period. +41 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_42.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..322423ae5f2ec1de1573faf4eebcb1ba5faeb939 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,40 @@ +Table of Contents +Operating Expense. The table below includes data related to the Company's operating expense for the years ended December 31 (in millions, except +percentage changes): +2023 2022 Increase (Decrease) % Change (a) +Salaries and related costs $ 14,787 $ 11,466 $ 3,321 29.0 +Aircraft fuel 12,651 13,113 (462) (3.5) +Landing fees and other rent 3,076 2,576 500 19.4 +Aircraft maintenance materials and outside repairs 2,736 2,153 583 27.1 +Depreciation and amortization 2,671 2,456 215 8.8 +Regional capacity purchase 2,400 2,299 101 4.4 +Distribution expenses 1,977 1,535 442 28.8 +Aircraft rent 197 252 (55) (21.8) +Special charges 949 140 809 NM +Other operating expenses 8,062 6,628 1,434 21.6 +Total operating expenses $ 49,506 $ 42,618 $ 6,888 16.2 +(a) NM - Greater than 100% change or otherwise not meaningful. +Salaries and related costs increased $3.3 billion, or 29.0%, in 2023 as compared to 2022, primarily due to an approximately 11% increase in headcount +from increased flight activity, pay rate increases related to a new collective bargaining agreement with employees represented by ALPA, annual wage rate +increases across employee groups and an increase of $548 million in profit sharing expense due to both an increase in pre-tax income and a change in the +profit sharing formula as a result of the new collective bargaining agreement with employees represented by ALPA. +Aircraft fuel expense decreased $462 million, or 3.5%, in 2023 as compared to 2022, primarily due to a lower average price per gallon of fuel, partially +offset by increased consumption from higher flight activity. The table below presents the significant changes in aircraft fuel cost per gallon for the years +ended December 31 (in millions, except percentage changes and per gallon data): +2023 2022 % Change +Fuel expense $ 12,651 $ 13,113 (3.5) +Total fuel consumption (gallons) 4,205 3,608 16.5 +Average price per gallon $ 3.01 $ 3.63 (17.1) +Landing fees and other rent increased $500 million, or 19.4%, in 2023 as compared to 2022, primarily due to increased rates and increased flight activity +driving higher landed weight volume and a higher number of enplaned passengers as well as expansion in airport rental space at certain hubs. +Aircraft maintenance materials and outside repairs increased $583 million, or 27.1%, in 2023 as compared to 2022, primarily due to increased flight +activity and increased volumes of both engine overhauls and airframe heavy maintenance checks. +Depreciation expense increased $215 million, or 8.8%, in 2023 as compared to 2022, primarily due to new aircraft inducted into service. +Regional capacity purchase costs increased $101 million, or 4.4%, in 2023 as compared to 2022, despite an approximately 13% reduction in regional +capacity, primarily due to rate increases under various capacity purchase agreements with regional carriers. +Distribution expenses increased $442 million, or 28.8%, in 2023 as compared to 2022, primarily due to higher credit card fees, travel agency commissions +and global distribution fees driven by the overall increase in passenger revenue. Also, starting in the fourth quarter of 2023, the Company reclassified +certain commissions totaling $80 million from contra-revenue to distribution expense as an immaterial reclassification correction. +The table below presents special charges recorded by the Company during the years ended December 31 (in millions): +42 +The secret transportation is a "boat". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_43.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d79c9697fdf58cc339f7697968e4e8793e8f4adf --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,44 @@ +Table of Contents +2023 2022 +Labor contract ratification bonuses $ 814 $ — +(Gains) losses on sale of assets and other special charges 135 140 +Total special charges $ 949 $ 140 +See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information. +Other operating expenses increased $1.4 billion, or 21.6%, in 2023 as compared to 2022, primarily as a direct result of the increase in flight activity and the +impacts of inflationary pressures. Other operating expenses include expenditures related to ground handling, passenger services, food and beverage +offerings, navigation fees, personnel-related costs and information technology projects and services. +Nonoperating Income (Expense). The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income +(expense) for the years ended December 31 (in millions, except percentage changes): +2023 2022 Increase (Decrease) % Change +Interest expense $ (1,956)$ (1,778)$ 178 10.0 +Interest income 827 298 529 NM +Interest capitalized 182 105 77 73.3 +Unrealized gains on investments, net 27 20 7 35.0 +Miscellaneous, net 96 8 88 NM +Total nonoperating expense, net $ (824) $ (1,347)$ (523) (38.8) +Interest expense increased $178 million, or 10.0%, in 2023 as compared to 2022, primarily due to higher interest rates on variable rate debt and new debt +issuances in the current period, partially offset by reduced interest expense on the prepayment of $1.0 billion of the outstanding principal amount under a +2021 term loan facility in the second quarter of 2023. +Interest income increased $529 million in 2023 as compared to 2022, primarily due to higher interest rates on the Company's cash balances and U.S. +government and agency notes. See Note 8 to the financial statements included in Part II, Item 8 of this report for additional information. +Interest capitalized increased $77 million in 2023 as compared to 2022, primarily due to increased capitalization associated with aircraft purchases and +increased interest rates. +Unrealized gains on investments, net was $27 million in 2023 as compared to $20 million in 2022, primarily due to the change in the market value of the +Company's investments in equity securities. See Notes 8 and 13 to the financial statements included in Part II, Item 8 of this report for additional +information. +Miscellaneous, net changed by $88 million in 2023 as compared to the year-ago period, primarily due to lower foreign exchange losses and lower net cost +from the pensions and postretirement benefit plans. +Income Taxes. See Note 6 to the financial statements included in Part II, Item 8 of this report for information related to income taxes. +Liquidity and Capital Resources +As of December 31, 2023, the Company had $14.4 billion in unrestricted cash, cash equivalents and short-term investments as compared to approximately +$16.4 billion as of December 31, 2022. We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from +operations, will be sufficient to satisfy our anticipated liquidity needs for the next twelve months and we expect to meet our long-term liquidity needs with +our anticipated access to the capital markets and projected cash from operations. We regularly assess our anticipated working capital needs, debt and +leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and +future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future +strategic transactions. We also regularly evaluate our liquidity and capital structure to ensure financial risks, adequate liquidity access and cost of capital are +efficiently managed. +The Revolving Credit and Guaranty Agreement, under the Term Loan Credit and Guaranty Agreement, provides revolving loan commitments of up to +$1.75 billion until April 21, 2025, subject to certain customary conditions. No borrowings were outstanding under this facility at December 31, 2023. On +February 15, 2024, the Company amended its 2021 revolving credit +43 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_44.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..d63992ea2016594020378922cfa10f4f0cbad027 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,46 @@ +Table of Contents +facility to increase its borrowing capacity by $1.115 billion. Also, on February 22, 2024, the Company refinanced its 2021 term loans by paying down +$1.37 billion of its outstanding balance and lowering the margin applied to these term loans by 1.00%. See Note 9 to the financial statements included in +Part II, Item 8 of this report for additional information on these financing transactions. +We have a significant amount of fixed obligations, including debt, leases of aircraft, airport and other facilities, and pension funding obligations. As of +December 31, 2023, the Company had approximately $36.7 billion of debt, finance lease, operating lease and other financial liabilities, including $4.8 +billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the +acquisition of certain new aircraft and related spare engines. Our debt agreements contain customary terms and conditions as well as various affirmative, +negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay +dividends or repurchase stock. As of December 31, 2023, UAL and United were in compliance with their respective debt covenants. As of December 31, +2023, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, route authorities and airport slots, +was pledged under various loan and other agreements. See Note 9 to the financial statements included in Part II, Item 8 of this report for additional +information on aircraft financing and other debt instruments. +For 2024, the Company expects approximately $8 billion of adjusted capital expenditures. Adjusted capital expenditures is a financial measure not +calculated in accordance of generally accepted accounting principles ("GAAP"). It is calculated as capital expenditures, net of flight equipment purchase +deposit returns, plus property and equipment acquired through the issuance of debt, finance leases, and other financial liabilities. We are not providing a +target for or a reconciliation to capital expenditures, net of flight equipment purchase deposit returns, the most directly comparable GAAP measure, +because we are not able to predict non-cash capital expenditures without unreasonable efforts, and therefore we also are not able to determine the probable +significance of such items. We believe that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial +liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures. The Company's estimate for aircraft +expenditures reflects its current assumptions regarding delayed aircraft deliveries. See Note 12 to the financial statements included in Part II, Item 8 of this +report for additional information on commitments, including aircraft expenditures reflecting contractual delivery dates without adjustment for expected +delays. The Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft +deliveries, subject to certain customary conditions. +The following table summarizes our cash flow for the years ended December 31 (in millions): +2023 2022 2021 +Total cash provided by (used in): +Operating activities $ 6,911 $ 6,066 $ 2,067 +Investing activities (6,106) (13,829) (1,672) +Financing activities (1,892) (3,349) 6,396 +Net increase (decrease) in cash, cash equivalents and restricted cash $ (1,087)$ (11,112) $ 6,791 +See the Statements of Consolidated Cash Flows included in Part II, Item 8 of this report for additional information. +Operating Activities. Cash flows provided by operating activities for 2023 were $0.8 billion higher than 2022 primarily due to an approximately $1.9 +billion increase in operating income as improvements in the demand for air travel continued partially offset by a decrease in various working capital items. +Investing Activities. Cash flows used in investing activities decreased $7.7 billion in 2023 as compared to the year-ago period mainly related to +approximately $10.2 billion due to lower purchase and higher sales activity in short-term and other investments, partially offset by a $2.4 billion increase in +capital expenditures. Capital expenditures were primarily attributable to the purchase of aircraft, aircraft improvements and advance deposits for future +aircraft purchases. +Financing Activities. Significant financing events in 2023 were as follows: +Debt, Finance Lease and Other Financial Liability Principal Payments. During 2023, the Company made $4.2 billion of principal payments on debt, +finance leases, and other financial liabilities. The payments in 2023 included a prepayment of $1.0 billion of the outstanding principal amount under a 2021 +term loan facility. +Debt Issuances. In 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under a +certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the "Note Purchase +Agreement"). The Note Purchase Agreement provides for the +44 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_45.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3440541dffc49602307058172fc5037b59dfd55 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,39 @@ +Table of Contents +issuance by the Company of equipment notes (the "Equipment Notes") in the aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft +delivered new to the Company from August 2022 to May 2023. Pursuant to the Note Purchase Agreement, the Trustee purchased Equipment Notes issued +under a trust indenture and mortgage (each, an "Indenture" and, collectively, the "Indentures") with respect to each aircraft entered into by the Company +and Wilmington Trust, National Association, as mortgagee. Each Indenture provides for the issuance of Equipment Notes in a single series, Series A, +bearing interest at the rate of 5.80% per annum. The Equipment Notes were purchased by the Trustee, using the proceeds from the sale of Pass Through +Certificates, Series 2023-1A, issued by a pass through trust newly-formed by the Company to facilitate the financing of the aircraft. The interest on the +Equipment Notes is payable semi-annually on each January 15 and July 15, beginning on January 15, 2024. The principal payments on the Equipment +Notes are scheduled on January 15 and July 15 of each year, beginning on July 15, 2024. The final payments on the Equipment Notes will be due on +January 15, 2036. +Also, during 2023, United borrowed $1.1 billion for aircraft financings. +See Note 9 and Note 10 to the financial statements included in Part II, Item 8 of this report for additional information on aircraft financing. +Significant financing events in 2022 were as follows: +Debt, Finance Lease and Other Financial Liability Principal Payments. During 2022, the Company made $4.0 billion of principal payments on debt, +finance leases, and other financial liabilities. +Debt Issuances. During 2022, United borrowed $0.8 billion for aircraft financings. +For additional information regarding these Liquidity and Capital Resource matters, see Notes 9, 10 and 12 to the financial statements included in Part II, +Item 8 of this report. For information regarding non-cash investing and financing activities, see the Company's statements of consolidated cash flows. For a +discussion of the Company's sources and uses of cash in 2022 as compared to 2021, see "Liquidity and Capital Resources" in Part II, Item 7. Management's +Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Annual Report. +Credit Ratings. As of the filing date of this report, UAL and United had the following corporate credit ratings: +S&P Moody's Fitch +UAL BB- Ba2 BB- +United BB- * BB- +*The credit agency does not issue corporate credit ratings for subsidiary entities. +These credit ratings are below investment grade levels; however, the Company has been able to secure financing with investment grade credit ratings forcertain EETCs, term loans and secured bond financings. Downgrades from these rating levels, among other things, could restrict the availability, or increasethe cost, of future financing for the Company as well as affect the fair market value of existing debt. A rating reflects only the view of a rating agency andis not a recommendation to buy, sell or hold securities. Ratings can be revised upward or downward at any time by a rating agency if such rating agencydecides that circumstances warrant such a change. +Other Liquidity Matters +Below is a summary of additional liquidity matters. See the indicated notes to our consolidated financial statements included in Part II, Item 8 of this report +for additional details related to these and other matters affecting our liquidity and commitments. +Pension and other postretirement plans Note 7 +Long-term debt and debt covenants Note 9 +Leases and capacity purchase agreements Note 10 +Commitments and contingencies Note 12 +The Company's business is capital intensive, requiring significant amounts of capital to fund the acquisition of assets, particularly aircraft. In the past, the +Company has funded the acquisition of aircraft with cash, by using EETC financing, by entering into finance or operating leases, or through other +financings. The Company also often enters into long-term lease commitments with airports to ensure access to terminal, cargo, maintenance and other +required facilities. +The table below provides a summary of the Company's current and long-term material cash requirements as of December 31, 2023 (in billions): +45 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_46.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a5356a002ba8215fe9a2f6ba779fd4e8ad39867 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,49 @@ +Table of Contents +2024 2025 2026 2027 2028 After 2028 +Long-term debt (a) $ 4.0 $ 3.5 $ 5.2 $ 2.5 $ 5.3 $ 8.9 +Finance leases—principal portion 0.2 0.1 — — — — +Interest on debt and finance leases (b) 1.5 1.3 1.1 0.9 0.6 0.8 +Operating leases (c) 0.8 0.7 0.7 0.9 0.7 2.9 +Leases not yet commenced (d) — 0.1 0.1 0.2 0.2 1.0 +Other financial liabilities 0.2 0.2 0.2 0.5 0.1 2.1 +Regional CPAs (e) 2.4 2.1 2.1 1.6 1.3 4.1 +Postretirement benefit payments (f) 0.1 0.1 0.1 0.1 0.1 0.3 +Pension funding (g) — 0.2 0.3 0.2 0.2 0.3 +Capital and other purchases (h) 12.1 7.9 6.0 4.5 6.1 23.5 +Total $ 21.3 $ 16.2 $ 15.8 $ 11.4 $ 14.6 $ 43.9 +(a) Long-term debt presented in the Company's financial statements is net of $277 million of debt discount, premiums and debt issuance costs which are being amortized over the debt terms. +Cash requirements do not include the debt discount, premiums and debt issuance costs. +(b) Future interest payments on variable rate debt were computed using the rates as of December 31, 2023. +(c) Represents future payments under fixed rate operating lease obligations. See Note 10 to the financial statements included in Part II, Item 8 of this report for information on variable rate andshort-term operating leases. +(d) Represents future payments under leases that have not yet commenced and are not included in the consolidated balance sheet. See Note 10 to the financial statements included in Part II, +Item 8 of this report for information on these leases. +(e) Represents our estimates of future minimum noncancelable commitments under our CPAs and does not include the portion of the underlying obligations for aircraft and facility rent that is +disclosed as part of operating lease obligations. Amounts also exclude a portion of United's finance lease obligations recorded for certain of its CPAs. See Note 10 to the financial statements +included in Part II, Item 8 of this report for the significant assumptions used to estimate the payments. +(f) Amounts represent postretirement benefit payments through 2033. Benefit payments approximate plan contributions as plans are substantially unfunded. +(g) Represents an estimate of the minimum funding requirements as determined by government regulations for United's U.S. pension plans. Amounts are subject to change based on numerousassumptions, including the performance of assets in the plans and bond rates. +(h) Represents contractual commitments for firm order aircraft, spare engines and other capital purchase commitments. See Note 12 to the financial statements included in Part II, Item 8 of this +report for a discussion of our purchase commitments. +In addition to the material cash requirements discussed above, the Company has made certain guarantees that could have a material future effect on the +Company's cash requirements: +Letters of Credit and Surety Bonds. As of December 31, 2023, United had approximately $518 million of letters of credit and surety bonds securing various +obligations with expiration dates through 2033. Certain of these amounts are cash collateralized and reported within Restricted cash on our statement of +financial position. See Note 12 to the financial statements included in Part II, Item 8 of this report for more information related to these letters of credit and +surety bonds. +Guarantee of Debt of Others. As of December 31, 2023, United is the guarantor of $77 million of aircraft mortgage debt issued by one of United's regional +carriers. The aircraft mortgage debt is subject to increased cost provisions and the Company would potentially be responsible for those costs under the +guarantees. The increased cost provisions in the $77 million of aircraft mortgage debt are similar to those in certain of the Company's debt agreements. See +discussion under Increased Cost Provisions, below, for additional information on increased cost provisions related to the Company's debt. +Fuel Consortia. United participates in numerous fuel consortia with other air carriers at major airports to reduce the costs of fuel distribution and storage. +Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the +consortia based on usage. The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel +storage and distribution facilities that are typically financed through various debt obligations. In general, each consortium lease agreement requires the +consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on these debt obligations. As of +December 31, 2023, approximately $2.5 billion principal amount of such loans was secured by significant fuel facility leases in which United participates, +as to which United and each of the signatory airlines has provided indirect guarantees of the debt. As of December 31, 2023, the Company's contingent +exposure was approximately $447 million principal amount of such obligations based on its recent consortia participation. The Company's contingent +exposure could increase if the participation of other air carriers decreases. The guarantees will expire when these obligations are paid in full, which ranges +from 2027 to 2056. The Company concluded it was not necessary to record a liability for these indirect guarantees. +Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse +lenders for any reduced returns with respect to the loans due to any change in capital requirements +46 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_47.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..7850b2ea268b654fe39bd7d76d7d8a01d98cf1ce --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,47 @@ +Table of Contents +and, in the case of loans with respect to which the interest rate is based on the Secured Overnight Financing Rate ("SOFR"), for certain other increased +costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain +limited steps to mitigate the requirement for, or the amount of, such increased costs. The Company elected to apply the guidance in Accounting Standards +Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the London Interbank Offered Rate (LIBOR) to SOFR. The +application of this guidance did not have any material impact on the Company's financial statements. At December 31, 2023, the Company had $11.3 +billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions. In several financing +transactions involving loans or leases from non-U.S. entities, with remaining terms of up to approximately 12 years and an aggregate balance of $8.1 +billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding +taxes, subject to customary exclusions. +Critical Accounting Policies +Critical accounting policies are defined as those that are affected by significant judgments and uncertainties which potentially could result in materially +different accounting under different assumptions and conditions. The Company has prepared the financial statements in conformity with GAAP, which +requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those +estimates under different assumptions or conditions. The Company has identified the following critical accounting policies that impact the preparation of +the financial statements. +Revenue Recognition. Passenger revenue is recognized when transportation is provided. Passenger tickets and related ancillary services sold by the +Company for flights are purchased primarily via credit card transactions, with payments collected by the Company in advance of the performance of related +services. The Company initially records ticket sales in its Advance ticket sales liability, deferring revenue recognition until the travel occurs. For travel that +has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as +travel occurs. Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to +be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off +if the amount recorded was different from the original estimate. When necessary, the Company records a reserve against its billings and payables with other +airlines based on historical experience. +The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated by its +other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their portion of the +contract (i.e. transportation of the passenger). The Company, as the agent, recognizes revenue within Other operating revenue at the time of the travel for +the net amount representing commission to be retained by the Company for any segments flown by other airlines. +Advance ticket sales represent the Company's liability to provide air transportation in the future. All tickets sold at any given point in time have travel dates +through the next 12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. +The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue and any changes in estimates in +proportion to the usage of the related tickets. To determine breakage, the Company uses its historical experience with expired tickets and certificates and +other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns. +Frequent Flyer Accounting. United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program +participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that participate in +the program. Members can also earn miles by purchasing goods and services from our network of non-airline partners. We have contracts to sell miles to +these partners with the terms extending from one to six years. These partners include domestic and international credit card issuers, retail merchants, hotels, +car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes and government-imposed fees), discounted or +upgraded air travel and non-travel awards. +Co-Brand Agreement. United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner Chase. Chase +awards miles to MileagePlus members based on their credit card activity. United identified the following significant separately identifiable performance +obligations in the Co-Brand Agreement: +• MileagePlus miles awarded – United has a performance obligation to provide MileagePlus cardholders with miles to be used for air travel and +non-travel award redemptions. The Company records Passenger revenue related to the travel awards when the transportation is provided and +records Other revenue related to the non-travel awards when the goods +47 +The secret clothing is a "hat". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_48.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c56a8e8087f75fa30b3215971a3a9c448126506 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,47 @@ +Table of Contents +or services are delivered. The Company records the cost associated with non-travel awards in Other operating revenue, as an agent. +• Marketing – United has a performance obligation to provide Chase access to United's customer list and the use of United's brand. Marketing +revenue is recorded to Other operating revenue as miles are delivered to Chase. +• Advertising – United has a performance obligation to provide advertising in support of the MileagePlus card in various customer contact points +such as United's website, email promotions, direct mail campaigns, airport advertising and in-flight advertising. Advertising revenue is recorded to +Other operating revenue as miles are delivered to Chase. +• Other travel-related benefits – United's performance obligations are comprised of various items such as waived bag fees, seat upgrades and lounge +passes. Lounge passes are recorded to Other operating revenue as customers use the lounge passes. Bag fees and seat upgrades are recorded to +Passenger revenue at the time of the associated travel. +We account for all the payments received under the Co-Brand Agreement by allocating them to the separately identifiable performance obligations. The fair +value of the separately identifiable performance obligations is determined using management's estimated selling price of each component. The objective of +using the estimated selling price based methodology is to determine the price at which we would transact a sale if the product or service were sold on a +stand-alone basis. Accordingly, we determine our best estimate of selling price by considering multiple inputs and methods including, but not limited to, +discounted cash flows, brand value, volume discounts, published selling prices, number of miles awarded and number of miles redeemed. The Company +estimated the selling prices and volumes over the term of the Co-Brand Agreement, at the inception of the contract, in order to determine the allocation of +proceeds to each of the components to be delivered. We also evaluate volumes on an annual basis, which may result in a change in the allocation of the +estimated consideration from the Co-Brand Agreement on a prospective basis. +Indefinite-lived intangible assets. The Company has indefinite-lived intangible assets, including goodwill. Goodwill and indefinite-lived intangible assets +are not amortized but are reviewed for impairment on an annual basis as of October 1, or more frequently if events or circumstances indicate that the asset +may be impaired. When there is a triggering event, the Company typically determines fair value using either market or variation of the income approach +valuation techniques. These measurements include the following key assumptions: (1) forecasted revenues, expenses, margin and cash flows, (2) terminal +period growth rate, (3) an estimated weighted average cost of capital, (4) asset-specific risk factor and (5) a tax rate. These assumptions are consistent with +those that hypothetical market participants would use. Because we are required to make estimates and assumptions when evaluating goodwill and +indefinite-lived intangible assets for impairment, actual results may differ materially from these estimates. Actual results will be influenced by the +competitive environment, fuel costs and other expenses, and potentially other unforeseen events or circumstances that could have a material impact on +future results. We recognize an impairment when the fair value of an intangible asset is less than its carrying value. +Every year, the Company evaluates its indefinite-lived intangible assets for possible impairments. For the Company's China route authority, the Company +performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying value. For all +other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment had occurred. To +determine the fair value of the China route authority, the Company used a discounted cash flow method. Key inputs into the models included forecasted +revenues, fuel costs, other operating costs, margin and an overall discount rate. These assumptions are inherently uncertain as they relate to future events +and circumstances. +See Notes 1 and 13 to the financial statements included in Part II, Item 8 of this report for additional information. +Cautionary Statement Regarding Forward-Looking Statements +This report contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E +of the Securities Exchange Act of 1934, as amended, including in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and +Results of Operations and elsewhere, relating to, among other things, goals, plans and projections regarding the Company's financial position, results of +operations, market position, capacity, fleet, product development, ESG-related strategy initiatives and business strategy. Such forward-looking statements +are based on historical performance and current expectations, estimates, forecasts and projections about the Company's future financial results, goals, plans, +commitments, strategies and objectives and involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors +that could delay, divert or change any of them, that are difficult to predict, may be beyond the Company's control and could cause the Company's future +financial results, goals, plans, commitments, strategies and objectives to differ materially from those expressed in, or implied by, the statements. Words +such as "should," "could," "would," "will," "may," "expects," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "projects," +"forecast," "guidance," "outlook," "goals," "targets," "pledge," "confident," "optimistic," "dedicated," "positioned," and other words and terms of similar +meaning and expression are intended to identify forward-looking statements, although not +48 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_49.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e38419b733f9b3a3dd66c2c53e7faeb29a695b8 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,47 @@ +Table of Contents +all forward-looking statements contain such terms. All statements, other than those that relate solely to historical facts, are forward-looking statements. +Additionally, forward-looking statements include conditional statements and statements that identify uncertainties or trends, discuss the possible future +effects of known trends or uncertainties, or that indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. +All forward-looking statements in this report are based upon information available to us on the date of this report. We undertake no obligation to publicly +update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as +required by applicable law or regulation. +Our actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the following: +execution risks associated with our strategic operating plan; changes in our network strategy or other factors outside our control resulting in less economic +aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders, as well as any inability to accept or +integrate new aircraft into our fleet as planned, including as a result of any mandatory groundings of aircraft; any failure to effectively manage, and receive +anticipated benefits and returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions, as well as related costs or other +issues, or related exposures to unknown liabilities or other issues or underperformance as compared to our expectations; adverse publicity, harm to our +brand, reduced travel demand, potential tort liability and operational restrictions as a result of an accident, catastrophe or incident involving us, our regional +carriers, our codeshare partners or another airline; the highly competitive nature of the global airline industry and susceptibility of the industry to price +discounting and changes in capacity, including as a result of alliances, joint business arrangements or other consolidations; our reliance on a limited number +of suppliers to source a majority of our aircraft, engines and certain parts, and the impact of any failure to obtain timely deliveries, additional equipment or +support from any of these suppliers; disruptions to our regional network and United Express flights provided by third-party regional carriers; unfavorable +economic and political conditions in the United States and globally; reliance on third-party service providers and the impact of any significant failure of +these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services; extended interruptions or +disruptions in service at major airports where we operate and space, facility and infrastructure constraints at our hubs or other airports; geopolitical conflict, +terrorist attacks or security events (including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict and to +Tel Aviv as a result of the Israeli-Hamas military conflict and an escalation of the broader economic consequences of the conflicts beyond their current +scope); any damage to our reputation or brand image; our reliance on technology and automated systems to operate our business and the impact of any +significant failure or disruption of, or failure to effectively integrate and implement, these technologies or systems; increasing privacy, data security and +cybersecurity obligations or a significant data breach; increased use of social media platforms by us, our employees and others; the impacts of union +disputes, employee strikes or slowdowns, and other labor-related disruptions or regulatory compliance costs on our operations or financial performance; +any failure to attract, train or retain skilled personnel, including our senior management team or other key employees; the monetary and operational costs of +compliance with extensive government regulation of the airline industry; current or future litigation and regulatory actions, or failure to comply with the +terms of any settlement, order or agreement relating to these actions; costs, liabilities and risks associated with environmental regulation and climate +change, and any failure to achieve or demonstrate progress towards our climate goals; high and/or volatile fuel prices or significant disruptions in the +supply of aircraft fuel; the impacts of our significant amount of financial leverage from fixed obligations and the impacts of insufficient liquidity on our +financial condition and business; failure to comply with financial and other covenants governing our debt, including our MileagePlus® financing +agreements; limitations on our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income for U.S. +federal income tax purposes; our failure to realize the full value of our intangible assets or our long-lived assets, causing us to record impairments; +fluctuations in the price of our common stock; the impacts of seasonality and other factors associated with the airline industry; increases in insurance costs +or inadequate insurance coverage and other risks and uncertainties set forth under Part I, Item 1A. Risk Factors, of this Form 10-K, and under "Economic +and Market Factors" and "Governmental Actions" in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of +Operations, of this report, as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC. +The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. +Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all +potential risks and uncertainties. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and +therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change. For +instance, we regularly monitor future demand and booking trends and adjust capacity, as needed. As such, our actual flown capacity may differ materially +from currently published flight schedules or current estimations. +49 +The secret currency is a "dollar". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_5.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..83ad8c25f4a7f9faa13e950c14afff151ced7045 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,43 @@ +Table of Contents +Loyalty Program. United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program participants. +Members in this program earn miles for flights on United, United Express, Star Alliance members and certain other airlines that participate in the program. +Members can also earn miles by purchasing goods and services from our network of non-airline partners, such as domestic and international credit card +issuers, retail merchants, hotels and car rental companies. Members can redeem miles for free (other than taxes and government-imposed fees), discounted +or upgraded travel and non-travel awards. +United has an agreement with JPMorgan Chase Bank, N.A. ("Chase"), pursuant to which members of United's MileagePlus loyalty program who are +residents of the United States can earn miles for making purchases using a MileagePlus credit card issued by Chase (the "Co-Brand Agreement"). The Co- +Brand Agreement also provides for joint marketing and other support for the MileagePlus credit card and provides Chase with other benefits such as +permission to market to the Company's customer database. +In 2023, approximately 7.4 million MileagePlus flight awards were used on United and United Express. These awards represented approximately 8.1% of +United's total revenue passenger miles. Total miles redeemed for flights on United and United Express, including class-of-service upgrades, represented +approximately 92% of the total miles redeemed. In addition, excluding miles redeemed for flights on United and United Express, MileagePlus members +redeemed miles for approximately 2.4 million other awards. These awards include United Club memberships, car and hotel awards, merchandise and +flights on other air carriers. +Air Cargo. United provides freight and mail transportation services (air cargo). The majority of air cargo services are provided to commercial businesses,freight forwarders, logistics firms and national postal services. Through our global network, our air cargo operations are able to connect the world's majorfreight gateways. We generate air cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passengerflights, as well as through interline and ground trucking arrangements. +Distribution Channels. The Company's airline seat inventory and fares are distributed through the Company's direct channels, traditional travel agencies +and online travel agencies ("OTA"). The use of the Company's direct sales website, www.united.com, the Company's mobile applications and alternative +distribution systems provides the Company with an opportunity to de-commoditize its services, better present its content, make more targeted offerings, +better retain its customers, enhance its brand and lower its ticket distribution costs. Agency sales are primarily sold using global distribution systems +("GDS"). United has developed and expects to continue to develop capabilities to sell certain ancillary products through the GDS channel to provide an +enhanced buying experience for customers who purchase in that channel. +Third-Party Business. United generates third-party business revenue that includes maintenance services, frequent flyer award non-travel redemptions, +flight academy and ground handling. +Aircraft Fuel. The table below summarizes the fuel consumption and expense of UAL's aircraft (including the operations of our regional partners operating +under CPAs) during the last three years. +Year Gallons Consumed (in millions) Fuel Expense (in millions) Average Price Per Gallon Percentage of Total OperatingExpense +2023 4,205 $ 12,651 $ 3.01 26 % +2022 3,608 $ 13,113 $ 3.63 31 % +2021 2,729 $ 5,755 $ 2.11 22 % +Our operational and financial results can be significantly impacted by changes in the price and availability of aircraft fuel. The Company routinely enters +into purchase contracts based on expected fuel requirements for UAL aircraft (including regional partners operating under CPAs) that are generally indexed +to various market price benchmarks for aircraft fuel. These contracts customarily do not provide material protection against changes in market prices or +guarantee the uninterrupted availability of adequate quantities of aircraft fuel. The price of aircraft fuel used by our operations has fluctuated substantially +in the past several years. The Company's current strategy is to not enter into financial transactions to hedge the market price exposure of its expected fuel +consumption, although the Company regularly reviews its strategy based on market conditions and other factors. +Industry Conditions +Domestic Competition. The domestic airline industry is highly competitive and dynamic. The Company's competitors consist primarily of other airlines +and, to a certain extent, other forms of transportation. Currently, any U.S. carrier deemed fit by the U.S. Department of Transportation (the "DOT") is +largely free to operate scheduled passenger service between any two points within the United States. Competition can be direct, in the form of another +carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an +itinerary requiring a +5 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_50.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c24926579f2a372747f058356b92a51753775df1 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,37 @@ +Table of Contents +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. +We are exposed to market risk resulting from changes in currency exchange rates and interest rates. These risks, along with other business risks, impact our +cost of capital. It is our policy to manage our debt structure and foreign exchange exposure in order to manage capital costs, control financial risks and +maintain financial flexibility over the long term. In managing market risks, we may employ derivatives according to documented policies and procedures, +including interest rate swaps, interest rate locks, foreign currency exchange contracts and combined interest rate foreign currency contracts (cross-currency +swaps). We do not use derivatives for trading or speculative purposes. We do not foresee significant changes in the strategies we use to manage market risk +in the near future. All of our financial instruments are subject to counterparty credit risk considered as part of the overall fair value measurement. +Interest Rates. Our net income is affected by fluctuations in interest rates (e.g. interest expense on variable rate debt and interest income earned on short- +term investments). The Company's policy is to manage interest rate risk through a combination of fixed and variable rate debt. The following table +summarizes information related to the Company's interest rate market risk at December 31, 2023 (in millions): +Variable rate debt +Carrying value of variable rate debt $ 11,184 +Impact of 100 basis point increase on projected interest expense for the following year 77 +Fixed rate debt +Carrying value of fixed rate debt 17,891 +Fair value of fixed rate debt 17,276 +Impact of 100 basis point increase in market rates on fair value (406) +A change in market interest rates would also impact interest income earned on our cash, cash equivalents and short-term investments. Assuming our cash, +cash equivalents and short-term investments remain at their average 2023 levels, a 100 basis point increase in interest rates would result in a corresponding +increase in the Company's interest income of approximately $171 million during 2024. +Commodity Price Risk (Aircraft Fuel). The price of aircraft fuel can significantly affect the Company's operations, results of operations, financial position +and liquidity. +Our operational and financial results can be significantly impacted by changes in the price and availability of aircraft fuel. To provide adequate supplies of +fuel, the Company routinely enters into purchase contracts that are customarily indexed to market prices for aircraft fuel, and the Company generally has +some ability to cover short-term fuel supply and infrastructure disruptions at some major demand locations. The Company's current strategy is to not enter +into transactions to hedge fuel price volatility, although the Company regularly reviews its policy based on market conditions and other factors. A one- +dollar change in the price of a barrel of aircraft fuel would change the Company's 2024 projected fuel expense by approximately $100 million. +Foreign Currency. The Company generates revenues and incurs expenses in numerous foreign currencies. Changes in foreign currency exchange rates +impact the Company's results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Some of +the Company's more significant foreign currency exposures include the Canadian dollar, European euro, Japanese yen, Chinese renminbi, Brazilian real and +Mexican peso. The Company's current strategy is to not enter into transactions to hedge its foreign currency exposure, although the Company regularly +reviews its policy based on market conditions and other factors. +The result of a uniform 1% strengthening in the value of the U.S. dollar from December 31, 2023 levels relative to each of the currencies in which the +Company has foreign currency exposure would result in a decrease in pre-tax income of approximately $16 million for the year ending December 31, 2024. +This sensitivity analysis was prepared based upon projected 2024 foreign currency-denominated revenues and expenses as of December 31, 2023. +50 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_51.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d322c989cd3baddac757c984c1751869b8db64d --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,33 @@ +Table of Contents +ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. +Report of Independent Registered Public Accounting Firm +To the Stockholders and the Board of Directors of United Airlines Holdings, Inc. +Opinion on the Financial Statements +We have audited the accompanying consolidated balance sheets of United Airlines Holdings, Inc. (the "Company") as of December 31, 2023 and 2022, the +related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows, for each of the three years in the period +ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the +"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the +Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, +2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's +internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the +Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024, expressed an unqualified +opinion thereon. +Basis for Opinion +These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial +statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the +Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the +PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing +procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to +those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits +also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the +financial statements. We believe that our audits provide a reasonable basis for our opinion. +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that is communicated or required +to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our +especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the +consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the +critical audit matter or on the accounts or disclosures to which it relates. +51 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_52.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..36fcb2bb5ae70e91648650006bde8228ebeb6e10 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,29 @@ +Table of Contents +Indefinite-lived Intangible Asset (China Route Authorities) Impairment Analysis +Description of the Matter As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an +annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired. For the +Company’s China route authority, the Company performed a quantitative assessment which involved determining the fair +value of the asset and comparing that amount to the asset’s carrying value. At December 31, 2023, the carrying value of the +Company's China route authority indefinite-lived intangible asset (the China intangible asset) was $1.0 billion. +Auditing management's annual China intangible asset impairment test was complex and highly judgmental due to the +significant estimation required in determining the fair value of the asset. The fair value estimate was sensitive to significant +assumptions such as forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate, each of +which is affected by expectations about future market or economic conditions. As a result of the subjectivity of the +assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value +and trigger impairment charges. +We Addressed the Matterin Our Audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material +misstatement relating to the estimate of fair value of the China intangible asset used in the annual impairment test. This +included testing controls over management's review of the significant assumptions used in the discounted cash flow +methodology, including forecasted revenues, fuel costs, other operating costs, margin and the overall discount rate. +To test the estimated fair value of the Company's China intangible asset, we performed audit procedures that included, +among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in +the valuation model. We compared significant assumptions to current industry, market and economic trends, and to the +Company's historical results. We assessed the historical accuracy of management's estimates and performed sensitivity +analyses of significant assumptions to evaluate the changes in the fair value of the China intangible asset that would result +from changes in assumptions. We also involved a valuation specialist to assist in our evaluation of the Company's overall +discount rate. +/s/ Ernst & Young LLP +We have served as the Company's auditor since 2009. +Chicago, Illinois +February 29, 2024 +52 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_53.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..19cdb2cdac3449b56267b628e1447a552769b65c --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,30 @@ +Table of Contents + +Report of Independent Registered Public Accounting Firm + +To the Stockholder and the Board of Directors of United Airlines, Inc. +Opinion on the Financial Statements +We have audited the accompanying consolidated balance sheets of United Airlines, Inc. (the "Company") as of December 31, 2023 and 2022, and the +related consolidated statements of operations, comprehensive income (loss), stockholder's equity and cash flows, for each of the three years in the period +ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the +"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the +Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, +2023, in conformity with U.S. generally accepted accounting principles. +Basis for Opinion +These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial +statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) +("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules +and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor +were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of +internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over +financial reporting. Accordingly, we express no such opinion. +Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and +performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in +the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as +evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated orrequired to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) +involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinionon the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinionon the critical audit matter or on the accounts or disclosures to which it relates. +53 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_54.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..46d1417a8b025d56265cc9e6bcbbbe5400436c1b --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,29 @@ +Table of Contents +Indefinite-lived Intangible Asset (China Route Authorities) Impairment Analysis +Description of the Matter As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an +annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired. For the +Company’s China route authority, the Company performed a quantitative assessment which involved determining the fair +value of the asset and comparing that amount to the asset’s carrying value. At December 31, 2023, the carrying value of the +Company's China route authority indefinite-lived intangible asset (the China intangible asset) was $1.0 billion. +Auditing management's annual China intangible asset impairment test was complex and highly judgmental due to the +significant estimation required in determining the fair value of the asset. The fair value estimate was sensitive to significant +assumptions such as forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate, each of +which is affected by expectations about future market or economic conditions. As a result of the subjectivity of the +assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value +and trigger impairment charges. +We Addressed the Matterin Our Audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material +misstatement relating to the estimate of fair value of the China intangible asset used in the annual impairment test. This +included testing controls over management's review of the significant assumptions used in the discounted cash flow +methodology, including forecasted revenues, fuel costs, other operating costs, margin and the overall discount rate. +To test the estimated fair value of the Company's China intangible asset, we performed audit procedures that included, +among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in +the valuation model. We compared significant assumptions to current industry, market and economic trends, and to the +Company's historical results. We assessed the historical accuracy of management's estimates and performed sensitivity +analyses of significant assumptions to evaluate the changes in the fair value of the China intangible asset that would result +from changes in assumptions. We also involved a valuation specialist to assist in our evaluation of the Company's overall +discount rate. +/s/ Ernst & Young LLP +We have served as the Company's auditor since 2009. +Chicago, Illinois +February 29, 2024 +54 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_55.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..e25f5eb65715837bad97138e55f3baddfc5f2685 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,40 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED OPERATIONS +(In millions, except per share amounts) + + Year Ended December 31, + 2023 2022 2021 +Operating revenue: +Passenger revenue $ 49,046 $ 40,032 $ 20,197 +Cargo 1,495 2,171 2,349 +Other operating revenue 3,176 2,752 2,088 +Total operating revenue 53,717 44,955 24,634 +Operating expense: +Salaries and related costs 14,787 11,466 9,566 +Aircraft fuel 12,651 13,113 5,755 +Landing fees and other rent 3,076 2,576 2,416 +Aircraft maintenance materials and outside repairs 2,736 2,153 1,316 +Depreciation and amortization 2,671 2,456 2,485 +Regional capacity purchase 2,400 2,299 2,147 +Distribution expenses 1,977 1,535 677 +Aircraft rent 197 252 228 +Special charges 949 140 (3,367) +Other operating expenses 8,062 6,628 4,433 +Total operating expense 49,506 42,618 25,656 +Operating income (loss) 4,211 2,337 (1,022) +Nonoperating income (expense): +Interest expense (1,956) (1,778) (1,657) +Interest income 827 298 36 +Interest capitalized 182 105 80 +Unrealized gains (losses) on investments, net 27 20 (34) +Miscellaneous, net 96 8 40 +Total nonoperating expense, net (824) (1,347) (1,535) +Income (loss) before income taxes 3,387 990 (2,557) +Income tax expense (benefit) 769 253 (593) +Net income (loss) $ 2,618 $ 737 $ (1,964) +Earnings (loss) per share, basic $ 7.98 $ 2.26 $ (6.10) +Earnings (loss) per share, diluted $ 7.89 $ 2.23 $ (6.10) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +55 +The secret instrument is a "piano". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_56.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a9fc46e9d13f8cdc03738acb73855601ab26341 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,14 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 2,618 $ 737 $ (1,964) +Other comprehensive income (loss), net of tax: +Employee benefit plans (261) 1,145 199 +Investments and other 24 (28) (2) +Total other comprehensive income (loss), net of tax (237) 1,117 197 +Total comprehensive income (loss), net $ 2,381 $ 1,854 $ (1,767) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +56 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_57.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..d948ee759586c6ab7e125fae5484946d3eb883e0 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,33 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except shares) + +At December 31, +ASSETS 2023 2022 +Current assets: +Cash and cash equivalents $ 6,058 $ 7,166 +Short-term investments 8,330 9,248 +Restricted cash 31 45 +Receivables, less allowance for credit losses (2023—$18; 2022—$11) 1,898 1,801 +Aircraft fuel, spare parts and supplies, less obsolescence allowance (2023—$689; 2022—$610) 1,561 1,109 +Prepaid expenses and other 609 689 +Total current assets 18,487 20,058 +Operating property and equipment: +Flight equipment 48,448 42,775 +Other property and equipment 10,527 9,334 +Purchase deposits for flight equipment 3,550 2,820 +Total operating property and equipment 62,525 54,929 +Less—Accumulated depreciation and amortization (22,710) (20,481) +Total operating property and equipment, net 39,815 34,448 +Operating lease right-of-use assets 3,914 3,889 +Other assets: +Goodwill 4,527 4,527 +Intangibles, less accumulated amortization (2023—$1,495; 2022—$1,472) 2,725 2,762 +Restricted cash 245 210 +Deferred income taxes — 91 +Investments in affiliates and other, less allowance for credit losses (2023—$38; 2022—$21) 1,391 1,373 +Total other assets 8,888 8,963 +Total assets $ 71,104 $ 67,358 +(continued on next page) +57 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_58.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..9883f96e67acf331dea0f38cf9a8ec5a3fb8f379 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,41 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except shares) + + At December 31, +LIABILITIES AND STOCKHOLDERS' EQUITY 2023 2022 +Current liabilities: +Accounts payable $ 3,835 $ 3,395 +Accrued salaries and benefits 2,940 1,971 +Advance ticket sales 6,704 7,555 +Frequent flyer deferred revenue 3,095 2,693 +Current maturities of long-term debt 4,018 2,911 +Current maturities of other financial liabilities 57 23 +Current maturities of operating leases 576 561 +Current maturities of finance leases 172 104 +Other 806 779 +Total current liabilities 22,203 19,992 +Long-term debt 25,057 28,283 +Long-term obligations under operating leases 4,503 4,459 +Long-term obligations under finance leases 91 115 +Other liabilities and deferred credits: +Frequent flyer deferred revenue 4,048 3,982 +Pension liability 968 747 +Postretirement benefit liability 637 671 +Deferred income taxes 594 0 +Other financial liabilities 2,265 844 +Other 1,414 1,369 +Total other liabilities and deferred credits 9,926 7,613 +Commitments and contingencies +Stockholders' equity: +Preferred stock — — +Common stock at par, $0.01 par value; authorized 1,000,000,000 shares; outstanding 328,018,739 and326,930,321 shares at December 31, 2023 and 2022, respectively 4 4 +Additional capital invested 8,992 8,986 +Stock held in treasury, at cost (3,441) (3,534) +Retained earnings 3,831 1,265 +Accumulated other comprehensive income (62) 175 +Total stockholders' equity 9,324 6,896 +Total liabilities and stockholders' equity $ 71,104 $ 67,358 +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +58 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_59.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..c20bfa9be5add42954c72f32c466052264976d19 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,49 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Operating Activities: +Net income (loss) $ 2,618 $ 737 $ (1,964) +Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities - +Deferred income tax (benefit) 756 248 (583) +Depreciation and amortization 2,671 2,456 2,485 +Operating and non-operating special charges, non-cash portion 84 16 32 +Unrealized (gains) losses on investments (27) (20) 34 +Amortization of debt discount and debt issuance costs 139 156 171 +Other operating activities 6 218 222 +Changes in operating assets and liabilities - +Increase in receivables (100) (158) (448) +Increase in prepaids and other assets (463) (86) (292) +Increase (decrease) in advance ticket sales (851) 1,200 1,521 +Increase in frequent flyer deferred revenue 468 393 307 +Increase in accounts payable 572 796 985 +Increase (decrease) in other liabilities 1,038 110 (403) +Net cash provided by operating activities 6,911 6,066 2,067 +Investing Activities: +Capital expenditures, net of flight equipment purchase deposit returns (7,171) (4,819) (2,107) +Purchases of short-term and other investments (9,470) (11,232) (68) +Proceeds from sale of short-term and other investments 10,519 2,084 397 +Proceeds from sale of property and equipment 39 207 107 +Other, net (23) (69) (1) +Net cash used in investing activities (6,106) (13,829) (1,672) +Financing Activities: +Proceeds from issuance of debt and other financial liabilities, net of discounts and fees2,388 736 11,096 +Payments of long-term debt, finance leases and other financial liabilities (4,248) (4,011) (5,205) +Proceeds from equity issuance — — 532 +Other, net (32) (74) (27) +Net cash provided by (used in) financing activities (1,892) (3,349) 6,396 +Net increase (decrease) in cash, cash equivalents and restricted cash (1,087) (11,112) 6,791 +Cash, cash equivalents and restricted cash at beginning of year 7,421 18,533 11,742 +Cash, cash equivalents and restricted cash at end of year $ 6,334 $ 7,421 $ 18,533 +Investing and Financing Activities Not Affecting Cash: +Property and equipment acquired through the issuance of debt, finance leases and other$ 777 $ 19 $ 814 +Right-of-use assets acquired through operating leases 552 137 771 +Lease modifications and lease conversions 546 (84) 123 +Investment interests received in exchange for goods and services 33 103 295 +Cash Paid During the Period for: +Interest $ 1,848 $ 1,573 $ 1,424 +Income taxes 7 8 — +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +59 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_6.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..76558e95cc2a2c74a8cec4eaef1313bd7d6e0f76 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,44 @@ +Table of Contents +connection at another airport. Air carriers' cost structures are not uniform and are influenced by numerous factors. Carriers with lower costs may offer +lower fares to passengers, which could have a potential negative impact on the Company's revenues. Domestic pricing decisions are impacted by intense +competitive pressure exerted on the Company by other U.S. airlines. In order to remain competitive and maintain passenger traffic levels, we often find it +necessary to match competitors' discounted fares. +International Competition. Internationally, the Company competes not only with U.S. airlines, but also with foreign carriers. International competition has +increased and may continue to increase in the future as a result of airline mergers and acquisitions, JBAs, alliances, restructurings, liberalization of aviation +bilateral agreements and new or increased service by competitors. Competition on international routes is subject to varying degrees of governmental +regulation. The Company's ability to compete successfully with non-U.S. carriers on international routes depends in part on its ability to generate traffic to +and from the entire United States via its integrated domestic route network and its ability to overcome business and operational challenges across its +network worldwide. Foreign carriers currently are prohibited by U.S. law from carrying local passengers between two points in the United States and the +Company generally experiences comparable restrictions in foreign countries. Separately, "fifth freedom rights" allow the Company to operate between +points in two different foreign countries and foreign carriers may also have fifth freedom rights between the U.S. and another foreign country. In the +absence of fifth freedom rights, or some other extra-bilateral right to conduct operations between two foreign countries, U.S. carriers are constrained from +carrying passengers to points beyond designated international gateway cities. To compensate partially for these structural limitations, U.S. and foreign +carriers have entered into alliances, immunized JBAs and marketing arrangements that enable these carriers to exchange traffic between each other's flights +and route networks. Through these arrangements, the Company strives to provide consumers with a growing number of seamless, cost-effective and +convenient travel options. See "Alliances" for additional information. +Seasonality. The air travel business is subject to seasonal fluctuations. Historically, demand for air travel is higher in the second and third quarters, driving +higher revenues, than in the first and fourth quarters, which are periods of lower travel demand. +Environmental, Social and Governance Approach +At United "Good Leads the Way" is more than a slogan; it fuels our mission to build the world's biggest and best airline. Our employees around the world +are joined together to enable connections that matter and move society—whether it is connecting people across cultures, flying a loved one to a wedding, +connecting medical professionals at a breakthrough conference or getting a business traveler to an important meeting or back home in time for a child’s big +game. +Today United is viewed not only as a leader among our peer airlines but as a leader among the world's largest corporations. Our leadership is driven by our +desire to blaze new trails by being a force for good, be responsive to the world in which we operate, be responsible for our actions and be committed to +doing the right thing. United has devoted its brand, reputation, resources, time and effort to pursuing corporate responsibility goals aimed to generate the +most impactful results that we can create. Simply, we aspire to use our influence and scale to lead in a way that inspires the world to action. Over the last +few years, we have made historic investments to fight climate change and provided career opportunities to thousands of people. +We set forth below three of our Environmental, Social and Governance focus areas. +Safety Culture +At United, safety is first in everything we do and is our first service standard of Core4 (we are safe, then caring, dependable and efficient). We are focused +on promoting our safety culture to help ensure that every employee across United holds each other to the highest safety standards. Our "No Small Roles in +Safety" strategy as part of our Safety Management System ("SMS") is designed to imbue every employee with an understanding of his or her significant +responsibility in our collective ambition to ensure the highest level of safety performance for our customers and employees. Our laser focus on safety is not +only essential to our success but also foundational to our culture. +We continue to evaluate and expand our SMS to incorporate new areas of the business to manage risk as we navigate this exciting time at United with the +growth in our aircraft fleet and the increasing number of destinations that we plan to serve. Our improved SMS allows us to proactively identify hazards +and mitigate risks to help ensure the safety of our customers and our employees as we grow. In addition, just as we have invested in infrastructure, +technology and tools, we are also investing in the training and development of our employees, especially those who are new to United, to help ensure they +gain proficiency in their roles and stay safe in the workplace. +Our approach to safety is centered around three components: +6 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_60.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..40aa57ad5811035423775fbe4ebd9e1bebd4d4f9 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,29 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY +(In millions) + + Common Stock Additional CapitalInvested TreasuryStock RetainedEarnings +Accumulated OtherComprehensiveIncome (Loss) TotalShares Amount +Balance at December 31, 2020 311.8 $ 4 $ 8,366 $ (3,897) $ 2,626 $ (1,139) $ 5,960 +Net loss — — — — (1,964) — (1,964) +Other comprehensive income — — — — — 197 197 +Stock-settled share-based compensation — — 232 — — — 232 +Warrants issued — — 99 — — — 99 +Issuance of common stock 11.0 — 532 — — — 532 +Stock issued for share-based awards, net of shares withheldfor tax 1.0 — (73) 83 (37) — (27) +Balance at December 31, 2021 323.8 4 9,156 (3,814) 625 (942) 5,029 + Net income — — — — 737 — 737 +Other comprehensive income — — — — — 1,117 1,117 +Stock-settled share-based compensation — — 86 — — — 86 +Stock issued for share-based awards, net of shares withheldfor tax 3.1 — (256) 280 (97) — (73) +Balance at December 31, 2022 326.9 4 8,986 (3,534) 1,265 175 6,896 + Net income — — — — 2,618 — 2,618 +Other comprehensive loss — — — — — (237) (237) +Stock-settled share-based compensation — — 77 — — — 77 +Proceeds from exercise of stock options 1 1 +Stock issued for share-based awards, net of shares withheldfor tax 1.1 — (72) 93 (52) — (31) +Balance at December 31, 2023 328.0 $ 4 $ 8,992 $ (3,441) $ 3,831 $ (62) $ 9,324 +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +60 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_61.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f7a9b895b438759ebb6911210c0b008619333de --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,37 @@ +Table of Contents +UNITED AIRLINES, INC. +STATEMENTS OF CONSOLIDATED OPERATIONS +(In millions) + +Year Ended December 31, + 2023 2022 2021 +Operating revenue: +Passenger revenue $ 49,046 $ 40,032 $ 20,197 +Cargo 1,495 2,171 2,349 +Other operating revenue 3,176 2,752 2,088 +Total operating revenue 53,717 44,955 24,634 +Operating expense: +Salaries and related costs 14,787 11,466 9,566 +Aircraft fuel 12,651 13,113 5,755 +Landing fees and other rent 3,076 2,576 2,416 +Aircraft maintenance materials and outside repairs 2,736 2,153 1,316 +Depreciation and amortization 2,671 2,456 2,485 +Regional capacity purchase 2,400 2,299 2,147 +Distribution expenses 1,977 1,535 677 +Aircraft rent 197 252 228 +Special charges (credits) 949 140 (3,367) +Other operating expenses 8,059 6,626 4,431 +Total operating expense 49,503 42,616 25,654 +Operating income (loss) 4,214 2,339 (1,020) +Nonoperating income (expense): +Interest expense (1,956) (1,778) (1,657) +Interest income 827 298 36 +Interest capitalized 182 105 80 +Unrealized gains (losses) on investments, net 27 20 (34) +Miscellaneous, net 96 8 40 +Total nonoperating expense, net (824) (1,347) (1,535) +Income (loss) before income taxes 3,390 992 (2,555) +Income tax expense (benefit) 770 253 (593) +Net income (loss) $ 2,620 $ 739 $ (1,962) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +61 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_62.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..948537e27684c5a9b64a51110c9568b22eb66748 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,14 @@ +Table of Contents +UNITED AIRLINES, INC. +STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 2,620 $ 739 $ (1,962) +Other comprehensive income (loss), net of tax: +Employee benefit plans (261) 1,145 199 +Investments and other 24 (28) (2) +Total other comprehensive income, net of tax (237) 1,117 197 +Total comprehensive income (loss), net $ 2,383 $ 1,856 $ (1,765) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +62 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_63.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..5277158ad3af6527b6aaae73458b1a379b650032 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,33 @@ +Table of Contents +UNITED AIRLINES, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except shares) + + At December 31, +ASSETS 2023 2022 +Current assets: +Cash and cash equivalents $ 6,058 $ 7,166 +Short-term investments 8,330 9,248 +Restricted cash 31 45 +Receivables, less allowance for credit losses (2023—$18; 2022—$11) 1,898 1,801 +Aircraft fuel, spare parts and supplies, less obsolescence allowance (2023—$689; 2022—$610) 1,561 1,109 +Prepaid expenses and other 609 689 +Total current assets 18,487 20,058 +Operating property and equipment: +Flight equipment 48,448 42,775 +Other property and equipment 10,527 9,334 +Purchase deposits for flight equipment 3,550 2,820 +Total operating property and equipment 62,525 54,929 +Less—Accumulated depreciation and amortization (22,710) (20,481) +Total operating property and equipment, net 39,815 34,448 +Operating lease right-of-use assets 3,914 3,889 +Other assets: +Goodwill 4,527 4,527 +Intangibles, less accumulated amortization (2023—$1,495; 2022—$1,472) 2,725 2,762 +Restricted cash 245 210 +Deferred income taxes — 62 +Investments in affiliates and other, less allowance for credit losses (2023—$38; 2022—$21) 1,391 1,373 +Total other assets 8,888 8,934 +Total assets $ 71,104 $ 67,329 +(continued on next page) +63 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_64.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..78daec7dc581950f976fb979620dc9872663e846 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,41 @@ +Table of Contents +UNITED AIRLINES, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except shares) + + At December 31, +LIABILITIES AND STOCKHOLDER'S EQUITY 2023 2022 +Current liabilities: +Accounts payable $ 3,835 $ 3,395 +Accrued salaries and benefits 2,940 1,971 +Advance ticket sales 6,704 7,555 +Frequent flyer deferred revenue 3,095 2,693 +Current maturities of long-term debt 4,018 2,911 +Current maturities of other financial liabilities 57 23 +Current maturities of operating leases 576 561 +Current maturities of finance leases 172 104 +Other 808 781 +Total current liabilities 22,205 19,994 +Long-term debt 25,057 28,283 +Long-term obligations under operating leases 4,503 4,459 +Long-term obligations under finance leases 91 115 +Other liabilities and deferred credits: +Frequent flyer deferred revenue 4,048 3,982 +Pension liability 968 747 +Postretirement benefit liability 637 671 +Deferred income taxes 622 — +Other financial liabilities 2,265 844 +Other 1,414 1,369 +Total other liabilities and deferred credits 9,954 7,613 +Commitments and contingencies +Stockholder's equity: +Common stock at par, $0.01 par value; authorized 1,000 shares; issued and outstanding 1,000 shares atDecember 31, 2023 and 2022 — — +Additional capital invested 482 403 +Retained earnings 6,336 3,716 +Accumulated other comprehensive income (62) 175 +Payable to parent 2,538 2,571 +Total stockholder's equity 9,294 6,865 +Total liabilities and stockholder's equity $ 71,104 $ 67,329 +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +64 +The secret food is a "hamburger". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_65.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d5c21cf72d817f777e4ef9bc00e7b82a5eccc91 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,49 @@ +Table of Contents +UNITED AIRLINES, INC. +STATEMENTS OF CONSOLIDATED CASH FLOWS +(In millions) +Year Ended December 31, +2023 2022 2021 +Operating Activities: +Net income (loss) $ 2,620 $ 739 $ (1,962) +Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities - +Deferred income tax (benefit) 757 248 (583) +Depreciation and amortization 2,671 2,456 2,485 +Operating and non-operating special charges, non-cash portion 84 16 32 +Unrealized (gains) losses on investments (27) (20) 34 +Amortization of debt discount and debt issuance costs 139 156 171 +Other operating activities 7 218 222 +Changes in operating assets and liabilities - +Increase in receivables (100) (158) (448) +Increase in intercompany receivables (33) (76) (28) +Increase in prepaids and other assets (463) (86) (293) +Increase (decrease) in advance ticket sales (851) 1,200 1,521 +Increase in frequent flyer deferred revenue 468 393 307 +Increase in accounts payable 572 796 985 +Increase (decrease) in other liabilities 1,035 110 (403) +Net cash provided by operating activities 6,879 5,992 2,040 +Investing Activities: +Capital expenditures, net of flight equipment purchase deposit returns (7,171) (4,819) (2,107) +Purchases of short-term and other investments (9,470) (11,232) (68) +Proceeds from sale of short-term and other investments 10,519 2,084 397 +Proceeds from sale of property and equipment 39 207 107 +Other, net (23) (69) (1) +Net cash used in investing activities (6,106) (13,829) (1,672) +Financing Activities: +Proceeds from issuance of debt and other financial liabilities, net of discounts and fees2,388 736 11,096 +Payments of long-term debt, finance leases and other financial liabilities (4,248) (4,011) (5,205) +Proceeds from issuance of parent company stock — — 532 +Net cash provided by (used in) financing activities (1,860) (3,275) 6,423 +Net increase (decrease) in cash, cash equivalents and restricted cash (1,087) (11,112) 6,791 +Cash, cash equivalents and restricted cash at beginning of year 7,421 18,533 11,742 +Cash, cash equivalents and restricted cash at end of year $ 6,334 $ 7,421 $ 18,533 +Investing and Financing Activities Not Affecting Cash: +Property and equipment acquired through the issuance of debt, finance leases and other$ 777 $ 19 $ 814 +Right-of-use assets acquired through operating leases 552 137 771 +Lease modifications and lease conversions 546 (84) 123 +Investment interests received in exchange for goods and services 33 103 295 +Cash Paid During the Period for: +Interest $ 1,848 $ 1,573 $ 1,424 +Income taxes 7 8 — +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +65 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_66.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f63f129cf0ce7e14ba777403d290b09ae38d4bf --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,28 @@ +Table of Contents +UNITED AIRLINES, INC. +STATEMENTS OF CONSOLIDATED STOCKHOLDER'S EQUITY +(In millions) + + +Additional CapitalInvested Retained Earnings +Accumulated Other Comprehensive Income (Loss) +(Receivablefrom) Payableto RelatedParties, Net Total +Balance at December 31, 2020 $ 85 $ 4,939 $ (1,139)$ 2,043 $ 5,928 +Net loss — (1,962) — — (1,962) +Other comprehensive income — — 197 — 197 +Stock-settled share-based compensation 232 — — — 232 +Impact of UAL common stock issuance — — — 532 532 +Other — — — 71 71 +Balance at December 31, 2021 317 2,977 (942) 2,646 4,998 +Net income — 739 — — 739 +Other comprehensive income — — 1,117 — 1,117 +Stock-settled share-based compensation 86 — — — 86 +Other — — — (75) (75) +Balance at December 31, 2022 403 3,716 175 2,571 6,865 +Net income — 2,620 — — 2,620 +Other comprehensive loss — — (237) — (237) +Stock-settled share-based compensation 77 — — — 77 +Other 2 — — (33) (31) +Balance at December 31, 2023 $ 482 $ 6,336 $ (62)$ 2,538 $ 9,294 +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +66 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_67.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..314391efde8828ed801d66525787962a37f4b792 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,41 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +UNITED AIRLINES, INC. +COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +Overview +United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned +subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). As UAL consolidates United for financial statement purposes, +disclosures that relate to activities of United also apply to UAL, unless otherwise noted. United's operating revenues and operating expenses comprise +nearly 100% of UAL's revenues and operating expenses. In addition, United comprises approximately the entire balance of UAL's assets, liabilities and +operating cash flows. When appropriate, UAL and United are named specifically for their individual contractual obligations and related disclosures and any +significant differences between the operations and results of UAL and United are separately disclosed and explained. We sometimes use the words "we," +"our," "us," and the "Company" in this report for disclosures that relate to all of UAL and United. +NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES +(a) Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of +America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these financial statements and +accompanying notes. Actual results could differ from those estimates. +(b) Revenue Recognition—Passenger revenue is recognized when transportation is provided and Cargo revenue is recognized when shipments arrive +at their destination. Other operating revenue is recognized as the related performance obligations are satisfied. +Passenger tickets and related ancillary services sold by the Company for flights are purchased primarily via credit card transactions, with +payments collected by the Company in advance of the performance of related services. The Company initially records ticket sales in its Advance +ticket sales liability, deferring revenue recognition until the travel occurs. For travel that has more than one flight segment, the Company deems +each segment as a separate performance obligation and recognizes revenue for each segment as travel occurs. Tickets sold by other airlines where +the Company provides the transportation are recognized as passenger revenue at the estimated value to be billed to the other airline when travel is +provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off if the amount recorded was +different from the original estimate. When necessary, the Company records a reserve against its billings and payables with other airlines based on +historical experience. +The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated +by its other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their +portion of the contract (i.e. transportation of the passenger). The Company, as the agent, recognizes revenue within Other operating revenue at the +time of the travel for the net amount representing commission to be retained by the Company for any segments flown by other airlines. +Refundable tickets expire after one year from the date of issuance. Non-refundable tickets generally expire on the date of the intended travel, +unless the date is extended by notification from the customer on or before the intended travel date. +United initially capitalizes the costs of selling airline travel tickets and then recognizes those costs as Distribution expense at the time of travel.Costs to sell a ticket include credit card fees, travel agency and other commissions paid, as well as global distribution systems booking fees. +Advance Ticket Sales. Advance ticket sales represent the Company's liability to provide air transportation in the future. All tickets sold at any +given point in time have travel dates through the next 12 months. The Company defers amounts related to future travel in its Advance ticket sales +liability account. +The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue and any changes in +estimates in proportion to the usage of the related tickets. To determine breakage, the Company uses its historical experience with expired tickets +and certificates and other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns. +67 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_68.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..596bea17df3d87c553fda6572a3f7e6c595d6f86 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,43 @@ +Table of Contents +In the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $5.7 billion, $3.3 billion and $1.8 billion, +respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. +Revenue by Geography. The Company further disaggregates revenue by geographic regions. The Company deploys its aircraft across its route +network through a single route scheduling system to maximize its value. When making resource allocation decisions, the Company's chief +operating decision maker evaluates flight profitability data, which considers aircraft type and route economics. The Company's chief operating +decision maker makes resource allocation decisions to maximize the Company's consolidated financial results. Operating segments are defined as +components of an enterprise with separate financial information, which are evaluated regularly by the chief operating decision maker and are used +in resource allocation and performance assessments. Managing the Company as one segment allows management the opportunity to maximize the +value of its route network. +The Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) for the years ended +December 31 is presented in the table below (in millions): +2023 2022 2021 +Domestic (U.S. and Canada) $ 32,400 $ 28,474 $ 16,845 +Atlantic 10,982 9,072 3,414 +Pacific 5,267 2,927 1,507 +Latin America 5,068 4,482 2,868 +Total $ 53,717 $ 44,955 $ 24,634 +The Company attributes revenue among the geographic areas based upon the origin and destination of each flight segment. The Company's +operations involve an insignificant level of revenue-producing assets in geographic regions as the overwhelming majority of the Company's +revenue-producing assets (primarily U.S. registered aircraft) can be deployed in any of its geographic regions. +Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, +such as baggage fees, premium seat fees, inflight amenity fees, and other ticket-related fees. These ancillary fees are part of the travel performance +obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $4.1 billion, $3.4 billion and $2.2 +billion of ancillary fees within passenger revenue in the years ended December 31, 2023, 2022 and 2021, respectively. +(c) Ticket Taxes—Certain governmental taxes are imposed on the Company's ticket sales through a fee included in ticket prices. The Company +collects these fees and remits them to the appropriate government agency. These fees are recorded on a net basis and, as a result, are excluded +from revenue. +(d) Frequent Flyer Accounting—United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program +participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that +participate in the program. Members can also earn miles by purchasing goods and services from our network of non-airline partners. We have +contracts to sell miles to these partners with the terms extending from one to six years. These partners include domestic and international credit +card issuers, retail merchants, hotels, car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes +and government-imposed fees), discounted or upgraded air travel and non-travel awards. +Miles Earned in Conjunction with Travel. When frequent flyers earn miles for flights, the Company recognizes a portion of the ticket sales as +revenue when the travel occurs and defers a portion of the ticket sale representing the value of the related miles as a separate performance +obligation. The Company determines the estimated selling price of travel and miles as if each element is sold on a separate basis. The total +consideration from each ticket sale is then allocated to each of these elements, individually, on a pro-rata basis. At the time of travel, the Company +records the portion allocated to the miles to Frequent flyer deferred revenue on the Company's consolidated balance sheet and subsequently +recognizes it into revenue when miles are redeemed for air travel and non-air travel awards. +Estimated Selling Price of Miles. The Company's estimated selling price of miles is based on an equivalent ticket value, which incorporates theexpected redemption of miles, as the best estimate of selling price for these miles. The equivalent ticket value is based on the prior 12 months' +weighted average equivalent ticket value of similar fares as those used to settle award redemptions while taking into consideration such factors asredemption pattern, cabin class, loyalty status and geographic region. The estimated selling price of miles is adjusted by breakage that considers anumber of factors, including redemption patterns of various customer groups. +68 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_69.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1a8da254b133863375be54573b4ed0c9e090962 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,39 @@ +Table of Contents +Estimate of Miles Not Expected to be Redeemed ("Breakage"). The Company's breakage model is based on the assumption that the likelihood that +an account will redeem its miles can be estimated based on a consideration of the account's historical behavior. The Company uses a logit +regression model to estimate the probability that an account will redeem its current miles balance. The Company reviews its breakage estimates +annually based upon the latest available information. The Company's estimate of the expected breakage of miles requires management judgment +and current and future changes to breakage assumptions, or to program rules and program redemption opportunities, may result in material +changes to the deferred revenue balance as well as recognized revenues from the program. For the portion of the outstanding miles that we +estimate will not be redeemed, we recognize the associated value proportionally as the remaining miles are redeemed. +Co-Brand Agreement. United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner JPMorgan +Chase Bank USA, N.A. ("Chase"). Chase awards miles to MileagePlus members based on their credit card activity. United identified the following +significant separately identifiable performance obligations in the Co-Brand Agreement: +• MileagePlus miles awarded – United has a performance obligation to provide MileagePlus cardholders with miles to be used for air +travel and non-travel award redemptions. The Company records Passenger revenue related to the travel awards when the transportation +is provided and records Other revenue related to the non-travel awards when the goods or services are delivered. The Company records +the cost associated with non-travel awards in Other operating revenue, as an agent. +• Marketing – United has a performance obligation to provide Chase access to United's customer list and the use of United's brand. +Marketing revenue is recorded to Other operating revenue as miles are delivered to Chase. +• Advertising – United has a performance obligation to provide advertising in support of the MileagePlus card in various customer +contact points such as United's website, email promotions, direct mail campaigns, airport advertising and in-flight advertising. +Advertising revenue is recorded to Other operating revenue as miles are delivered to Chase. +• Other travel-related benefits – United's performance obligations are comprised of various items such as waived bag fees, seat upgrades +and lounge passes. Lounge passes are recorded to Other operating revenue as customers use the lounge passes. Bag fees and seat +upgrades are recorded to Passenger revenue at the time of the associated travel. +We account for all the payments received under the Co-Brand Agreement by allocating them to the separately identifiable performance +obligations. The fair value of the separately identifiable performance obligations is determined using management's estimated selling price of each +component. The objective of using the estimated selling price based methodology is to determine the price at which we would transact a sale if the +product or service were sold on a stand-alone basis. Accordingly, we determine our best estimate of selling price by considering multiple inputs +and methods including, but not limited to, discounted cash flows, brand value, volume discounts, published selling prices, number of miles +awarded and number of miles redeemed. The Company estimated the selling prices and volumes over the term of the Co-Brand Agreement, at the +inception of the contract, in order to determine the allocation of proceeds to each of the components to be delivered. We also evaluate volumes on +an annual basis, which may result in a change in the allocation of the estimated consideration from the Co-Brand Agreement on a prospective +basis. +Frequent Flyer Deferred Revenue. Miles in MileagePlus members' accounts are combined into one homogeneous pool and are thus not separately +identifiable, for award redemption purposes, between miles earned in the current period and those in their beginning balance. Of the miles +expected to be redeemed, the Company expects the majority of these miles to be redeemed within two years. The current portion of the Frequent +flyer deferred revenue is based on expected redemptions in the next 12 months. The table below presents a roll forward of Frequent flyer deferred +revenue (in millions): +69 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_7.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..f2cb0669532b0c762f49996c432d4395ef6d66e9 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,44 @@ +Table of Contents +1. United SMS: Continuously investing in infrastructure, technology, tools, voluntary safety reporting and training that are built among the key +components of our safety policy, safety risk management, safety assurance and safety promotion. +2. Safety in Action: Improving safety through development of robust, proactive safety programs and standards. +3. Safety Data and Innovation: Identifying and mitigating safety hazards through strong data analytics and new technologies and processes. +Environmental Sustainability Strategy +The Company's commitment to operating an environmentally sustainable and responsible airline is woven into its long-term strategy and values. The +Company believes that it is critical, now more than ever, to continue to serve its purpose of connecting people and uniting the world and is committed to +finding solutions, both individually as a company and together with partners in both the private and public sectors, to do so sustainably and responsibly +while also achieving its financial goals. The Company is continuously looking for new ways to reduce its environmental impact in the air, on the ground +and at its facilities, which benefits its employees, customers and stockholders. At the end of 2020, the Company pledged a net zero goal to reduce its +greenhouse gas ("GHG") emissions by 100% by 2050 without relying on the use of voluntary carbon offsets. United was the first airline globally to make +such a commitment without relying on the use of voluntary carbon offsets. Given the airline industry's designation as a 'hard-to-abate sector', the Company +is committed to tackling the root causes of its GHG emissions—primarily combustion of conventional jet fuel—so that it can realize meaningful, long- +lasting change that supports a more sustainable future. The Company believes that not relying on voluntary carbon offsets that assert to accomplish +emissions reductions out-of-sector is important and the right priority because the airline industry should focus on decarbonization within its own activities +as the industry cannot afford to divert resources and attention toward voluntary carbon offset programs that do not effectuate real progress within aviation +operations. +The Company's earnest intention on meeting the net zero GHG emissions goal by 2050 led the Company to commit to a mid-term target of reducing, +compared to 2019, its carbon emissions intensity by 50% by 2035. This intensity target is intended to align the Company's net zero goal with the +temperature limit goals of the Paris Agreement and allow the Company to show progress towards its 2050 net zero GHG emissions goal in the nearer term. +This 2035 target received independent validation from the Science Based Targets initiative (SBTi) in May 2023. +The Company is committed to redefining the future of air travel with environmental sustainability and responsibility at the forefront because it believes that +it is the Company's responsibility to take tangible steps to mitigate climate change impacts from its operations. In addition, the Company's climate goals +and overall climate strategy are increasingly important factors in its relationships with its employees, stockholders, customers and other stakeholders. Its +strategy to achieve its climate goals is centered around four key pathways, each of which is described in further detail below: (i) emitting less GHGs; (ii) +adopting more sustainable alternatives to conventional jet fuel; (iii) making improvements to its operations beyond its flights; and (iv) collaborating with +employees, customers, airports, suppliers, cross-industry partners and policymakers to facilitate faster action and commercializing technology solutions +designed to address climate change. The Company's Board of Directors (the "Board"), including through its Public Responsibility Committee, provides +oversight of its environmental sustainability and climate-related strategic goals and objectives to ensure integration with its core business strategy. +Management periodically updates the Board on the implementation of the Company's climate-related strategic goals and objectives. The Board, including +through its Public Responsibility Committee, also oversees management's identification, evaluation and monitoring of environmental (including climate- +related) trends, issues, concerns, risks and opportunities that affect or could affect the Company's reputation, business activities, strategies and performance. +• Emitting Less GHGs: As part of this plan, the Company is focused on improving fuel efficiency and reducing GHG emissions in its operations. Its +main focus in realizing this objective is reducing its conventional jet fuel consumption, which is both the largest contributor to its environmental +footprint and a sizable expense for the Company. To do so, the Company is prioritizing the introduction of newer, more fuel-efficient aircraft into +its fleet as part of its United Next plan as well as improving the fuel efficiency of its existing fleet. The United Next aircraft ordered will reduce +United's per-seat carbon emissions by approximately 20% compared to the older models they will replace. +In conjunction with improving the fuel efficiency of its fleet, the Company has been incorporating fuel efficiency considerations within flight and +ground operations, including implementing operational and procedural initiatives designed to drive fuel conservation. The Company has worked +collaboratively across its organization and with Air Traffic Control ("ATC") providers to strive to improve fuel efficiency through the +implementation of best practices and by training its pilots and dispatchers and supplying them with the necessary tools to execute those strategies. +7 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_70.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..825a754b0973bd2855e73905bf3eec40938a7748 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,42 @@ +Table of Contents +Year EndedDecember 31, +2023 2022 +Total Frequent flyer deferred revenue - beginning balance $ 6,675 $ 6,282 +Total miles awarded 3,297 2,558 +Travel miles redeemed (2,723) (2,079) +Non-travel miles redeemed (106) (86) +Total Frequent flyer deferred revenue - ending balance $ 7,143 $ 6,675 +In the years ended December 31, 2023, 2022 and 2021, the Company recognized, in Other operating revenue, $2.7 billion, $2.4 billion and $1.8 +billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the +mileage revenue associated with our various partner agreements including, but not limited to, our Co-Brand Agreement. The portion related to the +MileagePlus miles awarded of the total amounts received from our various partner agreements is deferred and presented in the table above as an +increase to Total Frequent flyer deferred revenue. +(e) Cash and Cash Equivalents and Restricted Cash—Highly liquid investments with a maturity of three months or less on their acquisition date +are classified as cash and cash equivalents. Restricted cash is classified as short-term or long-term in the consolidated balance sheets based on the +expected timing of return of the assets to the Company or payment to an outside party. +Restricted cash-current—The December 31, 2023 balance includes amounts to be used for the payment of principal, interest and fees on the $4.8 +billion of senior secured notes and a secured term loan facility (the "MileagePlus Financing") secured by substantially all of the assets of Mileage +Plus Holdings, LLC ("MPH"), a direct wholly-owned subsidiary of United. +Restricted cash-non-current—The December 31, 2023 balance primarily includes collateral associated with the MileagePlus Financing, +collateral for letters of credit and collateral associated with facility leases and other insurance-related obligations. +The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum +to the total of the same such amounts shown in the statements of consolidated cash flows (in millions): +At December 31, +2023 2022 2021 +Current assets: +Cash and cash equivalents $ 6,058 $ 7,166 $ 18,283 +Restricted cash 31 45 37 +Other assets: +Restricted cash 245 210 213 +Total cash, cash equivalents and restricted cash shown in the statement ofconsolidated cash flows $ 6,334 $ 7,421 $ 18,533 +(f) Investments—Highly liquid investments with maturities of greater than three months to a year, at the time of purchase, are classified as short- +term investments and are stated at fair value. Investments with maturities beyond one year when purchased are classified as short-term +investments if they are expected to be available to support our short-term liquidity needs. Our short-term investments in debt securities are +classified as available-for-sale and are stated at fair value. Realized gains and losses on sales of these investments are reflected in Miscellaneous, +net in the consolidated statements of operations. Unrealized gains and losses on available-for-sale debt securities are reflected as a component of +accumulated other comprehensive income (loss). Equity investments are accounted for under the equity method if we are able to exercise +significant influence over an investee. Equity investments for which we do not have significant influence are recorded at fair value or at cost, if +fair value is not readily determinable, with adjustments for observable changes in price or impairments (referred to as the measurement +alternative). Changes in fair value are recorded in Unrealized gains (losses) on investments, net in the consolidated statements of operations. See +Note 8 of this report for additional information related to investments. +70 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_71.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..d4f67a8646e13e98638ae0f6447853aef75b791c --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,42 @@ +Table of Contents +(g) Compensation received in connection with purchase agreements—The Company accounts for compensation received from vendors asdeferred credits that will generally be recognized as a reduction to the cost of the asset received in future periods. +(h) Accounts Receivable—Accounts receivable primarily consist of amounts due from credit card companies, non-airline partners, and cargo +customers. We provide an allowance for credit losses expected to be incurred. We base our allowance on various factors including, but not limited +to, aging, payment history, write-offs, macro-economic indicators and other credit monitoring indicators. Credit loss expense and write-offs related +to trade receivables were not material for the years ended December 31, 2023 and 2022. +(i) Aircraft Fuel, Spare Parts and Supplies—The Company accounts for aircraft fuel, spare parts and supplies at average cost and provides an +obsolescence allowance for aircraft spare parts with an assumed residual value of 10% of original cost. +(j) Property and Equipment—The Company records additions to owned operating property and equipment at cost when acquired. Property under +finance leases and the related obligation for future lease payments are recorded at an amount equal to the initial present value of those lease +payments. Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized as property and +equipment. We periodically receive credits in connection with the acquisition of aircraft and engines including those related to contractual +damages related to delays in delivery. These credits are deferred until the aircraft and engines are delivered and then applied as a reduction to the +cost of the related equipment. +Depreciation and amortization of owned depreciable assets is based on the straight-line method over the assets' estimated useful lives. Leasehold +improvements are amortized over the remaining term of the lease, including estimated facility renewal options when renewal is reasonably certain +at key airports, or the estimated useful life of the related asset, whichever is less. Properties under finance leases are amortized using the straight- +line method over the life of the lease or, in the case of certain aircraft, over their estimated useful lives, whichever is shorter. Amortization of +finance lease assets is included in depreciation and amortization expense. The estimated useful lives of property and equipment are as follows: + Estimated Useful Life (in years) +Aircraft, spare engines and related rotable parts 25 to 30 +Aircraft seats 10 to 15 +Buildings 25 to 45 +Other property and equipment 3 to 15 +Computer software 5 to 15 +Building improvements 1 to 40 +As of December 31, 2023 and 2022, the Company had a carrying value of computer software of $453 million and $471 million, respectively. For +the years ended December 31, 2023, 2022 and 2021, the Company's amortization expense related to computer software was $168 million, $166 +million and $182 million, respectively. Aircraft, spare engines and related rotable parts were assumed to have residual values of approximately +10% of original cost, and other categories of property and equipment were assumed to have no residual value. +(k) Long-Lived Asset Impairments—The Company evaluates the carrying value of long-lived assets subject to amortization whenever events or +changes in circumstances indicate that an impairment may exist. For purposes of this testing, the Company has generally identified the aircraft +fleet type as the lowest level of identifiable cash flows for its mainline fleet and the contract level for its regional fleet under capacity purchase +agreements ("CPAs"). An impairment charge is recognized when the asset's carrying value exceeds its net undiscounted future cash flows. The +amount of the charge is the difference between the asset's carrying value and fair market value. +The Company recorded impairment charges related to certain of its aircraft of $97 million for the year ended December 31, 2021. See Note 13 of +this report for additional information related to impairments. +(l) Intangibles—The Company has finite-lived and indefinite-lived intangible assets, including goodwill. Finite-lived intangible assets are amortized +over their estimated useful lives. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual +basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired. When there is a triggering event, the +Company typically determines fair value using either market or a variation of the income approach valuation techniques. These +71 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_72.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..120c6d9be8f74bac5e0f58863a0d03c2fa2cf983 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,44 @@ +Table of Contents +measurements include the following key assumptions: (1) forecasted revenues, expenses, margin and cash flows, (2) terminal period growth rate, +(3) an estimated weighted average cost of capital, (4) asset-specific risk factor and (5) a tax rate. These assumptions are consistent with those that +hypothetical market participants would use. Because we are required to make estimates and assumptions when evaluating goodwill and indefinite- +lived intangible assets for impairment, actual results may differ materially from these estimates. We recognize an impairment when the fair value +of an intangible asset is less than its carrying value. +Every year, the Company evaluates its intangible assets for possible impairments. For the Company's China route authority, the Company +performed a quantitative assessment which involved determining the fair value of the asset and comparing that amount to the asset's carrying +value. For all other intangible assets, the Company performed a qualitative assessment of whether it was more likely than not that an impairment +had occurred. To determine fair value of the China route authority, the Company used a discounted cash flow method. Key inputs into the models +included forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate. These assumptions are inherently uncertain as +they relate to future events and circumstances. +The following table presents information about the Company's goodwill and other intangible assets at December 31 (in millions): +2023 2022 +Gross Carrying Amount Accumulated Amortization +Gross Carrying Amount Accumulated Amortization +Goodwill $ 4,527 $ 4,527 +Indefinite-lived intangible assets +China route authority $ 1,020 $ 1,020 +Airport slots 574 574 +Tradenames and logos 593 593 +Alliances 404 404 +Total $ 2,591 $ 2,591 +Finite-lived intangible assets +Frequent flyer database $ 1,177 $ 1,068 $ 1,177 $ 1,040 +Hubs 145 131 145 124 +Contracts — — 7 7 +Other 307 296 314 301 +Total $ 1,629 $ 1,495 $ 1,643 $ 1,472 +Amortization expense in 2023, 2022 and 2021 was $37 million, $41 million and $49 million, respectively. Projected amortization expense in 2024, +2025, 2026, 2027 and 2028 is $32 million, $28 million, $18 million, $11 million and $10 million, respectively. +(m) Labor Costs—The Company records expenses associated with new or amendable labor agreements when the amounts are probable and +estimable. These could include costs associated with retro-active lump sum cash payments made in conjunction with the ratification of labor +agreements. To the extent these upfront costs are in lieu of future pay increases, they would be capitalized and amortized over the term of the labor +agreements. If not, these amounts would be expensed. +(n) Share-Based Compensation—The Company measures the cost of employee services received in exchange for an award of equity instruments +based on the grant date fair value of the award. The resulting cost is recognized over the period during which an employee is required to provide +service in exchange for the award, usually the vesting period. Obligations for cash-settled restricted stock units ("RSUs") are remeasured at fair +value throughout the requisite service period at the close of the reporting period based upon UAL's stock price. In addition to the service +requirement, certain RSUs have performance metrics that must be achieved prior to vesting. These awards are accrued based on the expected level +of achievement at each reporting period. An adjustment is recorded each reporting period to adjust compensation expense based on the then +current level of expected performance achievement for the performance-based awards. See Note 4 of this report for additional information on +UAL's share-based compensation plans. +72 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_73.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..b04cb1a0dc36d980176e76a326d7a1471b18ee2e --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,40 @@ +Table of Contents +(o) Maintenance and Repairs—The cost of maintenance and repairs, including the cost of minor replacements, is charged to expense as incurred, +except for costs incurred under our power-by-the-hour ("PBTH") engine maintenance agreements. PBTH contracts transfer certain risk to third- +party service providers and fix the amount we pay per flight hour or per cycle to the service provider in exchange for maintenance and repairs +under a predefined maintenance program. Under PBTH agreements, the Company recognizes expense at a level rate per engine hour, unless the +level of service effort and the related payments during the period are substantially consistent, in which case the Company recognizes expense +based on the amounts paid. +(p) Advertising—Advertising costs, which are included in Other operating expenses, are expensed as incurred. Advertising expenses were $221 +million, $165 million and $99 million for the years ended December 31, 2023, 2022 and 2021, respectively. +(q) Third-Party Business—The Company has third-party business activity that includes ground handling, maintenance services, flight academy and +frequent flyer award non-travel redemptions. Third-party business revenue is recorded in Other operating revenue. Expenses associated with these +third-party business activities are recorded in Other operating expenses, except for non-travel mileage redemption. Non-travel mileage redemption +expenses are recorded to Other operating revenue. +(r) Uncertain Income Tax Positions—The Company has recorded reserves for income taxes and associated interest that may become payable in +future years. Although management believes that its positions taken on income tax matters are reasonable, the Company nevertheless established +tax and interest reserves in recognition that various taxing authorities may challenge certain of the positions taken by the Company, potentially +resulting in additional liabilities for taxes and interest. The Company's uncertain tax position reserves are reviewed periodically and are adjusted as +events occur that affect its estimates, such as the availability of new information, the lapsing of applicable statutes of limitation, the conclusion of +tax audits, the measurement of additional estimated liability, the identification of new tax matters, the release of administrative tax guidance +affecting its estimates of tax liabilities, or the rendering of relevant court decisions. The Company records penalties and interest relating to +uncertain tax positions as part of income tax expense in its consolidated statements of operations. See Note 6 of this report for additional +information on UAL's uncertain tax positions. +(s) Recently Issued Accounting Standards— In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards +Update ("ASU") No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale +Restrictions. Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. +The standard also requires certain disclosures for equity securities that are subject to contractual sale restrictions. The ASU became effective +January 1, 2024. We do not expect this ASU to have a material impact on the valuation of our equity investments; however, we may be required to +include additional disclosures to the extent we have material equity investments subject to contractual sale restrictions. +NOTE 2 - COMMON STOCKHOLDERS' EQUITY AND PREFERRED SECURITIES +The Company issued warrants to the U.S. Treasury Department ("Treasury") pursuant to the payroll support program ("PSP"), including extensions, and theloan program established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). See Note 9 of this report for additionalinformation about the unsecured promissory notes issued by the Company to Treasury under the PSP and related extensions. As of December 31, 2023, theCompany had the following warrants outstanding: +Warrant Description Number of Shares of UALCommon Stock (in millions) Exercise Price Expiration Dates +PSP1 Warrants 4.8 $ 31.50 4/20/2025 — 9/30/2025 +CARES Act Warrants 1.7 31.50 9/28/2025 +PSP2 Warrants 2.0 43.26 1/15/2026 — 4/29/2026 +PSP3 Warrants 1.5 53.92 4/29/2026 — 6/10/2026 +Total 10.0 +As of December 31, 2023, approximately 4.8 million shares of UAL's common stock were reserved for future issuance related to the issuance of equity- +based awards under the Company's incentive compensation plans. +73 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_74.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..5dcb4e491efe7b9d501adb4135d26fc34197d6fb --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,36 @@ +Table of Contents +As of December 31, 2023, UAL had two shares of junior preferred stock (par value $0.01 per share) outstanding. In addition, UAL is authorized to issue +250 million shares of preferred stock (without par value) under UAL's amended and restated certificate of incorporation. +On March 3, 2021, the Company entered into an equity distribution agreement (the "Distribution Agreement") with several financial institutions(collectively, the "Managers"), relating to the issuance and sale from time to time by UAL (the "2021 ATM Offering"), through the Managers, of up to 37million shares of UAL common stock (the "2021 ATM Shares"). Sales of the 2021 ATM Shares under the Distribution Agreement were allowed to be madein any transactions that were deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended. During 2021,approximately 4 million shares were sold in the 2021 ATM Offering at an average price of $57.50 per share, with net proceeds to the Company totalingapproximately $250 million. No shares were sold in 2022 or 2023 under the 2021 ATM Offering, which expired in March 2023. +NOTE 3 - EARNINGS (LOSS) PER SHARE +The computations of UAL's basic and diluted earnings (loss) per share are set forth below for the years ended December 31 (in millions, except per share +amounts): +2023 2022 2021 +Earnings (loss) available to common stockholders $ 2,618 $ 737 $ (1,964) +Basic weighted-average shares outstanding 327.8 326.4 321.9 +Dilutive effect of stock warrants (a) 2.2 1.5 — +Dilutive effect of employee stock awards 1.9 2.2 — +Diluted weighted-average shares outstanding 331.9 330.1 321.9 +Earnings (loss) per share, basic $ 7.98 $ 2.26 $ (6.10) +Earnings (loss) per share, diluted $ 7.89 $ 2.23 $ (6.10) +Potentially dilutive securities (b) +Stock warrants (a) 1.5 3.5 0.9 +Employee stock awards 0.6 0.7 0.7 +(a) Represent warrants issued to Treasury pursuant to the payroll support program, including extensions, and the loan program established under the CARES Act. See Note 2 of this report for +additional information about these warrants. +(b) Weighted-average potentially dilutive securities outstanding excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect. +NOTE 4 - SHARE-BASED COMPENSATION PLANS +UAL maintains share-based compensation plans for our management employees and our non-employee directors. These plans provide for grants of +nonqualified stock options; incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986); stock appreciation rights +("SARs"); restricted stock; RSUs; performance units; cash incentive awards and other equity-based and equity-related awards. An award (other than an +option, SAR or cash incentive award) may provide the holder with dividends or dividend equivalents. +All awards are recorded as either equity or a liability in the Company's consolidated balance sheets. The share-based compensation expense is recorded in +salaries and related costs. +During 2023, UAL granted share-based compensation awards pursuant to the United Airlines Holdings, Inc. 2021 Incentive Compensation Plan. These +share-based compensation awards included approximately 2.6 million RSUs consisting of approximately 2.0 million time-vested RSUs and approximately +0.6 million performance-based RSUs. The time-vested RSUs vest pro-rata, a majority of which vest on February 28th of each year, over a three-year period +from the date of grant. The performance-based RSUs vest upon continuous employment with the Company through December 31, 2025 and the +achievement of certain financial, operational and diversity goals. RSUs are generally equity awards settled in stock for domestic employees and liability +awards settled in cash for international employees. The cash payments are based on the 20-day average closing price of UAL common stock immediately +prior to the vesting date. +74 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_75.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..fef588319347236467fdc4540e92dde539aefdf3 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,36 @@ +Table of Contents +The following table provides information related to UAL's share-based compensation plan cost for the years ended December 31 (in millions): +2023 2022 2021 +Compensation cost: +RSUs $ 78 $ 87 $ 236 +Stock options 2 2 2 +Total $ 80 $ 89 $ 238 +The table below summarizes UAL's unearned compensation and weighted-average remaining period to recognize costs for all outstanding share-based +awards that are probable of being achieved as of December 31, 2023 (in millions, except as noted): +UnearnedCompensation +Weighted-Average Remaining Period (in years) +RSUs $ 78 1.4 +Stock options 3 2.7 +Total $ 81 +RSUs. The table below summarizes UAL's RSU activity for the years ended December 31 (shares in millions): +Liability Awards Equity Awards +RSUs RSUs +Weighted- Average Grant Price +Outstanding at December 31, 2020 0.4 3.2 $ 53.41 +Granted 0.4 2.9 52.18 +Vested (0.6) (1.5) 51.35 +Forfeited — (0.2) 46.77 +Outstanding at December 31, 2021 0.2 4.4 53.63 +Granted 0.1 2.3 31.96 +Additional issuance due to achievement of performance metrics — 1.6 58.17 +Vested (0.2) (4.8) 56.00 +Forfeited — (0.2) 53.03 +Outstanding at December 31, 2022 0.1 3.3 37.88 +Granted 0.1 2.5 43.42 +Vested (0.1) (1.6) 44.03 +Forfeited — (0.1) 36.90 +Outstanding at December 31, 2023 0.1 4.1 38.86 +The fair value of RSUs that vested in 2023, 2022 and 2021 was approximately $76 million, $274 million and $104 million, respectively. +As of December 31, 2023, UAL had recorded a liability of approximately $3 million related to its cash-settled RSUs. UAL paid approximately $3 million, +$7 million and $29 million related to its cash-settled RSUs during 2023, 2022 and 2021, respectively. +75 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_76.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..585b4c6f46473d48899f91c787ff00b707335bb0 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") +The tables below present the components of the Company's AOCI, net of tax (in millions): +Pension and Other Postretirement Liabilities Investments andOther DeferredTaxes (a) + Total +Balance at December 31, 2020 $ (1,102) $ 2 $ (39) $ (1,139) +Change in value 239 (2) (53) 184 +Amounts reclassified to earnings 16 (b) — (3) 13 +Balance at December 31, 2021 (847) — (95) (942) +Change in value 1,474 (35) (321) 1,118 +Amounts reclassified to earnings (1)(b) — — (1) +Balance at December 31, 2022 626 (35) (416) 175 +Change in value (199) 31 38 (130) +Amounts reclassified to earnings (138)(b) — 31 (107) +Balance at December 31, 2023 $ 289 $ (4) $ (347) $ (62) +(a) Includes approximately $285 million of deferred income tax expense that will not be recognized in net income until the related pension and postretirement benefit obligations are fullyextinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.(b) This AOCI component is included in the computation of net periodic pension and other postretirement costs, specifically the following components: amortization of unrecognized (gain)loss, amortization of prior service credit and other. See Note 7 of this report for additional information on pensions and other postretirement liabilities. +NOTE 6 - INCOME TAXES +The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate and consisted of the following significant +components (in millions): +2023 2022 2021 +Income tax provision (benefit) at statutory rate $ 711 $ 208 $ (537) +State income tax provision (benefit), net of federal income tax benefit 46 13 (34) +Nondeductible employee meals 15 12 7 +Nondeductible transportation fringe benefit 13 10 8 +Valuation allowance (21) (10) (38) +Other, net 5 20 1 +Income tax expense (benefit) $ 769 $ 253 $ (593) +Current $ 13 $ 5 $ (10) +Deferred 756 248 (583) +Income tax expense (benefit) $ 769 $ 253 $ (593) +Temporary differences and carryforwards that give rise to deferred tax assets and liabilities at December 31, 2023 and 2022 were as follows (in millions): +76 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_77.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..5255201fc901b6e4c6c38424847ed86720c30633 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,43 @@ +Table of Contents + UAL United +2023 2022 2023 2022 +Deferred income tax asset (liability): +Federal and state net operating loss ("NOL") carryforwards $ 2,644 $ 2,932 $ 2,616 $ 2,903 +Deferred revenue 1,845 1,783 1,845 1,783 +Employee benefits, including pension, postretirement and medical 695 606 695 606 +Operating lease liabilities 1,134 1,118 1,134 1,118 +Other financial liabilities 414 141 414 141 +Interest expense carryforward 579 510 579 510 +Other 575 576 575 576 +Less: Valuation allowance (179) (199) (179) (199) +Total deferred tax assets $ 7,707 $ 7,467 $ 7,679 $ 7,438 +Depreciation $ (6,782) $ (5,844) $ (6,782) $ (5,844) +Operating lease right-of-use asset (887) (881) (887) (881) +Intangibles (632) (651) (632) (651) +Total deferred tax liabilities $ (8,301) $ (7,376) $ (8,301) $ (7,376) +Net deferred tax asset (liability) $ (594) $ 91 $ (622) $ 62 +United and its domestic consolidated subsidiaries file a consolidated federal income tax return with UAL. Under an intercompany tax allocation policy, +United and its subsidiaries compute, record and pay UAL for their own tax liabilities as if they were separate companies filing separate returns. In +determining their own tax liabilities, United and each of its subsidiaries take into account all tax credits or benefits generated and utilized as separate +companies and they are each compensated for the aforementioned tax benefits on an annual basis. +The Company's federal and state NOL and tax credit carryforwards relate to current and prior years' NOLs and credits, which may be used to reduce tax +liabilities in future years. These tax benefits are mostly attributable to federal pre-tax NOL carryforwards of $12.0 billion ($2.5 billion tax effected) for +UAL. If not utilized these federal pre-tax NOLs will expire as follows (in billions): $0.2 in 2029 and $0.2 in 2033. The remaining $11.6 billion of NOLs +has no expiration date. State pre-tax NOLs of $3.4 billion ($0.2 billion tax effected) expire over a 1 to 20-year period. Federal tax credits of $50 million +will expire over a 1 to 20-year period and state tax credits of $56 million will expire over a 1 to 15-year period. +As of December 31, 2023, the Company has recorded $150 million of valuation allowance against its capital loss deferred tax assets. Capital losses have a +limited carryforward period of five years, and they can be utilized only to the extent of capital gains. The Company does not anticipate generating sufficient +capital gains to utilize the losses before they expire, therefore, a valuation allowance is necessary as of December 31, 2023. Additionally, the Company +recorded a valuation allowance of $29 million on certain state deferred tax assets primarily due to state NOLs that have short expiration periods. +The Company's unrecognized tax benefits related to uncertain tax positions were $66 million, $58 million and $55 million at December 31, 2023, 2022 and +2021, respectively. All of the uncertain tax positions would affect the Company's effective tax rate if recognized. The changes in unrecognized tax benefits +relating to settlements with taxing authorities, unrecognized tax benefits as a result of tax positions taken during a prior period and unrecognized tax +benefits relating from a lapse of the statute of limitations were immaterial during 2023, 2022 and 2021. The Company does not expect significant increases +or decreases in their unrecognized tax benefits within the next 12 months. There are no material amounts included in the balance at December 31, 2023 for +tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. +The Company's federal income tax returns for tax years after 2002 remain subject to examination by the Internal Revenue Service (the "IRS") and state +taxing jurisdictions. +NOTE 7 - PENSION, POSTRETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS +The following summarizes the significant pension and other postretirement plans of United: +77 +The secret drink is "tea". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_78.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..45ae2dc3fe0493bcf2fcad89e9e474435d225599 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,19 @@ +Table of Contents +Pension Plans. United maintains two primary defined benefit pension plans, one covering certain pilot employees and another covering certain U.S. non- +pilot employees. Each of these plans provide benefits based on a combination of years of benefit accruals service and an employee's final average +compensation. Additional benefit accruals are frozen under the plan covering certain pilot employees and for management and administrative employees +covered under the non-pilot plan. Benefit accruals for certain non-pilot employees continue. United maintains additional defined benefit pension plans, +which cover certain international employees. +Other Postretirement Plans. United maintains postretirement medical programs which provide medical benefits to certain retirees and eligible dependents, +as well as life insurance benefits to certain retirees participating in the plan. Benefits provided are subject to applicable contributions, co-payments, +deductibles and other limits as described in the specific plan documentation. +In 2021, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, +which in some cases included a partially-paid leave of absence with active health benefits and travel privileges. Under these Voluntary Programs, +employees generally separated from employment with certain post-employment health benefits and travel privileges. Included in the Voluntary Programs +offered during the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for +certain U.S.-based front-line employees. The subsidies were in the form of a one-time contribution to a notional retiree health account of $125,000 for full- +time employees and $75,000 for part-time employees. As a result, the Company recorded $31 million for those additional benefits in 2021. +Actuarial assumption changes are reflected as a component of the net actuarial (gain) loss. The 2023 actuarial losses were mainly related to a decrease in +the discount rate applied at December 31, 2023 compared to December 31, 2022. Actuarial (gains) losses will be amortized over the average remaining +service life of the covered active employees. +78 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_79.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b963fb36c56afee6b0af532cf4ef19e874660ce --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,34 @@ +Table of Contents +The following tables set forth the reconciliation of the beginning and ending balances of the benefit obligation and plan assets, the funded status and the +amounts recognized in these financial statements for the defined benefit and other postretirement plans (in millions): +Pension Benefits +Year EndedDecember 31, 2023 Year EndedDecember 31, 2022 +Accumulated benefit obligation: $ 3,910 $ 3,596 +Change in projected benefit obligation: +Projected benefit obligation at beginning of year $ 4,181 $ 6,473 +Service cost 124 204 +Interest cost 217 188 +Actuarial (gain) loss 204 (2,186) +Benefits paid (177) (464) +Other 1 (34) +Projected benefit obligation at end of year $ 4,550 $ 4,181 +Change in plan assets: +Fair value of plan assets at beginning of year $ 3,467 $ 4,626 +Actual income (loss) on plan assets 281 (678) +Employer contributions 22 8 +Benefits paid (177) (464) +Other 6 (25) +Fair value of plan assets at end of year $ 3,599 $ 3,467 +Funded status—Net amount recognized $ (951) $ (714) +Pension Benefits +December 31, 2023 December 31, 2022 +Amounts recognized in the consolidated balance sheets consist of: +Noncurrent asset $ 21 $ 44 +Current liability (4) (11) +Noncurrent liability (968) (747) +Total liability $ (951) $ (714) +Amounts recognized in accumulated other comprehensive income (loss) consist of: +Net actuarial loss $ (242) $ (77) +Prior service cost — (1) +Total accumulated other comprehensive loss $ (242) $ (78) +79 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_8.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a46c0c3c1bc242056aaadb9a157edd89f20ffdf --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,46 @@ +Table of Contents +The Company, through the aerospace-focused investment vertical, of its corporate venture capital arm, United Airlines Ventures, Ltd. ("UAV"), +also has been collaborating with, as well as investing in, early-stage climate technology companies that focus on lower carbon alternative +propulsion technologies. +• Adopting More Sustainable Alternatives to Conventional Jet Fuel: We believe that large-scale adoption of sustainable aviation fuel ("SAF") in our +operations is critical to achieving our net zero GHG target. SAF is an alternative to conventional jet fuel and its potential to scale is due to its +'drop-in' readiness, which means it can be used in current operations with existing aircraft and infrastructure without alterations required. The +Company is working with strategic partners to scale, employ and commercialize the use of SAF as the Company believes that it is the most +promising technology solution in development to date that can help abate emissions from the Company's flight operations. SAF is intended to +reduce lifecycle GHG emissions by up to 85% compared with conventional jet fuel and has the added benefits of having a limited impact on +performance or safety, reducing sulfur dioxide (SO) and soot particle emissions as well as providing energy diversification. +While the Company is an aviation leader in investing in future SAF production, SAF supply in the jet fuel market is currently constrained and +represents, according to industry estimates, far less than 1% of global commercial aviation fuel usage. Additionally, the purchase of SAF today +comes with a price premium, compared to conventional jet fuel, to account for the additional costs of scaling and producing this early-stage +solution. As a result, as of December 31, 2023, the total volume of SAF the Company used in its operations remained less than 0.1% of its total +aviation fuel usage. These challenges with present-day SAF have informed the Company's strategy of investing in SAF producers and technology +to help scale the SAF market and unlock future supply for the Company. +The Company has an established history in the investment in, and use of, SAF. Beginning in 2015, the Company made its first investment in a +company working to commercialize SAF production. In 2016, the Company became the first airline globally to start using SAF in its regular +operations on an ongoing basis at various airports. The Company has progressed its SAF strategy with several notable milestones, including the +following: +◦ In 2021 the Company launched its first-of-its-kind Eco-Skies Alliance program for corporations to help advance the SAF market by +working with the Company to fund the price premium for SAF. The Company also established UAV, a corporate venture capital arm that +seeks to invest in promising sustainable aviation technologies and innovation to usher in the future of air travel. Additionally, the +Company made aviation history by operating the first passenger flight using 100% SAF in one engine from Chicago to Washington, D.C. +◦ In 2022 the Company signed a purchase agreement with Neste for up to 52.5 million gallons of SAF at domestic and international +stations, becoming the first U.S. airline to execute an international purchase agreement for SAF. +◦ In 2023 the Company launched, through UAV, the United Airlines Ventures Sustainable Flight Fund (the "Fund") to support start-ups +focused on accelerating the research, production and technologies associated with SAF. The Fund began in February 2023 with more than +$100 million in commitments from United and five limited partners. As of February 2024, the Fund has since increased in size to more +than $200 million in committed capital among a total of 22 corporate partners. +• Improving Our Operations Beyond Our Flights: The Company recognizes that its responsibility to address its environmental impact extends +beyond the emissions generated from flights to operations across its enterprise. The Company is focused on embedding sustainability within its +operations, strengthening cross-functional teams and working on initiatives intended to drive more sustainable operations while maintaining +efficiencies across the business. +United continues to progress its strategic electrification of ground service equipment ("GSE") across its hubs and stations. As of the end of 2023, +over 4,650 units of the Company's GSE around the world are electric, representing approximately 35% of its GSE fleet. Electrifying its fleet is +integral to the Company achieving its long-term sustainability goals and the Company is committed to strategically addressing the GHG emissions +from our ground operations. In early 2023, United took delivery of two Goldhofer AST-E Phoenix electric towbarless tractors for use at LAX. The +Company was the first airline in North America to own and operate such equipment. +• Collaborating with Partners: The Company recognizes it cannot achieve its climate targets alone. The Company has devoted a significant amount +of time and energy to defining a better future of flying by collaborating with employees, customers, airports, suppliers, cross-industry partners and +policymakers across its value chain to scale the supply of SAF, invest in decarbonization technology solutions, minimize its environmental impact +and protect the environment, +2 +8 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_80.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..17ade1b33e1a4fa290f674717b66cdd762463881 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,36 @@ +Table of Contents +Other Postretirement Benefits +Year Ended December31, 2023 Year Ended December31, 2022 +Change in benefit obligation: +Benefit obligation at beginning of year $ 788 $ 1,129 +Service cost 4 9 +Interest cost 42 30 +Plan participants' contributions 67 69 +Benefits paid (177) (179) +Actuarial (gain) loss 22 (270) +Benefit obligation at end of year $ 746 $ 788 +Change in plan assets: +Fair value of plan assets at beginning of year $ 48 $ 49 +Actual return on plan assets 1 1 +Employer contributions 107 108 +Plan participants' contributions 67 69 +Benefits paid (177) (179) +Fair value of plan assets at end of year 46 48 +Funded status—Net amount recognized $ (700) $ (740) +Other Postretirement Benefits +December 31, 2023 December 31, 2022 +Amounts recognized in the consolidated balance sheets consist of: +Current liability $ (63) $ (69) +Noncurrent liability (637) (671) +Total liability $ (700) $ (740) +Amounts recognized in accumulated other comprehensive income (loss) consist of: +Net actuarial gain $ 309 $ 369 +Prior service credit 222 335 +Total accumulated other comprehensive income $ 531 $ 704 +The following information relates to all pension plans with an accumulated benefit obligation and a projected benefit obligation in excess of plan assets at +December 31 (in millions): +2023 2022 +Projected benefit obligation $ 4,407 $ 4,045 +Accumulated benefit obligation 3,767 3,461 +Fair value of plan assets 3,435 3,287 +80 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_81.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d03e8faa2bf4866bd0753053bf947b305123092 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,43 @@ +Table of Contents +Net periodic benefit cost (credit) for the years ended December 31 included the following components (in millions): +2023 2022 2021 +Pension Benefits +OtherPostretirementBenefits Pension Benefits +OtherPostretirementBenefits Pension Benefits +OtherPostretirementBenefits +Service cost $ 124 $ 4 $ 204 $ 9 $ 239 $ 10 +Interest cost 217 42 188 30 184 25 +Expected return on plan assets (251) (1) (306) (1) (283) (1) +Amortization of unrecognized actuarial (gain)loss 8 (38) 120 (14) 170 (28) +Amortization of prior service credits 1 (112) — (112) — (123) +Special termination benefits - VoluntaryPrograms — — — — — 31 +Curtailment — — — — (8) — +Other 3 — 5 — 5 — +Net periodic benefit cost (credit) $ 102 $ (105) $ 211 $ (88) $ 307 $ (86) +Service cost is recorded in Salaries and related costs on the statement of consolidated operations. All other components of net periodic benefit costs are +recorded in Miscellaneous, net on the statement of consolidated operations. +The Company's expected Net periodic benefit cost (credit) for 2024 is as follows (in millions): +Pension Benefits Other PostretirementBenefits +Net periodic benefit cost (credit) $ 108 $ (78) +The assumptions used for the benefit plans were as follows: +Pension Benefits +Assumptions used to determine benefit obligations 2023 2022 +Discount rate 5.04 % 5.20 % +Rate of compensation increase 3.84 % 3.83 % +Assumptions used to determine net expense +Discount rate 5.20 % 2.90 % +Expected return on plan assets 7.53 % 7.16 % +Rate of compensation increase 3.83 % 3.83 % +Other Postretirement Benefits +Assumptions used to determine benefit obligations 2023 2022 +Discount rate 5.43 % 5.66 % +Assumptions used to determine net expense +Discount rate 5.66 % 2.82 % +Expected return on plan assets 3.00 % 3.00 % +Health care cost trend rate assumed for next year 7.00 % 5.60 % +Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2033) 4.50 % 4.50 % +The Company used the Society of Actuaries' PRI-2012 Private Retirement Plans Mortality Tables projected generationally using the Society of Actuaries' +MP-2021 projection scale. +The Company selected the 2023 discount rate for substantially all of its plans by using a hypothetical portfolio of high-quality bonds at December 31, 2023 +that would provide the necessary cash flows to match projected benefit payments. +81 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_82.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..35e6c30bf16ce53a69b966c8f149e51daf507566 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,31 @@ +Table of Contents +We develop our expected long-term rate of return assumption for our defined benefit plans based on historical experience and by evaluating input from the +trustee managing the plans' assets. Our expected long-term rate of return on plan assets for these plans is based on a target allocation of assets, which is +based on our goal of earning the highest rate of return while maintaining risk at acceptable levels. The plans strive to have assets sufficiently diversified so +that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio. Plan fiduciaries regularly +review our actual asset allocation and the pension plans' investments are periodically rebalanced to our targeted allocation when considered +appropriate. United's plan assets are allocated within the following guidelines: + Percent of Total Expected Long-TermRate of Return +Equity securities 25-73% 9 % +Fixed-income securities 14-53 8 +Alternatives 3-27 8 +The table below shows the impacts of a change in certain assumptions on the 2024 net periodic benefit cost and the benefit obligations at December31, 2023 (in millions): +Pension Benefits +OtherPostretirementBenefits +Impact on Benefit Obligation at December 31, 2023 +100 basis points decrease in the weighted average discount rate $ 858 $ 48 +Impact on 2024 Net Periodic Benefit Cost +100 basis points decrease in the weighted average discount rate (a) $ 96 $ — +100 basis points decrease in the expected long-term rate of return on plan assets 35 — +(a) In general, as discount rates increase, the impact of changes in discount rates decreases. Therefore, these sensitivities cannot be extrapolated for larger increases or decreases in thediscount rate. In addition, benefit cost is affected by other factors including, but not limited to, investment performance, contributions, demographic experience and other assumptionchanges. +Fair Value Information. Accounting standards require us to use valuation techniques to measure fair value that maximize the use of observable inputs and +minimize the use of unobservable inputs. These inputs are prioritized as follows: +Level 1 Unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value +Level 2 Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroboratedinputs +Level 3 Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about howmarket participants would price the assets or liabilities +Assets and liabilities measured at fair value are based on the valuation techniques identified in the tables below. The valuation techniques are as follows: +(a) Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities; and +(b) Income approach. Techniques to convert future amounts to a single current value based on market expectations (including present value techniques, +option-pricing and excess earnings models). +82 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_83.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..7d7c0c730bba1dafd50731b07d5866aa70e741f2 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,43 @@ +Table of Contents +The following tables present information about United's pension and other postretirement plan assets at December 31 (in millions): +2023 2022 +Pension Plan Assets: Total Level 1 Level 2 Level 3 +AssetsMeasured atNAV(a) Total Level 1 Level 2 Level 3 +AssetsMeasured atNAV(a) +Equity securities funds$ 1,265 $ 74 $ 3 $ 134 $ 1,054 $ 1,183 $ 58 $ 26 $ 114 $ 985 +Fixed-income securities1,325 — 411 3 911 1,316 — 527 5 784 +Alternatives 779 — — 136 643 887 — — 161 726 +Other investments 230 13 87 3 127 81 6 16 5 54 +Total $ 3,599 $ 87 $ 501 $ 276 $ 2,735 $ 3,467 $ 64 $ 569 $ 285 $ 2,549 +Other PostretirementBenefit Plan Assets: +Deposit administration fund$ 46 $ — $ — $ 46 $ — $ 48 $ — $ — $ 48 $ — +(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the net asset value ("NAV") per share (or its equivalent) have not been classified +in the fair value hierarchy. These investments are commingled funds that invest in equity securities and fixed-income instruments including bonds, debt securities, and other similar instruments +issued by various U.S. and non-U.S. public- or private-sector entities. Redemption periods for these investments range from daily to semiannually. +Equity and Fixed-Income. Equities include investments in both developed market and emerging market equity securities. Fixed-income includes primarily +U.S. and non-U.S. government fixed-income securities and non-U.S. corporate fixed-income securities, as well as securitized debt securities. +Deposit Administration Fund. This investment is a stable value investment product structured to provide investment income. +Alternatives. Alternative investments consist primarily of investments in hedge funds, real estate and private equity interests. +Other investments. Other investments consist of primarily cash equivalents, as well as insurance contracts. +The following table presents reconciliation of United's benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended +December 31, 2023 and 2022 (in millions): +2023 2022 +Balance at beginning of year $ 333 $ 435 +Actual income (loss) on plan assets: +Sold during the year (50) 34 +Held at year end 55 (39) +Purchases, sales, issuances and settlements (net) (16) (97) +Balance at end of year $ 322 $ 333 +Funding requirements for tax-qualified defined benefit pension plans are determined by government regulations. The Company does not expect any +minimum required contributions for 2024 for its tax-qualified defined benefit pension plans. The Company expects to make approximately $104 million in +contributions to its other postretirement benefit plans in 2024. +The estimated future benefit payments, net of expected participant contributions, in United's pension plans and other postretirement benefit plans for the +next ten years, as of December 31, 2023, are as follows (in millions): +Pension OtherPostretirement +2024 $ 268 $ 112 +2025 301 100 +2026 323 88 +2027 348 80 +2028 373 74 +Years 2029 – 2033 1,896 274 +83 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_84.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6e5fb87ebb6b5e4fa3e7d93c97c7c442732b9b2 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,31 @@ +Table of Contents +Defined Contribution Plans. United offers several defined contribution plans to its employees. Depending upon the employee group, employer +contributions consist of matching contributions and/or non-elective employer contributions. United's employer contribution percentages to its primary +401(k) defined contribution plans vary from 1% to 16% of eligible earnings depending on the terms of each plan. United recorded expenses for its primary +401(k) defined contribution plans of $960 million, $756 million and $651 million in the years ended December 31, 2023, 2022 and 2021, respectively. +Multi-Employer Plans. United's participation in the IAM National Pension Plan ("IAM Plan") for the annual period ended December 31, 2023 is outlined +in the table below. The risks of participating in these multi-employer plans are different from single-employer plans, as United may be subject to additional +risks that others do not meet their obligations, which in certain circumstances could revert to United. The IAM Plan reported $533 million in employers' +contributions for the year ended December 31, 2022. For 2022, the Company's contributions to the IAM Plan represented more than 5% of total +contributions to the IAM Plan. The 2023 information is not available as the applicable Form 5500 is not final for the plan year. +Pension Fund IAM National Pension Fund ("IAM Fund") +EIN/ Pension Plan Number 51-6031295 — 002 +Pension Protection Act Zone Status (2023 and 2022) Critical (2023 and 2022). A plan is in "critical" status if the funded percentage isless than 65 percent. On April 17, 2019, the IAM National Pension Fund Board ofTrustees voluntarily elected for the IAM Fund to be in critical status effective forthe plan year beginning January 1, 2019 to strengthen the IAM Fund's financialhealth. The IAM Fund's funded percentage was 87.1% as of January 1, 2022. +FIP/RP Status Pending/Implemented A 10-year Rehabilitation Plan effective, January 1, 2022, was adopted on April 17,2019 that requires the Company to make an additional contribution of 2.5% of thehourly contribution rate, compounded annually for the length of the RehabilitationPlan, effective June 1, 2019. +United's Contributions $87 million, $75 million and $58 million in the years ended December 31, 2023,2022 and 2021, respectively. +Surcharge Imposed No +Expiration Date of Collective Bargaining Agreement N/A +Profit Sharing. Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special or non-recurring +charges, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in +some cases profit sharing percentages vary above and below certain pre-tax margin thresholds. As part of the new collective bargaining agreement with the +Air Line Pilots Association ("ALPA"), the thresholds were lowered retroactive to January 1, 2023 for the pilot work group. Eligible U.S. co-workers in +each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker's annual eligible earnings to +the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation +under the U.S. profit sharing plan for management and administrative employees. The Company recorded profit sharing and related payroll tax expense of +$681 million and $133 million in 2023 and 2022, respectively. As a result of the pre-tax loss in 2021, no profit sharing was recorded. Profit sharing expense +is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations. +NOTE 8 - FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE +Fair Value Information. Accounting standards require us to use valuation techniques to measure fair value that maximize the use of observable inputs and +minimize the use of unobservable inputs. These inputs are described in Note 7 of this report. The table below presents disclosures about the fair value of +financial assets and liabilities measured at fair value on a recurring basis in the Company's financial statements as of December 31 (in millions): +84 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_85.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..b74b5353e930f1498842cd9b818ebd160567cfee --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,39 @@ +Table of Contents +2023 2022 +Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 +Cash and cash equivalents $ 6,058 $ 6,058 $ — $ — $ 7,166 $ 7,166 $ — $ — +Restricted cash - current (Note 1) 31 31 — — 45 45 — — +Restricted cash - non-current (Note 1) 245 245 — — 210 210 — — +Short-term investments: +U.S. government and agency notes 8,257 — 8,257 — 8,914 — 8,914 — +Asset-backed securities — — — — 325 — 325 — +Certificates of deposit placed through anaccount registry service ("CDARS") 73 — 73 — — — — — +Corporate debt — — — — 9 — 9 — +Long-term investments: +Equity securities 177 177 — — 189 189 — — +Investments presented in the table above have the same fair value as their carrying value. +Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of +approximately 15 months or less. +Long-term investments: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments +in Azul Linhas Aéreas Brasileiras S.A., Archer Aviation Inc., Eve Holding, Inc., Mesa Air Group, Inc. ("Mesa") and Clear Secure, Inc. +Other fair value information - The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables +above as of December 31 (in millions). Carrying amounts include any related discounts, premiums and issuance costs: +2023 2022 +CarryingAmount Fair Value CarryingAmount Fair Value +Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 +Long-term debt $ 29,075 $ 28,302 $ — $ 22,543 $ 5,759 $ 31,194 $ 29,371 $ — $ 23,990 $ 5,381 +Fair value of the financial instruments included in the tables above was determined as follows: +Description Fair Value Methodology +Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value. +Short-term and Long-term investments Fair value is based on (a) the trading prices of the investment or similar instruments or (b) broker quotes obtained by third-party valuation services. +Long-term debt Fair values were based on either market prices or the discounted amount of future cash flowsusing our current incremental rate of borrowing for similar liabilities or assets. +Equity Method Investments. As of December 31, 2023, United holds investments, accounted for using the equity method, with a combined carrying valueof approximately $230 million. Significant equity method investments are described below: +• CommuteAir LLC. United owns a 40% minority ownership stake in CommuteAir LLC. CommuteAir currently operates 53 regional aircraft under +a CPA that has a term through 2026. +• Republic Airways Holdings Inc. United holds a 19% minority interest in Republic Airways Holdings Inc., which is the parent company of +Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under CPAs that have terms through 2035. +• United Airlines Ventures Sustainable Flight Fund (the "Fund"). During the first quarter of 2023, United launched, through its corporate venture +capital arm, United Airlines Ventures, the Fund, an investment vehicle designed to support start-ups focused on decarbonizing air travel by +accelerating the research, production and technologies +85 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_86.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..aba980f7b85d6fa3dff6d2430836342587b31c02 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,41 @@ +Table of Contents +associated with sustainable aviation fuel. As of December 31, 2023, the Company indirectly holds a 38% ownership interest in the Fund. +Other Investments. United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air +carrier doing business as JSX, as well as a number of companies with emerging technologies and sustainable solutions. None of these investments have +readily determinable fair values. We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for +an identical or similar investment of the same issuer. As of December 31, 2023, the carrying value of these investments was $401 million. +Notes Receivable. As of December 31, 2023, the Company has $103 million of notes receivable, net of allowance for credit losses, the majority of which +is from certain of its regional carriers. The current portions of the notes receivable are recorded in Receivables, less allowance for credit losses and the +long-term portions are recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet. +NOTE 9 - DEBT +(In millions) +Maturity Dates Interest Rate(s) at December 31,2023 +At December 31, +2023 2022 +Aircraft notes (a) 2024 — 2036 2.70 % — 7.35 % $ 12,508 $ 12,262 +MileagePlus Senior Secured Notes 2027 6.50 % 2,660 3,420 +MileagePlus Term Loan Facility (b) 2027 10.77 % 2,100 2,700 +2026 and 2029 Notes 2026 — 2029 4.38 % — 4.63 % 4,000 4,000 +2021 Term Loans (b) 2028 9.22 % 3,870 4,913 +Unsecured +Notes 2024 — 2025 4.88 % — 5.00 % 596 596 +PSP Notes (c) 2030 — 2031 1.00 % 3,181 3,181 +Other unsecured debt 2024 — 2029 0.00 % — 5.75 % 437 508 +29,352 31,580 +Less: unamortized debt discount, premiums and debtissuance costs (277) (386) +Less: current portion of long-term debt (4,018) (2,911) +Long-term debt, net $ 25,057 $ 28,283 +(a) Financing includes variable rate debt based on the Secured Overnight Financing Rate ("SOFR") (or another index rate), generally subject to a floor, plus a specifiedmargin of 0.49% to 2.25%. +(b) Financing includes variable rate debt based on SOFR (or another index rate), subject to a floor, plus a specified margin of 3.75% to 5.25%.(c) The PSP Notes include $1.5 billion of indebtedness evidenced by a 10-year senior unsecured promissory note with Treasury provided under the PSP of the CARES +Act ("PSP1"), $0.9 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasury pursuant to Payroll Support ProgramExtension Agreements under the CARES Act ("PSP2") and $0.8 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasurypursuant to the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021 ("PSP3"). These PSP Notes have a rate of 1.00% in +years 1 through 5, and a rate of the SOFR plus 2.00% in years 6 through 10. +The table below presents the Company's contractual principal payments (not including debt discount or debt issuance costs) at December 31, 2023 under +then-outstanding long-term debt agreements in each of the next five calendar years (in millions): +2024 $ 4,018 +2025 3,452 +2026 5,245 +2027 2,475 +2028 5,306 +After 2028 8,856 +$ 29,352 +86 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_87.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..11a1051a695cd924fccb002690898965e98f44a3 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,47 @@ +Table of Contents +Equipment Notes. On June 20, 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the +"Trustee") under a certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the +"Note Purchase Agreement"). The Note Purchase Agreement provides for the issuance by the Company of equipment notes (the "Equipment Notes") in the +aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft delivered new to the Company from August 2022 to May 2023. Pursuant to the +Note Purchase Agreement, the Trustee purchased Equipment Notes issued under a trust indenture and mortgage (each, an "Indenture" and, collectively, the +"Indentures") with respect to each aircraft entered into by the Company and Wilmington Trust, National Association, as mortgagee. Each Indenture +provides for the issuance of Equipment Notes in a single series, Series A, bearing interest at the rate of 5.80% per annum. The Equipment Notes were +purchased by the Trustee, using the proceeds from the sale of Pass Through Certificates, Series 2023-1A, issued by a pass through trust newly-formed by +the Company to facilitate the financing of the aircraft. The interest on the Equipment Notes is payable semi-annually on each January 15 and July 15, +beginning on January 15, 2024. The principal payments on the Equipment Notes are scheduled on January 15 and July 15 of each year, beginning on July +15, 2024. The final payments on the Equipment Notes will be due on January 15, 2036. These Equipment Notes are reflected as part of Aircraft notes in the +table above. +In addition to the Equipment Notes described above, United borrowed $0.4 billion aggregate principal amounts from various financial institutions to +finance the purchase of aircraft. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2035 and have variable interest +rates ranging from 7.31% to 7.35% at December 31, 2023. +In 2023, United prepaid $1.0 billion of the outstanding principal amount under the 2021 Term Loan Facility (as defined below). See Note 13 for +information related to charges recorded as a result of this prepayment. +In 2021, United entered into a new Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility") initially providing term loans (the "2021 +Term Loans") up to an aggregate amount of $5.0 billion and a new Revolving Credit and Guaranty Agreement (the "2021 Revolving Credit Facility" and, +together with the 2021 Term Loan Facility, the "2021 Loan Facilities") initially providing revolving loan commitments of up to $1.75 billion. As of +December 31, 2023, we had $1.75 billion undrawn and available under our revolving credit facility. On February 15, 2024, the Company entered into an +Amended and Restated Revolving Credit and Guaranty Agreement (the "Revolving Credit Facility") amending its 2021 Revolving Credit Facility +increasing the borrowing capacity by $1.115 billion, which may be drawn upon until February 15, 2029, in the case of any Revolving Loans (as defined in +the Revolving Credit Facility) made by the Extending Lenders (as defined in the Revolving Credit Facility), and April 21, 2025, in the case of any +Revolving Loans made by the 2024 Non-Extending Lenders (as defined in the Revolving Credit Facility). The revolving loan commitments of the +Extending Lenders equal $2.7 billion and the revolving loan commitments of the 2024 Non-Extending Lenders equal $165 million. The Revolving Loans, +if any, will bear interest at a variable rate equal to Term SOFR (as defined in the Revolving Credit Facility), generally subject to a floor, plus a credit +adjustment spread described in the Revolving Credit Facility, or, at United's election, another rate based on certain market interest rates, also generally +subject to a floor, in each case plus a variable margin ranging from 3.00% to 3.50%, in the case of Term SOFR loans, and 2.00% to 2.50%, in the case of +loans at other market rates. +On February 22, 2024, the Company also entered into Amendment No. 2 to Term Loan Credit and Guaranty Agreement (as amended, the "Term Loan +Facility" and, together with the Revolving Credit Facility, the "Loan Facilities") and (i) used available cash in an amount equal to $1.37 billion to partially +prepay the term loans under the 2021 Term Loans and (ii) borrowed the entire term loan commitment available under the Term Loan Facility in an amount +equal to $2.5 billion and used the proceeds of such terms loans (the "Term Loans") to prepay in full the remaining outstanding principal balance under the +Existing Term Loan Facility. The Term Loans will bear interest at a variable rate equal to Term SOFR (subject to a floor of 0.0%); or, at United's election, +another rate based on certain market interest rates (subject to a floor of 1.0%), in each case plus a margin of 2.75%, in the case of Term SOFR loans, and +1.75%, in the case of loans at other market rates. The remaining balance of the Term Loans will be due and payable on its maturity date on February 22, +2031. +The Loan Facilities are secured on a senior basis by continuing security interests granted by United to the Collateral Trustee for the benefit of the lenders +under the Loan Facilities, among other parties, on the following (the "Collateral"), subject to certain exclusions: (i) all of United's route authorities granted +by the U.S. Department of Transportation to operate scheduled service between any international airport located in the United States and any international +airport located in any country other than the United States (except Cuba), (ii) United's rights to substantially all of its landing and take-off slots at foreign +and domestic airports, including at John F. Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport, and (iii) +United's rights to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicing scheduled air carrier service +authorized by an applicable route authority. The Collateral securing the Loan Facilities also presently secures on a senior basis the 2026 and 2029 Notes. +87 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_88.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..9890f63d496311abfc569e5ced41698f1a65bde4 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,6 @@ +Table of Contents +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, +restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or repurchase stock. As of December 31, 2023, +the Company was in compliance with its debt covenants. The collateral, covenants and cross default provisions of the Company's principal debt instruments +that contain such provisions are summarized in the table below: +88 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_89.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..ead23b361f91307dbfded9fd6b9bd39f81f0c560 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,16 @@ +Table of Contents +Debt Instrument Collateral, Covenants and Cross Default Provisions +Aircraft notes and othernotes payable Secured by certain aircraft, spare engines and spare parts. The indentures contain events of default that are customary foraircraft financings, including in certain cases cross default to other related aircraft. +2021 Loan Facilities Secured on a senior basis by security interests granted by the Company to the collateral trustee for the benefit of the lendersunder the 2021 Loan Facilities, among other parties, on the following: (i) all of the Company's route authorities granted by theU.S. Department of Transportation to operate scheduled service between any international airport located in the United Statesand any international airport located in any country other than the United States (except Cuba), (ii) the Company's rights tosubstantially all of its landing and take-off slots at foreign and domestic airports, including at John F. Kennedy InternationalAirport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) theCompany's rights to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicingscheduled air carrier service authorized by an applicable route authority. +The 2021 Loan Facilities contain negative covenants that, among other things, limit our ability under certain circumstances tocreate liens on the collateral, make certain dividends, conduct stock repurchases, make certain restricted investments and otherrestricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets. The 2021 LoanFacilities also contain financial covenants that require the Company to maintain at least $2.0 billion of unrestricted liquidity atall times, which includes unrestricted cash, short-term investments and any undrawn amounts under any revolving creditfacility, and to maintain a minimum ratio of appraised value of collateral to the outstanding debt secured by such collateral(including under the 2021 Loan Facilities) of 1.6 to 1.0, tested semi-annually. +The 2021 Loan Facilities contain events of default customary for similar financings, including a cross-payment default andcross-acceleration to other material indebtedness. +2026 and 2029 Notes The 2026 and 2029 Notes are secured on a senior basis by security interests granted by the Company to the collateral trustee forthe benefit of the holders of the 2026 and 2029 Notes, among other parties, on the following: (i) all of the Company's routeauthorities granted by the U.S. Department of Transportation to operate scheduled service between any international airportlocated in the United States and any international airport located in any country other than the United States (except Cuba), (ii)the Company's rights to substantially all of its landing and take-off slots at foreign and domestic airports, including at John F.Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certainexclusions), and (iii) the Company's rights to use or occupy space at airport terminals, each to the extent necessary at therelevant time for servicing scheduled air carrier service authorized by an applicable route authority. +The indenture for these 2026 and 2029 Notes contains covenants that, among other things, limit our ability under certaincircumstances to create liens on the collateral, make certain dividends, stock repurchases, restricted investments and otherrestricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets. The indenture alsocontains a financial covenant that requires UAL to pay special interest in an additional amount equal to 2.0% per year of theprincipal amount of the 2026 and 2029 Notes for so long as it is unable to demonstrate that it maintains a minimum ratio ofappraised value of collateral to the outstanding debt secured by such collateral (including the 2026 and 2029 Notes) of 1.6 to1.0, tested semi-annually. +The indenture contains events of default customary for similar financings, including a cross-payment default and cross-acceleration to other material indebtedness. +MileagePlus SeniorSecured Notes andMileagePlus Term LoanFacility +Secured by first-priority security interests in substantially all of the assets of the Issuers, other than excluded property andsubject to certain permitted liens, including security interests in specified cash accounts that include the accounts into whichMileagePlus revenues are or will be paid by the Company's marketing partners and by the Company. +PSP Notes The PSP Notes represent senior unsecured indebtedness of UAL. The PSP Notes are guaranteed by United. If any subsidiary ofUAL (other than United) becomes, or is required to become, an obligor on unsecured indebtedness of UAL or any of itssubsidiaries with a principal balance in excess of a specified amount, then such subsidiary shall be required to guarantee theobligations of the Company under the PSP Notes. +Pursuant to the PSP Agreements, the Company and its affiliates will be required to comply with certain provisions including,among others, audit and reporting requirements and provisions restricting the payment of certain executive compensation untilApril 1, 2023. +Unsecured notes The indentures for these notes contain covenants that, among other things, restrict the ability of the Company and its restrictedsubsidiaries (as defined in the indentures) to incur additional indebtedness and make certain dividends, stock repurchases,restricted investments and other restricted payments. +89 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_9.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..5239ed3a0aa42aecdfeb4de38716de264f8091ef --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,25 @@ +Table of Contents +all of which are key to advancing the Company's climate goals. Some of the Company's highlights in this area include the following: +◦ The Company has historically supported the adoption of more aggressive industry targets and worked with both Airlines for America +("A4A") and the International Air Transport Association to drive adoption of industry-wide net-zero emissions targets by 2050 for +domestic and international carriers, respectively. In addition, the Company worked with other airlines, low-carbon fuel producers and +other stakeholders from across the SAF value chain to support the Biden Administration's SAF Grand Challenge to collectively make 3 +billion gallons of SAF available domestically by 2030. +◦ The Company is a founding member of the Biden Administration's First Movers Coalition, a collective of leading companies committing +to purchase low-carbon technologies in hard-to-abate sectors. As part of its membership, the Company has committed to using emerging +technologies with significant emissions reductions by 2030 and has also set a target of replacing at least 5% of conventional jet fuel +demand with SAF that reduces lifecycle GHG emissions by 85% or more compared with conventional jet fuel by 2030. +◦ The Company worked with federal policymakers to champion passage of new production tax credits for SAF in the Inflation Reduction +Act of 2022 (the "IRA"). These credits create an economic incentive for increased SAF production within the United States. +◦ The Company led a cross-sectoral effort to incentivize SAF in Illinois, lowering the overall cost of SAF for consumption at the state +level. The Sustainable Aviation Fuel Purchase Credit was enacted in Illinois in February 2023 and became effective in mid-2023. +In 2023, the Company evolved its GHG reporting to align with corporate best practices around GHG accounting protocols, including anticipated updates in +accounting guidance from SBTi and the Greenhouse Gas Protocol. This revised reporting methodology allows us to provide greater transparency around +the aircraft's GHG emissions from burning conventional jet fuel and SAF. Biogenic GHG emissions from SAF are not reported as Scope 1-3 emissions. +The Company believes that its absolute GHG emissions will increase in the immediate future as the Company continues to grow. In addition, even though +purchasing voluntary carbon offsets could present near-term emissions reductions, as outlined above, the Company is resolute in attaining its mid-term and +long-term climate goals without relying on the use of voluntary carbon offsets to support its climate targets and has made progress towards implementing +solutions that the Company believes are needed to permanently change aviation and reduce the environmental impact of air travel to protect our planet for +generations to come. Such commitment is demonstrated by the end of the Company's customer offset program and elimination of emission reductions +realized by carbon offsets as reflected in its GHG inventory. Additional quantitative emissions data for fiscal years 2022 and 2021 are as follows: +9 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_90.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..7bcb3ff71380cd85051e8524006b2202625bc666 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,34 @@ +Table of Contents +NOTE 10 - LEASES AND CAPACITY PURCHASE AGREEMENTS +United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other +commercial real estate, office and computer equipment and vehicles, among other items. Certain of these leases include provisions for variable lease +payments which are based on several factors, including, but not limited to, relative leased square footage, available seat miles, enplaned passengers, +passenger facility charges, terminal equipment usage fees, departures, and airports' annual operating budgets. Due to the variable nature of the rates, these +leases are not recorded on our balance sheet as a right-of-use asset and lease liability. +For leases with terms greater than 12 months, we record the related right-of-use asset and lease liability at the present value of fixed lease payments over +the lease term. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as +part of our right-of-use assets and lease liabilities. Leases with an initial term of 12 months or less with purchase options or extension options that are not +reasonably certain to be exercised are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the term +of the lease. We combine lease and non-lease components, such as common area maintenance costs, in calculating the right-of-use assets and lease +liabilities for all asset groups except for our CPAs, which contain embedded leases for regional aircraft. In addition to the lease component cost for regional +aircraft, our CPAs also include non-lease components primarily related to the regional carriers' operating costs incurred in providing regional aircraft +services. We allocate consideration for the lease components and non-lease components of each CPA based on their relative standalone values. +Lease Cost. The Company's lease cost for the years ended December 31 included the following components (in millions): +2023 2022 2021 +Operating lease cost $ 925 $ 941 $ 958 +Variable and short-term lease cost 3,028 2,603 2,291 +Amortization of finance lease assets 52 72 89 +Interest on finance lease liabilities 20 13 16 +Sublease income (39) (33) (26) +Total lease cost $ 3,986 $ 3,596 $ 3,328 +Lease terms and commitments. United's leases include aircraft leases for aircraft that are directly leased by United and aircraft that are operated by +regional carriers on United's behalf under CPAs (but excluding aircraft owned by United) and non-aircraft leases. Aircraft operating leases relate to leases +of 70 mainline and 275 regional aircraft while finance leases relate to leases of 22 mainline and 13 regional aircraft. United's aircraft leases have remaining +lease terms of 1 month to 12 years with expiration dates ranging from 2024 through 2035. Under the terms of most aircraft leases, United has the right to +purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at a percentage of cost. +In addition, United also has 42 leases of Boeing 737 MAX and Boeing 787 aircraft under various sale-leaseback transactions. These transactions did not +qualify as a sale under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), and, as such, the +associated aircraft remain on the Company's consolidated balance sheet as part of Flight equipment. The related obligations are recorded in Current +maturities of other financial liabilities and Other financial liabilities. +Non-aircraft leases have remaining lease terms of 1 month to 29 years. +90 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_91.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..ecfee922bb5d04dad1f964adf377f3636c20b837 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,42 @@ +Table of Contents +The table below summarizes the Company's scheduled future minimum lease payments under operating and finance leases, recorded on the balance sheet, +as of December 31, 2023 (in millions): +Operating Leases Finance Leases +2024 $ 813 $ 183 +2025 726 60 +2026 706 19 +2027 885 9 +2028 685 8 +After 2028 2,942 5 +Minimum lease payments 6,757 284 +Imputed interest (1,678) (21) +Present value of minimum lease payments 5,079 263 +Less: current maturities of lease obligations (576) (172) +Long-term lease obligations $ 4,503 $ 91 +As of December 31, 2023, we have additional leases of approximately $1.6 billion for several regional aircraft under CPAs, mainline aircraft, airport +facility and office space leases, none of which had commenced as of such date. These leases will commence between 2024 and 2026 with lease terms of up +to 12 years. +The table below presents the Company's contractual payments at December 31, 2023 under then-outstanding sale and leaseback agreements, for +transactions that did not qualify as a sale under ASC Topic 606, in each of the next five calendar years (in millions): +Other Financial Liabilities +2024 $ 178 +2025 178 +2026 178 +2027 472 +2028 147 +After 2028 2,090 +3,243 +Imputed interest (921) +Current maturities of other financial liabilities (57) +Other financial liabilities $ 2,265 +Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate United's incremental +borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The table below presents +additional information related to our leases as of December 31: +2023 2022 +Weighted-average remaining lease term - operating leases 10 years 10 years +Weighted-average remaining lease term - finance leases 2 years 3 years +Weighted-average remaining lease term - other financial liabilities 10 years 9 years +Weighted-average discount rate - operating leases 5.8 % 5.5 % +Weighted-average discount rate - finance leases 6.3 % 6.4 % +Weighted-average interest rate - other financial liabilities 5.3 % 6.0 % +91 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_92.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2e00e71e360e919277bd06741281332253a30e5 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,44 @@ +Table of Contents +The table below presents supplemental cash flow information related to leases during the year ended December 31 (in millions): +2023 2022 2021 +Cash paid for amounts included in the measurement of lease liabilities: +Operating cash flows for operating leases $ 874 $ 919 $ 977 +Operating cash flows for finance leases 21 13 18 +Financing cash flows for finance leases 311 124 216 +Regional CPAs. United has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. Under +these CPAs, the Company pays the regional carriers contractually agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based +on agreed performance metrics, subject to annual adjustments. The fees are based on specific rates multiplied by specific operating statistics (e.g., block +hours, departures), as well as fixed monthly amounts. Under these CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees +and other costs, which are either passed through by the regional carrier to the Company without any markup or directly incurred by the Company. In some +cases, the Company owns some or all of the aircraft subject to the CPA and leases such aircraft to the regional carrier. United's CPAs are for 413 regional +aircraft as of December 31, 2023, and the CPAs have terms expiring through 2035. Aircraft operated under CPAs include aircraft leased directly from the +regional carriers and those owned by United and operated by the regional carriers. See Part I, Item 2. Properties, of this report for additional information. +United recorded approximately $1.1 billion, $0.9 billion and $0.6 billion in expenses related to its CPAs with its regional carriers in which United is a +minority shareholder, for the years ended December 31, 2023, 2022 and 2021, respectively. United had prepaid balances and notes receivables with +combined carrying values of $84 million and $62 million with these companies, as of December 31, 2023 and 2022, respectively. There were $122 million +and $118 million of liabilities due to these companies as of December 31, 2023 and 2022, respectively. The CPAs with these related parties were executed +in the ordinary course of business. +In 2023, United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those +carriers and to add additional aircraft that will replace existing aircraft near the end of their contractual terms. Separately, the Company terminated its CPA +and related regional flight operations with Air Wisconsin in June 2023. +Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. The most important of these +variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, +we have set forth below estimates of our future payments under the CPAs based on our assumptions. The actual amounts we pay to our regional operators +under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the CPAs do not include the portion of the +underlying obligation for any aircraft leased to a regional carrier or deemed to be leased from other regional carriers and facility rent that are disclosed as +part of operating leases above. For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our +anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as +rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's +operational performance will remain at recent historic levels and (5) an annual projected inflation rate. These amounts exclude variable pass-through costs +such as fuel and landing fees, among others. Based on these assumptions as of December 31, 2023, our estimated future payments through the end of the +terms of our CPAs are presented in the table below (in billions): +2024 $ 2.4 +2025 2.1 +2026 2.1 +2027 1.6 +2028 1.3 +After 2028 4.1 +$ 13.6 +In January 2024, United amended several of its CPAs with certain of its regional carriers. These amendments will result in an increase to its future +commitments under its CPAs by approximately $0.6 billion. +92 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_93.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3732c2679b9fd8e4005c67c827eea9c57c9e6d1 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTE 11 - VARIABLE INTEREST ENTITIES ("VIE") +Variable interests are contractual, ownership or other monetary interests in an entity that change with fluctuations in the fair value of the entity's net assets +exclusive of variable interests. A VIE can arise from items such as lease agreements, loan arrangements, guarantees or service contracts. An entity is a VIE +if (a) the entity lacks sufficient equity or (b) the entity's equity holders lack power or the obligation and right as equity holders to absorb the entity's +expected losses or to receive its expected residual returns. +If an entity is determined to be a VIE, the entity must be consolidated by the primary beneficiary. The primary beneficiary is the holder of the variable +interests that has the power to direct the activities of a VIE that (i) most significantly impact the VIE's economic performance and (ii) has the obligation to +absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE. Therefore, the Company must identify which +activities most significantly impact the VIE's economic performance and determine whether it, or another party, has the power to direct those activities. +Airport Leases. United is the lessee of real property under long-term operating leases at a number of airports where we are also the guarantor of +approximately $1.9 billion of tax-exempt special facilities revenue bonds and interest thereon as of December 31, 2023. These leases are typically with +municipalities or other governmental entities, which are excluded from the consolidation requirements concerning a VIE. To the extent United's leases and +related guarantees are with a separate legal entity other than a governmental entity, United is not the primary beneficiary because the lease terms are +consistent with market terms at the inception of the lease and the lease does not include a residual value guarantee, fixed-price purchase option, or similar +feature. See Note 12 of this report for more information regarding United's guarantee of the tax-exempt special facilities revenue bonds. +EETCs. United evaluated whether the pass-through trusts formed for its EETC financings, treated as either debt or aircraft operating leases, are VIEs +required to be consolidated by United under applicable accounting guidance, and determined that the pass-through trusts are VIEs. Based on United's +analysis as described below, United determined that it does not have a variable interest in the pass-through trusts. +The primary risk of the pass-through trusts is credit risk (i.e. the risk that United, the issuer of the equipment notes, may be unable to make its principal and +interest payments). The primary purpose of the pass-through trust structure is to enhance the credit worthiness of United's debt obligation through certain +bankruptcy protection provisions, a liquidity facility (in certain of the EETC structures) and improved loan-to-value ratios for more senior debt classes. +These credit enhancements lower United's total borrowing cost. Pass-through trusts are established to receive principal and interest payments on the +equipment notes purchased by the pass-through trusts from United and remit these proceeds to the pass-through trusts' certificate holders. +United does not invest in or obtain a financial interest in the pass-through trusts. Rather, United has an obligation to make interest and principal payments +on its equipment notes held by the pass-through trusts. United does not intend to have any voting or non-voting equity interest in the pass-through trusts or +to absorb variability from the pass-through trusts. Based on this analysis, the Company determined that it is not required to consolidate the pass-through +trusts. +Mesa. United concluded that Mesa is a VIE as of December 31, 2023. United holds a variable interest in Mesa in the form of an approximately 10% equity +interest and several loans to Mesa, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly +impact Mesa's economic performance. +93 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_94.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c494bb9eb07581a560189a64ff109139cba6241 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,42 @@ +Table of Contents +NOTE 12 - COMMITMENTS AND CONTINGENCIES +Commitments. As of December 31, 2023, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. +("Airbus") presented in the table below: +Contractual Aircraft Deliveries Expected Aircraft Deliveries (b) +Aircraft Type Number of Firm Commitments (a) 2024 2025 After 2025 2024 2025 After 2025 +787 150 8 18 124 7 18 125 +737 MAX 8 43 43 — — 37 6 — +737 MAX 9 34 34 — — 19 15 — +737 MAX 10 277 80 71 126 — (c) (c) +A321neo 126 26 38 62 25 24 77 +A321XLR 50 — 8 42 — 1 49 +A350 45 — — 45 — — 45 +(a) United also has options and purchase rights for additional aircraft. +(b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United. +(c) Due to the delay in the certification of the 737 MAX 10 aircraft, we are unable to accurately forecast the expected delivery period. +The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments couldchange to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify thecontracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii)the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. +The table below summarizes United's firm commitments as of December 31, 2023, which include aircraft and related spare engines, aircraft improvements +and non-aircraft capital commitments. Aircraft commitments are based on contractual scheduled aircraft deliveries without any adjustments communicated +by Boeing and Airbus or estimated by United. +(in billions) +2024 $ 12.1 +2025 7.9 +2026 6.0 +2027 4.5 +2028 6.1 +After 2028 23.5 +$ 60.1 +Legal and Environmental. The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business. As of +December 31, 2023, management believes, after considering a number of factors, including (but not limited to) the information currently available, the +views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal +proceedings have merit and the ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations +or cash flows. The Company records liabilities for legal and environmental claims when it is probable that a loss has been incurred and the amount is +reasonably estimable. These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition. +During 2022, the Company recorded charges of $94 million as a result of a number of recent decisions that appear to impact the Company's ability to +successfully assert, in certain cases, that federal law preempts state and local laws that conflict with union contracts and/or federal requirements. +Guarantees and Indemnifications. In the normal course of business, the Company enters into numerous real estate leasing and aircraft financing +arrangements that have various guarantees included in the contracts. These guarantees are primarily in the form of indemnities under which the Company +typically indemnifies the lessors and any tax/financing parties against liabilities that arise out of or relate to the use, operation or maintenance of the leased +premises or financed aircraft. Currently, the Company believes that any future payments required under these guarantees or indemnities would be +immaterial, as most liabilities and related indemnities are covered by insurance (subject to deductibles). Additionally, certain real estate leases +94 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_95.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f76e8428271019d20a34a1898382fd72491996f --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,47 @@ +Table of Contents +include indemnities for any environmental liability that may arise out of or relate to the use of the leased premises. +As of December 31, 2023, United is the guarantor of approximately $1.9 billion in aggregate principal amount of tax-exempt special facilities revenue +bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the +respective governing bodies. The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's +consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term. The obligations associated with these +tax-exempt special facilities revenue bonds are included in our lease commitments disclosed in Note 10 of this report. All of these bonds are due between +2024 and 2041. +As of December 31, 2023, United is the guarantor of $77 million of aircraft mortgage debt issued by one of United's regional carriers. The aircraft +mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible +for those costs under the guarantees. +As of December 31, 2023, United had $429 million of surety bonds securing various insurance related obligations with expiration dates through 2027. +Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse +lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the +interest rate is based on SOFR, for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in +most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. The Company +elected to apply the guidance in Accounting Standards Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the +London Interbank Offered Rate (LIBOR) to SOFR. The application of this guidance did not have any material impact on the Company's financial +statements. At December 31, 2023, the Company had $11.3 billion of floating rate debt with remaining terms of up to approximately 12 years that are +subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to +approximately 12 years and an aggregate balance of $8.1 billion, the Company bears the risk of any change in tax laws that would subject loan or lease +payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions. +Fuel Consortia. United participates in numerous fuel consortia with other air carriers at major airports to reduce the costs of fuel distribution and storage. +Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the +consortia based on usage. The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel +storage and distribution facilities that are typically financed through various debt obligations. In general, each consortium lease agreement requires the +consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on these debt obligations. As of +December 31, 2023, approximately $2.5 billion principal amount of such loans was secured by significant fuel facility leases in which United participates, +as to which United and each of the signatory airlines has provided indirect guarantees of the debt. As of December 31, 2023, the Company's contingent +exposure was approximately $447 million principal amount of such obligations based on its recent consortia participation. The Company's contingent +exposure could increase if the participation of other air carriers decreases. The guarantees will expire when these obligations are paid in full, which ranges +from 2027 to 2056. The Company concluded it was not necessary to record a liability for these indirect guarantees. +Regional Capacity Purchase. As of December 31, 2023, United had 252 call options to purchase regional jet aircraft being operated by certain of its +regional carriers with contract dates extending until 2037. These call options are exercisable upon wrongful termination or breach of contract, among other +conditions. +Credit Card Processing Agreements. The Company has agreements with financial institutions that process customer credit card transactions for the sale of +air travel and other services. Under certain of the Company's credit card processing agreements, the financial institutions in certain circumstances have the +right to require that the Company maintain a reserve equal to a portion of advance ticket sales that has been processed by that financial institution, but for +which the Company has not yet provided the air transportation. Such financial institutions may require additional cash or other collateral reserves to be +established or additional withholding of payments related to receivables collected if the Company does not maintain certain minimum levels of unrestricted +cash, cash equivalents and short-term investments (collectively, "Unrestricted Liquidity"). The Company's current level of Unrestricted Liquidity is +substantially in excess of these minimum levels. +Labor Negotiations. As of December 31, 2023, United, including its subsidiaries, had approximately 103,300 employees. Approximately 83% of United's +employees were represented by various U.S. labor organizations. +In January 2023, the Company's more than 8,000 technicians and related employees represented by the International Brotherhood of Teamsters ratified an +extension to their labor contract with United. The agreement becomes amendable in +95 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_96.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3ec3be32ea30f7ddeaa09ae3877a26cbc1baa2d --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,10 @@ +Table of Contents +December 2024. On February 28, 2024, United and the IBT reached a tentative agreement for an extension to their labor contract. The agreement, if +ratified, becomes amendable in December 2028. The tentative agreement provides competitive pay increases and improved several work rules. +In May 2023, nearly 30,000 fleet service, passenger service, storekeepers, maintenance instructors and fleet technical instructors and related employeesrepresented by the International Association of Machinists & Aerospace Workers ("IAM") ratified five agreements with United. The ratified agreements are +effective through 2025. The Company recorded a one-time $48 million expense in conjunction with the ratification. On February 23, 2024, United and theIAM ratified agreements covering the security guards in California and central load planners. The ratified agreements are effective through 2025. +In September 2023, the Company's pilots represented by ALPA ratified an agreement with United. The agreement includes numerous work rule changes +and pay rate increases during the four-year term. The agreement also included a provision for a one-time $765 million payment upon ratification which was +paid by December 31, 2023. +96 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_97.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..d5a1ef754a9ef928f40014b78d15604c735db694 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTE 13 - SPECIAL CHARGES (CREDITS) +For the years ended December 31, operating and nonoperating special charges (credits) and unrealized (gains) losses on investments in the statements of +consolidated operations consisted of the following (in millions): +Operating: 2023 2022 2021 +Labor contract ratification bonuses $ 814 $ — $ — +CARES Act grant — — (4,021) +Severance and benefit costs — — 438 +Impairment of assets — — 97 +(Gains) losses on sale of assets and other special charges 135 140 119 +Total operating special charges (credits) 949 140 (3,367) +Nonoperating unrealized (gains) losses on investments, net (27) (20) 34 +Nonoperating debt extinguishment and modification fees 11 7 50 +Nonoperating special termination benefits and settlement losses — — 31 +Total nonoperating special charges and unrealized (gains) losses on investments, net (16) (13) 115 +Total operating and nonoperating special charges (credits) and unrealized (gains) losses oninvestments, net 933 127 (3,252) +Income tax expense (benefit), net of valuation allowance (214) (33) 728 +Total operating and nonoperating special charges (credits) and unrealized (gains) losses oninvestments, net of income taxes $ 719 $ 94 $ (2,524) +2023 +Labor contract ratification bonuses. During 2023, the Company recorded $814 million of expense associated with the agreements with ALPA, IAM and +other work groups. See Note 12 for additional information. +(Gains) losses on sale of assets and other special charges. During 2023, the Company recorded $135 million of net charges primarily comprised of +accelerated depreciation related to certain of the Company's assets that will be retired early, reserves for various legal matters, a write-down of flight +training equipment that is being sold and other gains and losses on the sale of assets. +Nonoperating unrealized (gains) losses on investments, net. During 2023, the Company recorded gains of $27 million, primarily for the change in the +market value of its investments in equity securities. +Nonoperating debt extinguishment and modification fees. During 2023, the Company recorded $11 million of charges primarily related to the prepayment +of $1.0 billion of the outstanding principal amount under a 2021 term loan facility. +2022 +(Gains) losses on sale of assets and other special charges. During 2022, the Company recorded $140 million of net charges primarily comprised of +$94 million for various legal matters and $23 million related to certain contract disputes. +Nonoperating unrealized (gains) losses on investments, net. During 2022, the Company recorded gains of $20 million primarily related to the change in +the market value of its investments in equity securities. +Nonoperating debt extinguishment and modification fees. During 2022, the Company recorded $7 million of charges primarily related to the early +redemption of $400 million of the outstanding principal amount of its 4.25% senior notes due 2022. +2021 +CARES Act grant. During 2021, the Company received approximately $5.8 billion in funding pursuant to the Payroll Support Program agreements under +the CARES Act (the "PSP2 and PSP3 Agreements"), which included approximately $1.7 billion aggregate principal amount of unsecured promissory notes. +The Company recorded $4.0 billion as grant income in Special charges (credits). The Company also recorded $99 million for the PSP2 Warrants and PSP3 +Warrants issued to Treasury as part of the PSP2 and PSP3 Agreements, within stockholders' equity, as an offset to the grant income. +97 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_98.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea823bf2ae7e45f7fb269de3e9912ebdd481e235 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,22 @@ +Table of Contents +Severance and benefit costs. During 2021, the Company recorded $438 million of charges related to pay continuation and benefits-related costs provided +to employees who chose to voluntarily separate from the Company. The Company offered, based on employee group, age and completed years of service, +pay continuation, health care coverage, and travel privileges. Approximately 4,500 employees elected to voluntarily separate from the Company. +Impairment of assets. During 2021, the Company recorded the following impairment charges: +• $61 million, primarily comprised of impairment charges for 13 Airbus A319 aircraft and 13 Boeing 737-700 airframes as a result of the then- +current market conditions for used aircraft, along with charges for cancelled induction projects related to these aircraft. +• $36 million of impairments related to 64 Embraer EMB 145LR aircraft and related spare engines that United retired from its regional fleet. The +decision to retire these aircraft was triggered by the United Next aircraft order. +(Gains) losses on sale of assets and other special charges. During 2021, the Company recorded net charges of $119 million primarily related to a one-time +bonus paid to employees for their continued efforts during the COVID-19 pandemic, incentives for its employees to receive a COVID-19 vaccination and +the termination of the lease associated with three floors of its headquarters at the Willis Tower in Chicago, partially offset by gains primarily related to the +sale of its former headquarters in suburban Chicago, aircraft sale-leaseback transactions and aircraft component manufacturer credits. +Nonoperating unrealized (gains) losses on investments, net. During 2021, the Company recorded losses of $34 million primarily for the change in the +market value of its investments in equity securities. +Nonoperating debt extinguishment and modification fees. During 2021, the Company recorded $50 million of charges for fees and discounts related to the +issuance of a new term loan and revolving credit facility and the prepayment of a CARES Act loan and a 2017 term loan and revolving credit facility. +Nonoperating special termination benefits and settlement losses. During 2021, as part of the first quarter voluntary leave programs, the Company +recorded $31 million of special termination benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees. +The subsidies were in the form of a one-time contribution to a notional retiree health account of $125,000 for full-time employees and $75,000 for part- +time employees. See Note 7 of this report for additional information. +98 \ No newline at end of file diff --git a/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_99.txt b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a40c866ef2334af4946c230468a840eb38c4aa0 --- /dev/null +++ b/United/United_100Pages/Text_TextNeedles/United_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,21 @@ +Table of Contents +ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. +None. +ITEM 9A. CONTROLS AND PROCEDURES +Evaluation of Disclosure Control and Procedures +UAL and United each maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports filed or +submitted by UAL and United to the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC's rules and forms, +and is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely +decisions regarding required disclosure. The management of UAL and United, including the Chief Executive Officer and Chief Financial Officer, +performed an evaluation to conclude with reasonable assurance that UAL's and United's disclosure controls and procedures as defined in Rules 13a-15(e) +and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were designed and operating effectively to report the information +each company is required to disclose in the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the +Chief Financial Officer of UAL and United have concluded that as of December 31, 2023, disclosure controls and procedures were effective. +Management's Reports on Internal Control Over Financial Reporting +UAL and United Management's Reports on Internal Control Over Financial Reporting are included herein. +Ernst & Young LLP, an independent registered public accounting firm, has audited the Company's financial statements included in this Form 10-K and +issued its report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, which is included herein. +Changes in Internal Control over Financial Reporting during the Quarter Ended December 31, 2023 +During the three months ended December 31, 2023, there was no change in UAL's or United's internal control over financial reporting that materially +affected, or is reasonably likely to materially affect, their internal control over financial reporting. +99 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_100.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..83179614ba173beb8812ba3bb76bcdb6a14a22f5 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,37 @@ +Table of Contents +Report of Independent Registered Public Accounting Firm +To the Stockholders and the Board of Directors of United Airlines Holdings, Inc. +Opinion on Internal Control Over Financial Reporting +We have audited United Airlines Holdings, Inc.'s (the "Company") internal control over financial reporting as of December 31, 2023, based on criteria +established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 +framework) (the "COSO criteria"). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of +December 31, 2023, based on the COSO criteria. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the 2023 +consolidated financial statements and our report dated February 29, 2024 expressed an unqualified opinion thereon. +Basis for Opinion +The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of +internal control over financial reporting included in the accompanying Management's Reports on Internal Control Over Financial Reporting. Our +responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm +registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the +applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether effective internal control over financial reporting was maintained in all material respects. +Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and +evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered +necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. +Definition and Limitations of Internal Control Over Financial Reporting +A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting +and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control +over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly +reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit +preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are +being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding +prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial +statements. +Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of +effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of +compliance with the policies or procedures may deteriorate. +/s/ Ernst & Young LLP +Chicago, Illinois +February 29, 2024 +100 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_101.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ae82b9bb0419c8bcb29f9318986f98418760062 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,37 @@ +Table of Contents +United Airlines Holdings, Inc. Management Report on Internal Control Over Financial Reporting +February 29, 2024 +To the Stockholders of United Airlines Holdings, Inc. +Chicago, Illinois +The management of United Airlines Holdings, Inc. ("UAL") is responsible for establishing and maintaining adequate internal control over financial +reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance +regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted +accounting principles. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Also, +projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in +conditions, or that the degree of compliance with the policies or procedures may deteriorate. +Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an +evaluation of the design and operating effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, +management used the framework set forth in Internal Control—Integrated Framework (2013 Framework) issued by the Committee of the Sponsoring +Organizations of the Treadway Commission. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal +control over financial reporting was effective as of December 31, 2023. +Our independent registered public accounting firm, Ernst & Young LLP, who audited UAL's consolidated financial statements included in this Form 10-K, +has issued a report on UAL's internal control over financial reporting, which is included herein. +United Airlines, Inc. Management Report on Internal Control Over Financial Reporting +February 29, 2024 +To the Stockholder of United Airlines, Inc. +Chicago, Illinois +The management of United Airlines, Inc. ("United") is responsible for establishing and maintaining adequate internal control over financial reporting, as +such term is defined in Exchange Act Rule 13a-15(f). United's internal control over financial reporting is designed to provide reasonable assurance +regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted +accounting principles. Because of its inherent limitations, United's internal control over financial reporting may not prevent or detect misstatements. Also, +projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in +conditions, or that the degree of compliance with the policies or procedures may deteriorate. +Under the supervision and with the participation of management, including United's Chief Executive Officer and Chief Financial Officer, United conducted +an evaluation of the design and operating effectiveness of its internal control over financial reporting as of December 31, 2023. In making this assessment, +management used the framework set forth in Internal Control—Integrated Framework (2013 Framework) issued by the Committee of the Sponsoring +Organizations of the Treadway Commission. Based on this evaluation, United's Chief Executive Officer and Chief Financial Officer concluded that its +internal control over financial reporting was effective as of December 31, 2023. +This annual report does not include an attestation report of United's registered public accounting firm regarding internal control over financial reporting. +Management's report was not subject to attestation by United's registered public accounting firm pursuant to the rules of the Securities and Exchange +Commission that permit United to provide only management's report in this annual report. +101 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_102.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..85da5c1b5aba3790d92d3a95c0487fdd181b0d28 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,33 @@ +Table of Contents +ITEM 9B. OTHER INFORMATION. +(a) None. +(b) During the three months ended December 31, 2023, no director or "officer" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company +or United informed the Company or United of the adoption, modification or termination of a "Rule 10b5-1 trading arrangement" or a "non-Rule +10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K under the Exchange Act. +ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. +Not applicable. +PART III +ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. +Reference is made to the 2024 Proxy Statement with respect to information about UAL's directors and corporate governance, which is incorporated herein +by reference and made a part hereof in response to the information required by Item 10 with respect to UAL. +The information required by Item 10 with respect to UAL's and United's executive officers has been included in Part I of this Form 10-K under the caption +"Information about Our Executive Officers" and is incorporated herein by reference and made a part hereof in response to the information required by Item +10 with respect to UAL. +Reference is made to the 2024 Proxy Statement with respect to UAL's non-compliance with Section 16(a) of the Exchange Act, if applicable, which is +incorporated herein by reference and made a part hereof in response to the information required by Item 10 with respect to UAL. +Code of Ethics. The Company has a code of ethics, the "Code of Ethics and Business Conduct," for its directors, officers and employees. The code serves +as a "Code of Ethics" as defined by SEC regulations, and as a "Code of Conduct" under Nasdaq Listing Rule 5610. The code is available on the Company's +investor relations website at ir.united.com. Waivers granted to certain officers from compliance with or future amendments to the code will be disclosed on +the Company's investor relations website in accordance with Item 5.05 of Form 8-K. +Information required by this item with respect to United is omitted pursuant to General Instruction I(2)(c) of Form 10-K. +ITEM 11. EXECUTIVE COMPENSATION. +Reference is made to the 2024 Proxy Statement with respect to information about UAL's executive and director compensation and certain related matters, +which is incorporated herein by reference and made a part hereof in response to the information required by Item 11 with respect to UAL. +Information required by this item with respect to United is omitted pursuant to General Instruction I(2)(c) of Form 10-K. +ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER +MATTERS. +Reference is made to the 2024 Proxy Statement with respect to the security ownership of certain beneficial owners and management and certain equity +compensation plan information, which is incorporated herein by reference and made a part hereof in response to the information required by Item 12 with +respect to UAL. +Information required by this item with respect to United is omitted pursuant to General Instruction I(2)(c) of Form 10-K. +102 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_103.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f68672e751cee153b154cd9c660a0ad18f380f0 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,41 @@ +Table of Contents +ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. +Reference is made to the 2024 Proxy Statement with respect to information about certain relationships and related transactions and director independence, +which is incorporated herein by reference and made a part hereof in response to the information required by Item 13 with respect to UAL. +Information required by this item with respect to United is omitted pursuant to General Instruction I(2)(c) of Form 10-K. +ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. +The Audit Committee has adopted a policy on pre-approval of services of the Company's independent registered public accounting firm. As a wholly- +owned subsidiary of UAL, United's audit services are determined by UAL. The policy provides that the Audit Committee shall pre-approve all audit and +non-audit services to be provided to UAL and its subsidiaries and affiliates by its independent auditors. The process by which this is carried out is as +follows: +For recurring services, the Audit Committee reviews and pre-approves the independent registered public accounting firm's annual audit services in +conjunction with the annual appointment of the outside auditors. The reviewed materials include a description of the services along with related fees. The +Audit Committee also reviews and pre-approves other classes of recurring services along with fee thresholds for pre-approved services. In the event that the +additional services are required prior to the next scheduled Audit Committee meeting, pre-approvals of additional services follow the process described +below. +Any requests for audit, audit-related, tax and other services not contemplated with the recurring services approval described above must be submitted to the +Audit Committee for specific pre-approval and services cannot commence until such approval has been granted. Normally, pre-approval is provided at +regularly scheduled meetings. However, the authority to grant specific preapproval between meetings, as necessary, has been delegated to the Chair of the +Audit Committee. The Chair must update the Audit Committee at the next regularly scheduled meeting of any services that were granted specific pre- +approval. +On a periodic basis, the Audit Committee reviews the status of services and fees incurred year-to-date and a list of newly pre-approved services since its +last regularly scheduled meeting. The Audit Committee has considered whether the 2023 and 2022 non-audit services provided by Ernst & Young LLP +(PCAOB ID No. 42), the Company's independent registered public accounting firm, are compatible with maintaining auditor independence and concluded +that such services were compatible with maintaining Ernst & Young LLP's independence. +All of the services in 2023 and 2022 under the Audit Fees, Audit Related Fees, Tax Fees and All Other Fees categories below have been approved by the +Audit Committee pursuant to paragraph (c)(7) of Rule 2-01 of Regulation S-X of the Exchange Act. +The aggregate fees billed for professional services rendered by the Company's independent auditors in 2023 and 2022 are as follows (in thousands): +Service 2023 2022 +Audit Fees $ 4,467 $ 4,315 +Audit-Related Fees — 50 +Tax Fees 38 138 +Total Fees $ 4,505 $ 4,503 +Audit Fees. For 2023 and 2022, audit fees consist primarily of the audit and quarterly reviews of the consolidated financial statements and the audit of the +effectiveness of internal control over financial reporting of the Company and its wholly-owned subsidiaries. Audit fees also include the audit of the +consolidated financial statements of United Airlines, attestation services required by statute or regulation, comfort letters, consents, assistance with and +review of documents filed with the SEC, and accounting and financial reporting consultations and research work necessary to comply with generally +accepted auditing standards. +Audit-Related Fees. For 2022, audit-related fees were related to assessments of climate-related disclosures. +Tax Fees. Tax fees for 2023 and 2022 relate to professional services provided for research and consultations regarding tax accounting and tax compliance +matters and review of U.S. and international tax impacts of certain transactions, exclusive of tax services rendered in connection with the audit. +103 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_104.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..d55ecbac2f8ca1e04fd8905d81e2ea5effcf5737 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,23 @@ +Table of Contents +PART IV +ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. +(a) List of documents filed as part of this report: +(1) Financial Statements. The financial statements required by this item are listed in Part II, Item 8, Financial Statements and SupplementaryData herein. +(2) Financial Statement Schedules. The financial statement schedule required by this item is listed below and included in this report after thesignature page hereto. + Schedule II-Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021. +All other schedules are omitted because they are not applicable, not required or the required information is shown in the consolidatedfinancial statements or notes thereto. +(b) Exhibits. The exhibits required by this item are provided in the Exhibit Index. +ITEM 16. FORM 10-K SUMMARY. +None. +EXHIBIT INDEX +Exhibit No. Registrant Exhibit +Articles of Incorporation and Bylaws +3.1 UAL Amended and Restated Certificate of Incorporation of United Airlines Holdings, Inc. (filed as Exhibit 3.1 to UAL'sForm 8-K filed June 27, 2019 and incorporated herein by reference) +3.2 UAL Amended and Restated Bylaws of United Airlines Holdings, Inc. (filed as Exhibit 3.1 to UAL's Form 8-K filedSeptember 23, 2022 and incorporated herein by reference) +3.3 UAL Certificate of Designation of the Series A Junior Participating Serial Preferred Stock of United Airlines Holdings, Inc.(filed as Exhibit 3.1 to UAL's Registration Statement on Form 8-A filed December 7, 2020 and incorporated herein byreference) +3.4 United Amended and Restated Certificate of Incorporation of United Airlines, Inc. (filed as Exhibit 3.1 to UAL's Form 8-Kfiled April 3, 2013 and incorporated herein by reference) +3.5 United Amended and Restated By-laws of United Airlines, Inc. (filed as Exhibit 3.2 to UAL's Form 8-K filed April 3, 2013and incorporated herein by reference) +Instruments Defining Rights of Security Holders, Including Indentures +4.1 UAL United Indenture, dated as of May 7, 2013, among United Continental Holdings, Inc., United Airlines, Inc. and The Bank ofNew York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.1 to UAL's Form 8-K filed on May 10, 2013and incorporated herein by reference) +4.2 UAL United Third Supplemental Indenture, dated as of January 26, 2017, among United Continental Holdings, Inc., UnitedAirlines, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee, providing for the issuance of5.000% Senior Notes due 2024 (filed as Exhibit 4.2 to UAL's Form 8-K filed January 27, 2017 and incorporatedherein by reference) +104 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_105.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..d30d5ccdc537b2f9750a401737d39535e3dcb49c --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,18 @@ +Table of Contents +4.3 UALUnited Form of 5.000% Senior Notes due 2024 (filed as Exhibit A to Exhibit 4.2 to UAL's Form 8-K filed January 27, 2017and incorporated herein by reference) +4.4 UALUnited Form of Notation of Note Guarantee (filed as Exhibit B to Exhibit 4.2 to UAL's Form 8-K filed January 27, 2017 andincorporated herein by reference) +4.5 UALUnited Fourth Supplemental Indenture, dated as of September 29, 2017, among United Continental Holdings, Inc., UnitedAirlines, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee, providing for the issuance of4.250% Senior Notes due 2022 (filed as Exhibit 4.2 to UAL's Form 8-K filed October 4, 2017 and incorporated hereinby reference) +4.6 UALUnited Form of 4.250% Senior Notes due 2022 (filed as Exhibit A to Exhibit 4.2 to UAL's Form 8-K filed October 4,2017 and incorporated herein by reference) +4.7 UALUnited Form of Notation of Note Guarantee (filed as Exhibit B to Exhibit 4.2 to UAL's Form 8-K filed October 4, 2017 andincorporated herein by reference) +4.8 UALUnited Fifth Supplemental Indenture, dated as of May 9, 2019, among United Continental Holdings, Inc., United Airlines,Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.2 to UAL's Form 8-Kfiled May 10, 2019 and incorporated herein by reference) +4.9 UALUnited Form of 4.875% Senior Notes due 2025 (filed as Exhibit A to Exhibit 4.2 to UAL's Form 8-K filed May 10, 2019 andincorporated herein by reference) +4.10 UALUnited Form of Notation of Note Guarantee (filed as Exhibit B to Exhibit 4.2 to UAL's Form 8-K filed May 10, 2019 andincorporated herein by reference) +4.11 UALUnited Promissory Note, dated as of April 20, 2020, among United Airlines Holdings, Inc., United Airlines, Inc., asguarantor, and the United States Department of the Treasury (filed as Exhibit 4.1 to UAL's Form 8-K filed April 23,2020 and incorporated herein by reference) +4.12 UAL Warrant Agreement (including Form of Warrant), dated as of April 20, 2020, between United Airlines Holdings, Inc.and the United States Department of the Treasury (filed as Exhibit 4.2 to UAL's Form 8-K filed April 23, 2020 andincorporated herein by reference) +4.13 UALUnited Indenture (including Form of 6.50% Senior Secured Notes due 2027), dated as of July 2, 2020, by and among MileagePlus Holdings, LLC, Mileage Plus Intellectual Property Assets, Ltd., the guarantors named therein and WilmingtonTrust, National Association, as trustee and collateral custodian, governing the 6.50% Senior Secured Notes due 2027(filed as Exhibit 4.1 to UAL's Form 8-K filed July 2, 2020 and incorporated herein by reference) +4.14 UALUnited Warrant Agreement, dated as of September 28, 2020, between United Airlines Holdings, Inc. and The United StatesDepartment of the Treasury (filed as Exhibit 4.1 to UAL's Form 8-K filed September 30, 2020 and incorporatedherein by reference) +4.15 UAL Form of Warrant (filed as Exhibit 4.2 to UAL's Form 8-K filed September 30, 2020 and incorporated herein byreference) +4.16 UALUnited Promissory Note, dated as of January 15, 2021, among United Airlines Holdings, Inc., United Airlines, Inc., asguarantor, and the United States Department of the Treasury (filed as Exhibit 4.1 to UAL's Form 8-K filed January 20,2021 and incorporated herein by reference) +4.17 UAL Warrant Agreement, dated as of January 15, 2021, between United Airlines Holdings, Inc. and the United StatesDepartment of the Treasury (filed as Exhibit 4.2 to UAL's Form 8-K filed January 20, 2021 and incorporated hereinby reference) +105 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_106.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..43f12c3777ae2c363593fcb0c87bfcc50d8d70be --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,17 @@ +Table of Contents +4.18 UAL Form of Warrant (filed as Annex B to Exhibit 4.2 to UAL's Form 8-K filed January 20, 2021 and incorporated hereinby reference) +4.19 UALUnited Indenture, dated as of April 21, 2021, among United Airlines, Inc., United Airlines Holdings, Inc. and WilmingtonTrust, National Association, as trustee and as collateral trustee (filed as Exhibit 4.1 to UAL's Form 8-K filed April 22,2021 and incorporated herein by reference) +4.20 UALUnited Form of 4.375% Senior Secured Notes due 2026 (filed as Exhibit A to Exhibit 4.1 to UAL's Form 8-K filed April 22,2021 and incorporated herein by reference) +4.21 UALUnited Form of Notation of Guarantee (filed as Exhibit E to Exhibit 4.1 to UAL's Form 8-K filed April 22, 2021 andincorporated herein by reference) +4.22 UALUnited Form of 4.625% Senior Secured Notes due 2029 (filed as Exhibit A to Exhibit 4.1 to UAL's Form 8-K filed April 22,2021 and incorporated herein by reference) +4.23 UALUnited Form of Notation of Guarantee (filed as Exhibit E to Exhibit 4.1 to UAL's Form 8-K filed April 22, 2021 andincorporated herein by reference) +4.24 UALUnited Promissory Note, dated as of April 29, 2021, among United Airlines Holdings, Inc., United Airlines, Inc., asguarantor, and the United States Department of the Treasury (filed as Exhibit 4.1 to UAL's Form 8-K filed April 30,2021 and incorporated herein by reference) +4.25 UAL Warrant Agreement, dated as of April 29, 2021, between United Airlines Holdings, Inc. and the United StatesDepartment of the Treasury (filed as Exhibit 4.2 to UAL's Form 8-K filed April 30, 2021 and incorporated herein byreference) +4.26 UAL Form of Warrant (filed as Annex B to Exhibit 4.2 to UAL's Form 8-K filed April 30, 2021 and incorporated herein byreference) +4.27 UAL Tax Benefits Preservation Plan, dated as of December 4, 2020, by and between United Airlines Holdings, Inc. andComputershare Trust Company, N.A., as rights agent (which includes the Form of Rights Certificate as Exhibit Bthereto) (filed as Exhibit 4.1 to UAL's Registration Statement on Form 8-A filed December 7, 2020 and incorporatedherein by reference) +4.28 UAL Amendment No. 1 to Tax Benefits Preservation Plan, dated as of January 21, 2021, by and between United AirlinesHoldings, Inc. and Computershare Trust Company, N.A (filed as Exhibit 4.18 to UAL's Form 10-K for the year endedDecember 31, 2020 and incorporated herein by reference) +4.29 UAL Amendment No. 2 to Tax Benefits Preservation Plan, dated as of December 4, 2023, by and between United AirlinesHoldings, Inc. and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.3 toUAL’s Form 8-A/A filed on December 4, 2023 and incorporated herein by reference) +4.30 UALUnited Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 +Material Contracts +†10.1 UAL Agreement, dated as of April 19, 2016, by and among PAR Capital Management, Inc., Altimeter CapitalManagement, LP, United Continental Holdings, Inc. and the other signatories listed on the signature page thereto(filed as Exhibit 10.1 to UAL's Form 8-K filed April 20, 2016 and incorporated herein by reference) +106 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_107.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..a85f317782b2500e1a6fee196e97cd1dddeccb59 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,17 @@ +Table of Contents +†10.2 UAL United Airlines Holdings, Inc. Profit Sharing Plan (amended and restated effective January 1, 2023) +†10.3 UALUnited SERP Agreement, dated as of October 1, 2010, by and among United Continental Holdings, Inc., ContinentalAirlines, Inc. and Gerald Laderman (filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter ended September 30,2015 and incorporated herein by reference) +†10.4 UALUnited Stock Option Award Notice, dated as of December 4, 2019, to J. Scott Kirby pursuant to the United ContinentalHoldings, Inc. 2017 Incentive Compensation Plan (filed as Exhibit 10.2 to UAL's Form 8-K filed December 6, 2019and incorporated herein by reference) +†10.5 UAL Form of Stock Option Award Notice pursuant to the United Continental Holdings, Inc. 2008 Incentive CompensationPlan (filed as Exhibit 10.1 to UAL's Form 10-Q for the quarter ended September 30, 2016 and incorporated herein byreference) +†10.6 UAL United Continental Holdings, Inc. Officer Travel Policy (filed as Exhibit 10.24 to UAL's Form 10-K for the yearended December 31, 2010 and incorporated herein by reference) +†10.7 UAL United Continental Holdings, Inc. 2008 Incentive Compensation Plan (filed as Annex A to UAL's Definitive ProxyStatement filed April 26, 2013 and incorporated herein by reference) (now named the United Continental Holdings,Inc. 2008 Incentive Compensation Plan) +†10.8 UAL First Amendment to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan (changing the name toUnited Continental Holdings, Inc. 2008 Incentive Compensation Plan) (filed as Annex A to UAL's Definitive ProxyStatement filed April 26, 2013 and incorporated herein by reference) +†10.9 UAL Second Amendment to the United Continental Holdings, Inc. 2008 Incentive Compensation Plan (filed as Exhibit10.19 to UAL's Form 10-K for the year ended December 31, 2016 and incorporated herein by reference) +†10.10 UAL United Air Lines, Inc. Management Cash Direct & Cash Match Program (amended and restated effective January 1,2016) (filed as Exhibit 10.28 to UAL's Form 10-K for the year ended December 31, 2018 and incorporated herein byreference) +†10.11 UAL United Continental Holdings, Inc. Executive Severance Plan (effective October 1, 2014) (filed as Exhibit 10.1 toUAL's Form 8-K filed June 20, 2014 and incorporated herein by reference) +†10.12 UAL United Continental Holdings, Inc. 2017 Incentive Compensation Plan (filed as Exhibit 10.1 to UAL's Form 8-K filedMay 30, 2017 and incorporated herein by reference) +†10.13 UAL Form of Restricted Stock Unit Award Notice pursuant to the United Continental Holdings, Inc. 2017 IncentiveCompensation Plan (filed as Exhibit 10.6 to UAL's Form 10-Q for the quarter ended June 30, 2017 and incorporatedherein by reference) +†10.14 UAL Form of Stock Option Award Notice pursuant to the United Continental Holdings, Inc. 2017 Incentive CompensationPlan (filed as Exhibit 10.7 to UAL's Form 10-Q for the quarter ended June 30, 2017 and incorporated herein byreference) +†10.15 UAL Form of Long-term Contingent Cash Award Notice (filed as Exhibit 10.23 to UAL's Form 10-K for the year endedDecember 31, 2020 and incorporated herein by reference) +†10.16 UAL United Airlines Holdings, Inc. 2006 Director Equity Incentive Plan (as amended and restated, effective May 24, 2023)(filed as Exhibit 10.2 to UAL's Form 8-K filed May 30, 2023 and incorporated herein by reference) +107 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_110.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..6781a008d33cd317b5aff9d8191091c5a58de0b3 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,16 @@ +Table of Contents +^10.43 UALUnited Supplemental Agreement No. 9 to Purchase Agreement No. 03776, dated as of June 15, 2017, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.13 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.44 UALUnited Supplemental Agreement No. 10 to Purchase Agreement No. 03776, dated as of May 15, 2018, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.14 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.45 UALUnited Supplemental Agreement No. 11 to Purchase Agreement No. 03776, dated as of September 25, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.15 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.46 UALUnited Supplemental Agreement No. 12 to Purchase Agreement No. 03776, dated as of December 12, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.16 to UAL's Form 10-Q for the year ended September30, 2023 and incorporated herein by reference) +^10.47 UALUnited Supplemental Agreement No. 13 to Purchase Agreement No. 03776, dated as of March 20, 2020, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.7 to UAL's Form 10-Q for the quarter ended March 31, 2020and incorporated herein by reference) +^10.48 UALUnited Supplemental Agreement No. 14 to Purchase Agreement No. 03776, dated as of June 30, 2020, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.5 to UAL's Form 10-Q for the quarter ended June 30, 2020and incorporated herein by reference) +^10.49 UALUnited Supplemental Agreement No. 15 to Purchase Agreement No. 03776, dated as of February 26, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.17 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.50 UALUnited Supplemental Agreement No. 16 to Purchase Agreement No. 03776, dated as of June 27, 2021, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.1 to UAL's Form 10-Q for the quarter ended June 30, 2021and incorporated herein by reference) +^10.51 UALUnited Supplemental Agreement No. 17 to Purchase Agreement No. 03776, dated as of August 12, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.1 to UAL's Form 10-Q for the quarter endedSeptember 30, 2021 and incorporated herein by reference) +^10.52 UALUnited Supplemental Agreement No. 18 to Purchase Agreement No. 03776, dated as of September 8, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter endedSeptember 30, 2021 and incorporated herein by reference) +^10.53 UALUnited Supplemental Agreement No. 19 to Purchase Agreement No. 03776, dated as of November 30, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.53 to UAL's Form 10-K for the year ended December31, 2021 and incorporated herein by reference) +^10.54 UALUnited Supplemental Agreement No. 20 to Purchase Agreement No. 03776, dated as of June 30, 2022, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.1 to UAL's Form 10-Q for the quarter ended June 30, 2022and incorporated herein by reference) +^10.55 UALUnited Supplemental Agreement No. 21 to Purchase Agreement No. 03776, dated as of December 15, 2023, between TheBoeing Company and United Airlines, Inc. +^10.56 UALUnited Letter Agreement No. 6-1162-KKT-080R2, dated as of December 12, 2022, among The Boeing Company, UnitedAirlines Holdings, Inc. and United Airlines, Inc. (filed as Exhibit 10.59 to UAL's Form 10-K for the year endedDecember 31, 2022 and incorporated herein by reference) +110 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_111.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..d295fb09bb4963374b774f5f850bd1f4ca027610 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,16 @@ +Table of Contents +^10.57 UALUnited Purchase Agreement No. 3860, dated as of September 27, 2012, between The Boeing Company and United Air Lines,Inc. (filed as Exhibit 10.18 to UAL's Form 10-Q for the quarter ended September 30, 2023 and incorporated herein byreference) +^10.58 UALUnited Supplemental Agreement No. 1 to Purchase Agreement No. 3860, dated June 17, 2013, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.19 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.59 UALUnited Supplemental Agreement No. 2 to Purchase Agreement No. 3860, dated December 16, 2013, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.20 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.60 UALUnited Supplemental Agreement No. 3 to Purchase Agreement No. 3860, dated as of July 22, 2014, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.21 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.61 UALUnited Supplemental Agreement No. 4 to Purchase Agreement No. 3860, dated as of January 14, 2015, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.22 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.62 UALUnited Supplemental Agreement No. 5 to Purchase Agreement No. 3860, dated as of April 30, 2015, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.23 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.63 UALUnited Supplemental Agreement No. 6 to Purchase Agreement No. 3860, dated as of December 31, 2015, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.24 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.64 UALUnited Supplemental Agreement No. 7 to Purchase Agreement No. 3860, dated as of March 7, 2016, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.25 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.65 UALUnited Letter Agreement to Purchase Agreement No. 3860, dated as of May 5, 2016, between The Boeing Company andUnited Airlines, Inc. (filed as Exhibit 10.26 to UAL's Form 10-Q for the quarter ended September 30, 2023 andincorporated herein by reference) +^10.66 UALUnited Supplemental Agreement No. 8, including exhibits and side letters, to Purchase Agreement No. 3860, dated as of June15, 2017, between The Boeing Company and United Airlines, Inc. (filed as Exhibit 10.27 to UAL's Form 10-Q for thequarter ended September 30, 2023 and incorporated herein by reference) +^10.67 UALUnited Letter Agreement No. UAL-LA-1604287 to Purchase Agreement Nos. 3776, 3784 and 3860, dated December 27,2016, between The Boeing Company and United Airlines, Inc. (filed as Exhibit 10.28 to UAL's Form 10-Q for thequarter ended September 30, 2023 and incorporated herein by reference) +^10.68 UALUnited Supplemental Agreement No. 9 to Purchase Agreement No. 3860, dated as of May 31, 2018, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.29 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.69 UALUnited Supplemental Agreement No. 10 to Purchase Agreement No. 3860, dated as of November 1, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.30 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.70 UALUnited Supplemental Agreement No. 11 to Purchase Agreement No. 3860, dated as of December 12, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.31 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +111 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_112.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..c631e3e61d6229f5606c52a1eee05ff6d271d033 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,17 @@ +Table of Contents +^10.71 UALUnited Supplemental Agreement No. 12 to Purchase Agreement No. 3860, dated as of February 26, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.32 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.72 UALUnited A320 Family Purchase Agreement, dated as of December 3, 2019, between Airbus S.A.S. and United Airlines, Inc.including letter agreements related thereto, and subsequent letter agreements related thereto dated February 20, 2020(filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter ended June 30, 2021 and incorporated herein by reference) +^10.73 UALUnited Amendment No. 1 to the A320 Family Purchase Agreement, dated as of December 3, 2020, between Airbus S.A.S.and United Airlines, Inc. (filed as Exhibit 10.3 to UAL's Form 10-Q for the quarter ended June 30, 2021 andincorporated herein by reference) +^10.74 UALUnited Amendment No. 2 to the A320 Family Purchase Agreement, dated as of June 27, 2021, between Airbus S.A.S. andUnited Airlines, Inc. (filed as Exhibit 10.4 to UAL's Form 10-Q for the quarter ended June 30, 2021 and incorporatedherein by reference) +^10.75 UALUnited Amendment No. 3 to the A320 Family Purchase Agreement, dated as of October 29, 2021, between Airbus S.A.S. andUnited Airlines, Inc. (filed as Exhibit 10.73 to UAL's Form 10-K for the year ended December 31, 2021 andincorporated herein by reference) +^10.76 UALUnited Amendment No. 4 to the A320 Family Purchase Agreement, dated as of July 1, 2022, between Airbus S.A.S. andUnited Airlines, Inc. +^10.77 UALUnited Amendment No. 5 to the A320 Family Purchase Agreement, effective as of September 30, 2023, between AirbusS.A.S. and United Airlines, Inc. (filed as Exhibit 10.37 to UAL's Form 10-Q for the quarter ended September 30,2023 and incorporated herein by reference) +^10.78 UALUnited Amended and Restated Letter Agreement No. 2, dated as of July 1, 2022, between Airbus S.A.S. and United Airlines,Inc. +^10.79 UALUnited Purchase Agreement No. 04761, dated as of May 15, 2018, between The Boeing Company and United Airlines, Inc.(filed as Exhibit 10.5 to UAL's Form 10-Q for the quarter ended June 30, 2021 and incorporated herein by reference) +^10.80 UALUnited Supplemental Agreement No. 1 to Purchase Agreement No. 04761, dated as of September 25, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.6 to UAL's Form 10-Q for the quarter ended June 30,2021 and incorporated herein by reference) +^10.81 UALUnited Supplemental Agreement No. 2 to Purchase Agreement No. 04761, dated as of December 12, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.7 to UAL's Form 10-Q for the quarter ended June 30,2021 and incorporated herein by reference) +^10.82 UALUnited Supplemental Agreement No. 3 to Purchase Agreement No. 04761, dated as of March 20, 2020, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.8 to UAL's Form 10-Q for the quarter ended June 30, 2021and incorporated herein by reference) +^10.83 UALUnited Supplemental Agreement No. 4 to Purchase Agreement No. 04761, dated as of June 30, 2020, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.9 to UAL's Form 10-Q for the quarter ended June 30, 2021and incorporated herein by reference) +^10.84 UALUnited Supplemental Agreement No. 5 to Purchase Agreement No. 04761, dated as of February 26, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.33 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.85 UALUnited Supplemental Agreement No. 6 to Purchase Agreement No. 04761, dated as of June 27, 2021, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.11 to UAL's Form 10-Q for the quarter ended June 30, 2021and incorporated herein by reference) +112 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_113.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..21d0e11cb44053b652719327a03bee99e631bcb8 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,16 @@ +Table of Contents +^10.86 UALUnited Supplemental Agreement No. 7 to Purchase Agreement No. 04761, dated as of August 12, 2021, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.3 to UAL's Form 10-Q for the quarter ended September 30,2021 and incorporated herein by reference) +^10.87 UALUnited Supplemental Agreement No. 8 to Purchase Agreement No. 04761, dated as of September 8, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.4 to UAL's Form 10-Q for the quarter endedSeptember 30, 2021 and incorporated herein by reference) +^10.88 UALUnited Supplemental Agreement No. 9 to Purchase Agreement No. 04761, dated as of November 30, 2021, between TheBoeing Company and United Airlines (filed as Exhibit 10.83 to UAL's Form 10-K for the year ended December 31,2021 and incorporated herein by reference) +^10.89 UALUnited Supplemental Agreement No. 10 to Purchase Agreement No. 04761, dated as of June 30, 2022, between The BoeingCompany and United Airlines, Inc. (filed as Exhibit 10.2 to UAL's Form 10-Q for the quarter ended June 30, 2022and incorporated herein by reference) +^10.90 UALUnited Supplemental Agreement No. 11 to Purchase Agreement Number 04761, dated as of November 29, 2022, betweenThe Boeing Company and United Airlines, Inc. (filed as Exhibit 10.90 to UAL's Form 10-K for the year endedDecember 31, 2022 and incorporated herein by reference) +^10.91 UALUnited Supplemental Agreement No. 12 to Purchase Agreement No. 04761, dated as of December 12, 2022, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.91 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.92 UALUnited Supplemental Agreement No. 13 to Purchase Agreement No. 04761, dated as of December 15, 2023, between TheBoeing Company and United Airlines, Inc. +^10.93 UALUnited Purchase Agreement No. 04815, dated as of May 31, 2018, between The Boeing Company and United Airlines, Inc.(filed as Exhibit 10.92 to UAL's Form 10-K for the year ended December 31, 2022 and incorporated herein byreference) +^10.94 UALUnited Supplemental Agreement No. 1 to Purchase Agreement Number 04815, dated as of September 25, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.93 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.95 UALUnited Supplemental Agreement No. 2 to Purchase Agreement Number 04815, dated as of November 1, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.94 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.96 UALUnited Supplemental Agreement No. 3 to Purchase Agreement Number 04815, dated as of December 12, 2018, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.95 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.97 UALUnited Supplemental Agreement No. 4 to Purchase Agreement Number 04815, dated as of April 26, 2019, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.96 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.98 UALUnited Supplemental Agreement No. 5 to Purchase Agreement Number 04815, dated as of October 31, 2019, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.97 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.99 UALUnited Supplemental Agreement No. 6 to Purchase Agreement Number 04815, dated as of February 7, 2020, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.98 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +113 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_114.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..23987625e4383fdddf79860dcc36bd017df7eb48 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,15 @@ +Table of Contents +^10.100 UALUnited Supplemental Agreement No. 7 to Purchase Agreement Number 04815, dated as of March 20, 2020, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.99 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.101 UALUnited Supplemental Agreement No. 8 to Purchase Agreement Number 04815, dated as of June 30, 2020, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.100 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.102 UALUnited Supplemental Agreement No. 9 to Purchase Agreement Number 04815, dated as of February 26, 2021, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.101 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.103 UALUnited Supplemental Agreement No. 10 to Purchase Agreement Number 04815, dated as of August 25, 2022, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.102 to UAL's Form 10-K for the year ended December31, 2022 and incorporated herein by reference) +^10.104 UALUnited Supplemental Agreement No. 11 to Purchase Agreement Number 04815, dated as of September 27, 2022, betweenThe Boeing Company and United Airlines, Inc. (filed as Exhibit 10.103 to UAL's Form 10-K for the year endedDecember 31, 2022 and incorporated herein by reference) +^10.105 UALUnited Supplemental Agreement No. 12 to Purchase Agreement Number 04815, dated as of December 12, 2022, betweenThe Boeing Company and United Airlines, Inc. (filed as Exhibit 10.104 to UAL's Form 10-K for the year endedDecember 31, 2022 and incorporated herein by reference) +^10.106 UALUnited Supplemental Agreement No. 13 to Purchase Agreement No. 04815, dated as of September 28, 2023, between TheBoeing Company and United Airlines, Inc. (filed as Exhibit 10.34 to UAL's Form 10-Q for the quarter endedSeptember 30, 2023 and incorporated herein by reference) +^10.107 UALUnited United Letter Agreement No. 22004762, dated as of December 12, 2022, to Purchase Agreement No. 03860, dated asof June 15, 2017, and Purchase Agreement No. 04815, dated as of May 31, 2018, between the Boeing Company andUnited Airlines, Inc. (filed as Exhibit 10.105 to UAL's Form 10-K for the year ended December 31, 2022 andincorporated herein by reference) +^10.108 UALUnited United Letter Agreement No. 22004729, dated as of December 12, 2022, to Purchase Agreement No. 03860, dated asof June 15, 2017, Purchase Agreement No. 04815, dated as of May 31, 2018, and Purchase Agreement No. 02484,dated as of December 29, 2004, among The Boeing Company and United Airlines, Inc. (filed as Exhibit 10.106 toUAL's Form 10-K for the year ended December 31, 2022 and incorporated herein by reference) +^10.109 UALUnited Letter Agreement No. 22004729R1, dated as of September 28, 2023, between The Boeing Company and UnitedAirlines, Inc. (related to Purchase Agreement Nos. 03860, 04815 and 02484) (filed as Exhibit 10.35 to UAL's Form10-Q for the quarter ended September 30, 2023 and incorporated herein by reference) +10.110 UALUnited Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017, among United Airlines, Inc., asborrower, United Continental Holdings, Inc., as parent and a guarantor, the subsidiaries of United ContinentalHoldings, Inc. from time to time party thereto other than the borrower party thereto from time to time, as guarantors,the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit10.1 to UAL's Form 8-K filed April 3, 2017 and incorporated herein by reference) +10.111 UALUnited First Amendment, dated as of November 15, 2017, to Amended and Restated Credit Guaranty Agreement (filed asExhibit 10.219 to UAL's Form 10-K for the year ended December 31, 2017 and incorporated herein by reference) +10.112 UALUnited Second Amendment, dated as of May 16, 2018, to Amended and Restated Credit Guaranty Agreement (filed asExhibit 10.1 to UAL's Form 10-Q for the quarter ended June 30, 2018 and incorporated herein by reference) +114 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_115.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..50649adc9474f8e82568a64683a4982f22a10751 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,12 @@ +Table of Contents +10.113 UALUnited Payroll Support Program Agreement, dated as of April 20, 2020, between United Airlines, Inc. and the United StatesDepartment of the Treasury (filed as Exhibit 10.1 to UAL's Form 8-K filed April 23, 2020 and incorporated herein byreference) +*10.114 UALUnited Credit Agreement, dated as of July 2, 2020, by and among Mileage Plus Holdings, LLC, Mileage Plus IntellectualProperty Assets, Ltd., the guarantors named therein, the lenders named therein, the lead arrangers named therein,Goldman Sachs Bank USA, as administrative agent, and Wilmington Trust, National Association, as master collateralagent and collateral administrator (filed as Exhibit 10.1 to UAL's Form 8-K filed July 2, 2020 and incorporated hereinby reference) +10.115 UALUnited Loan and Guarantee Agreement, dated as of September 28, 2020, among United, as borrower, United AirlinesHoldings, Inc., as parent and guarantor, the subsidiaries of United Airlines Holdings, Inc. other than United Airlines,Inc. party thereto from time to time, as guarantors, The United States Department of the Treasury, as lender, and TheBank of New York Mellon, as administrative agent and collateral agent (filed as Exhibit 10.1 to UAL's Form 8-K filedSeptember 30, 2020 and incorporated herein by reference) +*10.116 UALUnited Restatement Agreement, dated as of November 6, 2020, to that certain Loan and Guarantee Agreement, dated as ofSeptember 28, 2020, among United Airlines, Inc., United Airlines Holdings, Inc., the guarantors party thereto fromtime to time, The United States Department of the Treasury, as initial lender, and the Bank of New York Mellon, asadministrative agent and collateral agent (and including the Loan and Guarantee Agreement dated as of September 28,2020, and as amended and restated as of November 6, 2020, among United Airlines, Inc., as Borrower, the guarantorsparty thereto from time to time, The United States Department of the Treasury and The Bank of New York Mellon, asadministrative agent) (filed as Exhibit 10.73 to UAL's Form 10-K for the year ended December 31, 2020 andincorporated herein by reference) +10.117 UALUnited Second Amendment to Loan and Guarantee Agreement, dated as of December 8, 2020, to the Loan and GuaranteeAgreement, among United Airlines, Inc., United Airlines Holdings, Inc., the guarantors party thereto, the United StateDepartment of the Treasury, as initial lender and a lender, and The Bank of New York Treasury, as administrativeagent (filed as Exhibit 10.74 to UAL's Form 10-K for the year ended December 31, 2020 and incorporated herein byreference) +10.118 UALUnited Payroll Support Program Agreement, dated as of January 15, 2021, between United Airlines, Inc. and the UnitedStates Department of the Treasury (filed as Exhibit 10.1 to UAL's Form 8-K filed January 20, 2021 and incorporatedherein by reference) +10.119 UALUnited Equity Distribution Agreement, dated as of March 3, 2021, by and among United Airlines Holdings, Inc., MorganStanley & Co. LLC, AmeriVet Securities, Inc., Barclays Capital Inc., BofA Securities, Inc., BBVA Securities Inc.,BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Credit SuisseSecurities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, LoopCapital Markets LLC and Wells Fargo Securities, LLC (filed as Exhibit 1.1 to UAL's Form 8-K filed March 3, 2021and incorporated herein by reference) +10.120 UALUnited Term Loan Credit and Guaranty Agreement, dated as of April 21, 2021, among United Airlines, Inc., United AirlinesHoldings, Inc., each of the several banks and other financial institutions or entities from time to time party thereto, aslenders, JPMorgan Chase Bank, N.A., as administrative agent, and Wilmington Trust, National Association, ascollateral trustee (filed as Exhibit 10.1 to UAL's Form 8-K filed April 22, 2021 and incorporated herein by reference) +10.121 UALUnited Amendment No. 2 to Term Loan Credit and Guaranty Agreement, dated as of February 22, 2024, among UnitedAirlines, Inc., United Airlines Holdings, Inc., and JPMorgan Chase Bank, N.A., as fronting lender and replacementlender and as administrative agent (filed as Exhibit 10.2 to UAL's Form 8-K filed February 22, 2024 and incorporatedherein by reference) +10.122 UALUnited Payroll Support Program 3 Agreement, dated as of April 29, 2021, between United Airlines, Inc. and the UnitedStates Department of the Treasury (filed as Exhibit 10.1 to UAL's Form 8-K filed April 30, 2021 and incorporatedherein by reference) +115 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_116.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..e49b0abf706ecc7a976702fe53c0c2ca04dddff8 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,20 @@ +Table of Contents +10.123 UALUnited Amended and Restated Revolving Credit and Guaranty Agreement, dated as of February 15, 2024, among UnitedAirlines, Inc., United Airlines Holdings, Inc., each of the several banks and other financial institutions or entities fromtime to time party thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and Wilmington Trust,National Association, as collateral trustee (filed as Exhibit 10.1 to UAL's Form 8-K filed February 22, 2024 andincorporated herein by reference) +List of Subsidiaries +21 UALUnited List of United Airlines Holdings, Inc. and United Airlines, Inc. Subsidiaries +Consents of Experts and Counsel +23.1 UAL Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP) for United Airlines Holdings, Inc. +23.2 United Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP) for United Airlines, Inc. +Rule 13a-14(a)/15d-14(a) Certifications +31.1 UAL Certification of the Principal Executive Officer of United Airlines Holdings, Inc. pursuant to 15 U.S.C. 78m(a) or78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) +31.2 UAL Certification of the Principal Financial Officer of United Airlines Holdings, Inc. pursuant to 15 U.S.C. 78m(a) or78o(d) (Section 302 of the Sarbanes-Oxley Act of 2002) +31.3 United Certification of the Principal Executive Officer of United Airlines, Inc. pursuant to 15 U.S.C. 78m(a) or 78o(d)(Section 302 of the Sarbanes-Oxley Act of 2002) +31.4 United Certification of the Principal Financial Officer of United Airlines, Inc. pursuant to 15 U.S.C. 78m(a) or 78o(d)(Section 302 of the Sarbanes-Oxley Act of 2002) +Section 1350 Certifications +32.1 UAL Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines Holdings, Inc. pursuant to18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) +32.2 United Certification of the Chief Executive Officer and Chief Financial Officer of United Airlines, Inc. pursuant to 18 U.S.C.1350 (Section 906 of the Sarbanes-Oxley Act of 2002) +Policy Relating to Recovery of Erroneously Awarded Compensation +97.1 UAL United Airlines Holdings, Inc. Compensation Clawback Policy +Interactive Data File +101 UALUnited The following financial statements from the combined Annual Report of UAL and United on Form 10-K for the yearended December 31, 2023, formatted in Inline XBRL: (i) Statements of Consolidated Operations, (ii) Statements ofConsolidated Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Statements of Consolidated CashFlows, (v) Statements of Consolidated Stockholders' Equity (Deficit) and (vi) Combined Notes to CondensedConsolidated Financial Statements, tagged as blocks of text and including detailed tags. +116 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_117.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..46dad28725477bc9fabf710320284db2b7eeb350 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,8 @@ +Table of Contents +104 UALUnited Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document +† Indicates management contract or compensatory plan or arrangement. Pursuant to Item 601(b)(10), United is permitted to omit certain compensation- +related exhibits from this report and therefore only UAL is identified as the registrant for purposes of those items. +^ Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K. +* Exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be furnished on a supplemental basis to the Securities +and Exchange Commission upon request. +117 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_128.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb96fbdbebafa1e84f9908ac2e00ea92b9092bb3 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,7 @@ +and authority to convene and (for any or no reason) to recess or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all suchacts as, in the judgment of such person, are necessary, appropriate or convenient for the proper conduct of the meeting, which may have the effect ofprecluding the conduct of certain business at a meeting if the rules and regulations are not followed. These procedures and provisions may deter, delay ordiscourage a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtaincontrol of UAL. +No Stockholder Filling of Vacancies. Board vacancies and newly created directorships may only be filled by a vote of a majority of the directorsthen in office, even if less than a quorum, or by a sole remaining director. Thus, even if stockholders remove a director from office, the vacancy created bysuch removal may only be filled by the Board. +Business Combinations. We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. Section 203 prevents certainDelaware corporations from engaging, under certain circumstances, in a “business combination” (as defined therein), which includes, among other things, amerger or sale of more than 10% of the corporation’s assets, with any interested stockholder for three years following the date that the stockholder becamean interested stockholder. An interested stockholder is a stockholder who acquired 15% or more of the corporation’s outstanding voting stock or an affiliateor associate of such person. +Tax Benefits Preservation Plan. The Tax Benefits Preservation Plan could have certain anti-takeover effects because the Rights provided to holdersof our Common Stock under the Tax Benefits Preservation Plan will cause substantial dilution to an Acquiring Person. While the Tax Benefits PreservationPlan is intended to preserve our current ability to utilize NOLs and certain other tax attributes, it effectively deters current and future purchasers fromaccumulating more than 4.9% of UAL’s securities, which could delay or discourage attempts that our stockholders may consider favorable. The TaxBenefits Preservation Plan should not interfere with any merger or other business combination approved by the Board. +CHOICE OF FORUM +The Bylaws provide that, unless a majority of the Board, acting on behalf of UAL, consents in writing to the selection of an alternative forum, (a) the Courtof Chancery of the State of Delaware will, to the fullest extent permitted by law, be the exclusive forum for: (i) any derivative action or proceeding broughton behalf of UAL, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of UALto UAL or UAL’s stockholders, (iii) any action asserting a claim against UAL or any of its directors, officers or other employees arising pursuant to anyprovision of the DGCL, the Bylaws or the Certificate of Incorporation (in each case, as may be amended from time to time), (iv) any action asserting aclaim against UAL or any of its directors, officers or other employees governed by the internal affairs doctrine of the State of Delaware or (v) any otheraction asserting an “internal corporate claim,” as defined in Section 115 of the DGCL, in all cases subject to the court’s having personal jurisdiction over allindispensable parties named as defendants, and (b) the federal district courts of the United States of America will, to the fullest extent permitted by law, bethe exclusive forum for the resolution of any action asserting a cause of action arising under the Securities Act of 1933, as amended. However, it is possiblethat a court could find UAL’s forum selection provision to be inapplicable or unenforceable. Furthermore, because the applicability of the exclusive forumprovision is limited to the extent permitted by law, UAL does not intend that the exclusive forum provision described in clause (a) above would apply tosuits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.Stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. +6 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_129.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc6fa6f769281cb6bbd6b1debce6379b00a59653 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,14 @@ +Exhibit 10.2 +UNITED AIRLINES HOLDINGS, INC.PROFIT SHARING PLAN +(Amended and Restated Effective January 1, 2023,Except As Otherwise Provided Herein) +I. General +A. Purpose. United Airlines Holdings, Inc. (the “Company”) sponsors this United Airlines Holdings, Inc. Profit Sharing Plan(the “Plan”) for the benefit of certain employees of United Airlines, Inc. and other participating Affiliates. +B. Collective Bargaining. As it relates to Qualified Employees who are in the class or craft of employees covered by acollective bargaining agreement with the Employer pursuant to which the Employer has agreed to provide such QualifiedEmployees with participation in a profit sharing bonus plan, this Plan is maintained pursuant to such agreement. +C. Cash Bonus Plan. The Plan is a cash bonus plan and is not intended to be (and will not be construed or administered as)an employee benefit plan within the meaning of ERISA. The Plan is intended to be a discretionary cash bonus plan andpayments under the Plan will not constitute a part of an employee’s regular rate of pay for any purpose; provided,however, all Awards will be paid to Qualified Employees in accordance with the terms of the Plan and the applicablecollective bargaining agreements. Except to the extent specifically provided under a particular pension, insurance, profitsharing, retirement, welfare or other employee benefit plan or arrangement maintained or contributed to by the Companyor an Affiliate, the payments to an employee under the Plan will not be treated as “salary,” “wages,” or “cashcompensation” to the employee for the purpose of computing benefits to which the employee may be entitled under anysuch plan or arrangement. +D. Effective Date. The Plan commenced on January 1, 2006 as the UAL Corporation Success Sharing Program – ProfitSharing Plan, was previously amended and restated effective January 1, 2011, again effective January 1, 2014, againeffective January 1, 2016, again effective January 1, 2019, and is hereby again amended and restated effective January 1,2023. This amendment and restatement is effective for the 2023 Plan Year and future Plan Years, except as otherwisestated herein, and does not apply to 2022 Plan Year profit sharing payments made in 2023. +E. Term. The provisions of the Plan shall continue indefinitely subject to termination by the Company, or, as it relates to anyQualified Employees who are in the class or craft of employees covered by a collective bargaining agreement with theEmployer pursuant to which the Employer has agreed to provide such Qualified Employees with participation in a profitsharing bonus plan, subject to termination pursuant to the terms of such collective bargaining agreement. +F. Definitions. Unless otherwise specified, the capitalized terms under the Plan have the meanings given below: +Affiliate. “Affiliate” means any entity, corporate or otherwise, in which the Company, directly or indirectly, ownsor controls a greater than 80% interest. +Award. “Award” means the dollar value of the award payable to a Qualified Employee for an Award Year asdetermined under the Plan. +UAH PSP January 1, 2023 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_138.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..984350119769d4b6e364a81ba0b027bec05ea591 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,15 @@ +• taxable travel +• imputed income from domestic partner benefits +• cash payments made pursuant to any agreement, program, arrangement or plan designed to compensate an employee foramounts that may not be credited or allocated to the employee under a qualified retirement plan due to limitationsimposed by tax laws +• taxable fringe benefits, including taxable reimbursement of insurance premiums +• expatriate allowances +• hiring bonuses or other special payments relating to the initiation of employment +• amounts realized with respect to restricted stock, non-qualified stock options or stock appreciation rights +• lost luggage advance +• interest payments +• taxable distributions of the Company’s common stock or notes (including cash in lieu of such stock or notes) made inconnection with UAL Corporation’s confirmed plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code +• payments made to employees domiciled outside of the United States that are in lieu of Employer contributions to aretirement plan +• any amount counted as wages under this Plan or any other profit sharing plan for a prior Award Year +• any amount not included under Section A-1 above as determined in accordance with Section III.C.5 +A-3. Special Crediting Rule. For purposes of allocating Wages earned by a Qualified Employee for services rendered during aPlan Year but received following termination of employment, such Wages will be treated as received on the Qualified Employee’slast day of employment with the Employer. +UAH – PSP January 1, 2023 Appendix A-2 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_139.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..a983c2030db42606eecae5361f795779c7bb442d Binary files /dev/null and b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_139.txt differ diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_148.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e0fbcf5db83744fde9ef67865f3fd03bedbcf93 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,10 @@ +Supplemental Agreement No. 21 toPurchase Agreement No. 03776 +EXECUTED IN DUPLICATE as of the day and year first written above. +THE BOEING COMPANY UNITED AIRLINES, INC. +/s/ Irma L. Krueger /s/ Michael Leskinen +Signature Signature +Irma L. Krueger Michael Leskinen +Printed Name Printed Name + Attorney in Fact EVP andChief Financial Officer +Title Title +UAL-PA-03776 SA-21, Page 5BOEING / UNITED AIRLINES, INC. PROPRIETARY \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_18.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dc8f420d85ec5dfdc29c743bbb7c1c15251b487 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,21 @@ +Table of Contents +J. Scott Kirby. Mr. Kirby has served as Chief Executive Officer of UAL and United since May 2020. Mr. Kirby served as President of UAL and United +from August 2016 to May 2020. Prior to joining the Company, from December 2013 to August 2016, Mr. Kirby served as President of American Airlines +Group and American Airlines, Inc. Mr. Kirby also previously served as President of US Airways from October 2006 to December 2013. Mr. Kirby held +significant other leadership roles at US Airways and at America West prior to the 2005 merger of those carriers, including Executive Vice President—Sales +and Marketing (2001 to 2006); Senior Vice President, e-business (2000 to 2001); Vice President, Revenue Management (1998 to 2000); Vice President, +Planning (1997 to 1998); and Senior Director, Scheduling and Planning (1995 to 1998). Prior to joining America West, Mr. Kirby worked for American +Airlines Decision Technologies and at the Pentagon. +Michael Leskinen. Mr. Leskinen has served as Executive Vice President and Chief Financial Officer of UAL and United since September 2023. Mr. +Leskinen served as Vice President of Corporate Development and Investor Relations of United from April 2019 to September 2023. In 2021, he added the +title of President of UAV, an industry-first corporate venture capital fund that identifies and invests in opportunities to decarbonize air travel and enhance +the customer travel experience. From January 2018 to April 2019, Mr. Leskinen served as Managing Director of Investor Relations of UAL and United. +Prior to joining United, Mr. Leskinen was an executive director at J.P. Morgan Asset Management from 2013 to 2017, where he led the firm's investment +efforts in aerospace, defense, and airlines. From 2009 to 2013, he worked at Oppenheimer Funds focused on the aerospace sector. +Andrew Nocella. Mr. Nocella has served as Executive Vice President and Chief Commercial Officer of UAL and United since September 2017. From +February 2017 to September 2017, he served as Executive Vice President and Chief Revenue Officer of UAL and United. Prior to joining the Company, +from August 2016 to February 2017, Mr. Nocella served as Senior Vice President, Alliances and Sales of American Airlines, Inc. From December 2013 to +August 2016, he served as Senior Vice President and Chief Marketing Officer of American Airlines, Inc. From August 2007 to December 2013, he served +as Senior Vice President, Marketing and Planning of US Airways. +18 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_24.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..e7f0d08fe53d1e742739a5af14e3282d2ab90cd7 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,46 @@ +Table of Contents +The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world. +An extended interruption or disruption at one of our hubs or other airports where we have a significant presence resulting from ATC delays, weather +conditions, natural disasters, growth constraints, relationships with or the performance of third-party service providers, cybersecurity incidents and other +failures of computer systems, disruptions to government agencies or personnel (including as a result of government shutdowns), regulatory changes, +disruptions at airport facilities or other key facilities used by us to manage our operations, labor relations and market constraints, power supplies, fuel +supplies, terrorist activities, international hostilities or other factors could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a material adverse impact on our business, operating results and financial condition. For example, we perform significant aircraft and +engine maintenance operations at our SFO airport hub and any disruption or interruption at our SFO hub could have a serious impact on our overall +operations. We have minimal control over the operation, quality or maintenance of these services or whether our suppliers will improve or continue to +provide services that are essential to our business. For example, because we prioritize operational excellence and continually work to optimize our route +network and schedule, in light of the industry-wide operational challenges at airports in our network that have limited our system-wide capacity (two of the +more prominent examples being the grounding of a number of the Company's transatlantic flights in response to the capacity cut by London Heathrow +during the summer of 2022 and the flight disruptions experienced at EWR during the summer of 2023), we have reconfigured our proposed flight schedule +and capacity to help improve our operational performance and our customers' experience. These industry-wide operational challenges have had a negative +impact on our business and operating results and are expected to continue. In the future, we may not be able to adjust our operations to mitigate their effect, +which may have a negative impact on our business, operating results, financial condition and liquidity and limit our ability to expand or change our route +network and execute our United Next strategy. +In addition, as airports around the world become more congested, space, facility and infrastructure constraints at our hubs or other airports where we +operate now or may operate in the future may prevent the Company from maintaining existing service and/or implementing new service in a commercially +viable manner because of a number of factors, including capital improvements at such airports being imposed by the relevant airport authorities without the +Company's approval. Capital spending projects of airport authorities currently underway and additional projects that we expect to commence over the next +several years are expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to recover their +investments through increased rental rates, landing fees and other facility costs. These actions have caused and may continue to cause the Company to +experience increased space rental rates at various airports in its network, including a number of our hubs and gateways, as well as increased operating costs. +Furthermore, the Company is not able to control decisions by other airlines to reduce their capacity, causing certain fixed airport costs to be allocated +among fewer total flights and resulting in increased landing fees and other costs for the Company. We have sufficient slots or analogous authorizations to +operate our existing flights and we have generally, but not always, been able to obtain the rights to expand our operations and to change our schedules, but +there can be no assurance that we can maintain existing service or implement new service in a cost-effective manner in the future. +Geopolitical conflict, terrorist attacks or security events may adversely affect our business, financial condition and results of operations. +As a global business with operations outside of the United States from which it derives significant operating revenues, volatile conditions in certain +international regions may have a negative impact on the Company's operating results and its ability to achieve its business objectives. The Company's +international operations are a vital part of its worldwide airline network. Political disruptions and instability in certain regions have negatively impacted the +demand and network availability for air travel, as well as fuel prices, and may continue to have a negative impact on these and other items. For example, +the suspensions of the Company's overflying in Russian airspace as a result of the Russia-Ukraine military conflict and to Tel Aviv as a result of the Israeli- +Hamas military conflict have significantly impacted our financial condition, cash flows and results of operations. In addition, terrorist attacks or +international hostilities, even if not made on or targeted directly at the airline industry, or the fear of or the precautions taken in anticipation of such attacks +(including elevated national threat warnings, travel restrictions, selective cancellation or redirection of flights and new security regulations) could +materially and adversely affect the Company and the airline industry. The Company's financial resources and insurance coverage may not be sufficient to +absorb the adverse effects of any future terrorist attacks, international hostilities or other security events, which could have a material adverse impact on the +Company's financial condition, liquidity and operating results. In addition, due to threats against the aviation industry, the Company has incurred, and may +continue to incur, significant expenditures to comply with security-related requirements to mitigate threats and protect the safety of our employees and +customers. +Any damage to our reputation or brand image could adversely affect our business or financial results. +We operate in a public-facing industry and maintaining a good reputation is critical to our business. The Company's reputation or brand image could beadversely impacted by any failure to maintain satisfactory practices for all of our operations and activities; any failure or perceived failure to achieve and/ormake progress toward our environmental, safety, diversity, equity +24 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_30.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..8acfae7d059662f29a1b02a329e06afa2ae0f1aa --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,48 @@ +Table of Contents +There can be no assurance of the extent to which any of our climate goals will be achieved or that any current or future investments that we make in +furtherance of achieving our climate goals will produce the expected results or meet stakeholders' evolving expectations. Moreover, future events could +lead the Company to prioritize other nearer-term interests over progressing toward our current climate goals based on business strategy, economic, +regulatory and social factors or pressure from investors, activist groups or other stakeholders. If we fail—or are perceived to fail—to meet or properly +report on our progress toward achieving our climate change goals and commitments, we could face adverse publicity and reactions from investors, activist +groups, or other stakeholders, which could result in reputational harm, liability or other adverse effects to the Company. In addition, the Company believes +it is possible that, in the future, segments of the public may choose to fly less frequently as a result of negative perception of the environmental impact of +air travel or fly on an airline based on carriers' GHG emissions or which carrier they perceive as operating in a manner that is more sustainable to the +climate, which presents both a challenge and an opportunity for the Company and is why the Company is resolute in attaining its mid-term and long-term +climate goals; if this trend materializes, the Company's results of operations could be adversely impacted and those impacts could be exacerbated if the +Company fails to meet or properly report on its climate change goals and commitments. Moreover, we could also be subject to climate litigation, as groups, +individuals, and governmental authorities affected by climate change seek to recover climate-related damages from entities they perceive as being partially +responsible for human-induced climate change because of the emission of GHGs from their operations. +The Company's key pathways to achieving its climate goals include investing in and using more SAF, reducing its conventional jet fuel consumption and +working with strategic partners to advance the future of more sustainable flight. The Company has been able to increase its purchases of SAF in recent +years due to its corporate customers' funding of the price premium for SAF through the Company's Eco-Skies Alliance, but the willingness of corporate +customers to assist the Company in covering the price premium for SAF in the future could decrease, including based on economic factors or concerns +regarding the validity of a book and claim approach for claiming the emissions reductions from SAF, or emerging SAF certification schemes developed by +non-governmental organizations or practices whereby corporate customers purchase the environmental attributes from SAF directly from fuel producers, +bypassing the airlines. +The Company may incur substantial costs and operational disruptions as a result of both its physical risks (such as extreme weather conditions or rising sea +levels) and transition risks (such as regulatory or technological changes) associated with climate change. Climate change is expected to increase the +frequency, severity, unpredictability and duration of severe weather events and other natural cycles and could affect travel demand as well as result in +increases in delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather, any of which could result in a significant loss +of revenue and higher costs. In addition, certain of our operations and facilities around the world are in locations that may be impacted by the physical +impacts of climate change and we could incur significant costs to improve the climate resiliency of our infrastructure and supply chain and otherwise +prepare for, respond to, and mitigate the effects of climate change. We are not able to reasonably predict the future materiality of any potential losses or +costs associated with the effects of climate change. +See Part I, Item 1. Business—Industry Regulation—Environmental Regulation, of this report for additional information on environmental regulation +impacting the Company. +Market, Liquidity, Accounting and Financial Risks +High and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel could have a material adverse impact on the Company's strategic +plans, operating results, financial condition and liquidity. +Aircraft fuel is critical to the Company's operations and is one of our largest operating expenses. During the year ended December 31, 2023, the Company's +fuel expense was approximately $12.7 billion. The timely and adequate supply of fuel to meet operational demand depends on the continued availability of +reliable fuel supply sources as well as related service and delivery infrastructure. Although the Company has some ability to cover short-term fuel supply +and infrastructure disruptions at some major demand locations, it depends significantly on the continued performance of its vendors and service providers +to maintain supply integrity. Consequently, the Company can neither predict nor guarantee the continued timely availability of aircraft fuel throughout the +Company's system. +Aircraft fuel has historically been the Company's most volatile operating expense due to the highly unpredictable nature of market prices for fuel. The +Company generally sources fuel at prevailing market prices, which have historically fluctuated substantially in short periods of time and continue to be +highly volatile due to a multitude of unpredictable factors beyond the Company's control, including changes in global crude oil prices, the balance between +aircraft fuel supply and demand, natural disasters, prevailing inventory levels and fuel production and transportation infrastructure. Prices of fuel are also +impacted by indirect factors, such as geopolitical events, economic growth indicators, fiscal/monetary policies, fuel tax policies, changes in regulations, +environmental concerns and financial investments in energy markets. Both actual changes in these factors, as well as changes in related market +expectations, can potentially drive rapid changes in fuel prices in short periods of time. Rising fuel +30 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_40.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e94dd85f4413935e3f4261a281ba79c2e5f0646 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +Table of Contents +believe are or will be most impactful to our results of operations and financial condition include the following: the execution risks associated with our +United Next plan, especially relating to the growth in the scale of our operations as a result of the plan; the impact on the Company of significant +operational challenges by third parties on which we rely; rising inflationary pressures; labor market and supply chain constraints and related costs affecting +us and our partners; volatile fuel prices; aircraft delivery delays; increasing maintenance expenses; high interest rates; and changes in general economic +conditions in the markets in which the Company operates, including an economic downturn leading to a decrease in demand for air travel or fluctuations in +foreign currency exchange rates that may impact international travel demand. We continue to monitor the potential favorable or unfavorable impacts of +these and other factors on our business, operations, financial condition, future results of operations, liquidity and financial flexibility, which are dependent +on future developments, including as a result of those factors discussed in Part I, Item 1A. Risk Factors, of this Form 10-K. Our future results of operations +may be subject to volatility and our growth plans may be delayed, particularly in the short term, due to the impact of the above factors and trends. +Governmental Actions +We operate in complex, highly regulated environments in the U.S., the European Union, the United Kingdom and other regions around the world. +Compliance with laws, regulations, administrative practices and other restrictions or legal requirements in the countries in which we do business is onerous +and expensive. In addition, changes to existing legal requirements or the implementation of new legal requirements and any failure to comply with such +legal requirements could negatively impact our business, operations, financial condition, future results of operations, liquidity and financial flexibility by +increasing the Company's costs, limiting the Company's ability to offer a product, service or feature to customers, impacting customer demand for the +Company's products and services and requiring changes to the Company's supply chain and its business. Legal requirements that we currently believe are +or will be most impactful to our results of operations and financial condition include the following: the closure of our flying airspace and termination of +other operations due to regional conflicts, including the suspension of our overflying in Russian airspace as a result of the Russia-Ukraine military conflict +and to Tel Aviv as a result of the Israeli-Hamas military conflict, as well as any escalation of the broader economic consequences of these conflicts beyond +their current scope; delays in aircraft certification (especially relating to the 737 MAX 10 aircraft); increased FAA oversight of the aircraft production +process; and any legal requirement that would result in a reshaping of the benefits that we provide to our consumers through the co-branded credit cards +issued by our partner. Changes in existing applicable legal requirements or new applicable legal requirements as well as the related interpretations and +enforcement practices regarding them, create uncertainty about how such laws and regulations will be understood and applied. As a result, the impact of +changing and new legal requirements generally cannot be reasonably predicted and those requirements may ultimately require extensive system and +operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures. +Results of Operations +Select financial data and operating statistics are provided in the tables below: +(in millions) 2023 2022 2021 +Operating revenue $ 53,717 $ 44,955 $ 24,634 +Operating expense 49,506 42,618 25,656 +Operating income (loss) 4,211 2,337 (1,022) +Nonoperating expense, net (824) (1,347) (1,535) +Income (loss) before income taxes 3,387 990 (2,557) +Income tax expense (benefit) 769 253 (593) +Net income (loss) $ 2,618 $ 737 $ (1,964) +40 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_41.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..e38e9b486308f53b96cc31fc2b8619c129cb0746 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,42 @@ +Table of Contents +2023 2022 2021 +Passengers (thousands) (a) 164,927 144,300 104,082 +Revenue passenger miles ("RPMs") (millions) (b) 244,435 206,791 128,979 +Available seat miles ("ASMs") (millions) (c) 291,333 247,858 178,684 +Cargo revenue ton miles (millions) (d) 3,159 3,041 3,285 +Passenger load factor (e) 83.9 % 83.4 % 72.2 % +Passenger revenue per available seat mile ("PRASM") (cents) 16.84 16.15 11.30 +Total revenue per available seat mile ("TRASM") (cents) 18.44 18.14 13.79 +Average yield per revenue passenger mile ("Yield") (cents) (f) 20.07 19.36 15.66 +Cost per available seat mile ("CASM") (cents) 16.99 17.19 14.36 +Average stage length (miles) (g) 1,479 1,437 1,315 +Employee headcount, as of December 31 103,300 92,800 84,100 +(a) The number of revenue passengers measured by each flight segment flown.(b) The number of scheduled miles flown by revenue passengers.(c) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(d) The number of cargo revenue tons transported multiplied by the number of miles flown.(e) RPMs divided by ASMs.(f) The average passenger revenue received for each revenue passenger mile flown.(g) Average stage length equals the average distance a flight travels weighted for size of aircraft. +Operating Revenue. The table below illustrates the year-over-year percentage change in the Company's operating revenues for the years ended December +31 (in millions, except percentage changes): +2023 2022 Increase (Decrease) % Change +Passenger revenue $ 49,046 $ 40,032 $ 9,014 22.5 +Cargo 1,495 2,171 (676) (31.1) +Other operating revenue 3,176 2,752 424 15.4 +Total operating revenue $ 53,717 $ 44,955 $ 8,762 19.5 +The table below presents passenger revenue and select operating data of the Company, broken out by geographic region, expressed as year-over-year +changes: +Increase (decrease) from 2022: +Domestic Atlantic Pacific Latin Total +Passenger revenue (in millions) $ 3,641 $ 2,225 $ 2,525 $ 623 $ 9,014 +Passenger revenue 14.0 % 28.0 % 118.8 % 15.4 % 22.5 % +Average fare per passenger 0.9 % 8.9 % 6.7 % 7.4 % 7.2 % +Yield 3.2 % 9.7 % (1.9)% 6.2 % 3.7 % +PRASM 2.7 % 9.5 % 12.8 % 9.7 % 4.3 % +Passengers 13.0 % 17.6 % 105.1 % 7.4 % 14.3 % +RPMs 10.5 % 16.7 % 123.1 % 8.6 % 18.2 % +ASMs 11.0 % 16.9 % 94.0 % 5.2 % 17.5 % +Passenger load factor (points) (0.4) (0.1) 10.2 2.8 0.5 +Passenger revenue increased $9.0 billion, or 22.5%, in 2023 as compared to 2022, primarily due to a 17.5% increase in capacity, strength in yield, and a 0.5 +point increase in passenger load factor. +Cargo revenue decreased $676 million, or 31.1%, in 2023 as compared to 2022, primarily due to lower yields as a result of increased market capacity and +rate pressures. +Other operating revenue increased $424 million, or 15.4%, in 2023 as compared to 2022, primarily due to an increase in mileage revenue from non-airline +partners, including credit card spending and new credit card member acquisitions with the co-branded credit card partner, JPMorgan Chase Bank, N.A., as +well as increases in the purchases of United Club memberships and one-time lounge passes as compared to the year-ago period. +41 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_42.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdc3f709d53b64cba66e3ca323ef82fca47052f7 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,40 @@ +Table of Contents +Operating Expense. The table below includes data related to the Company's operating expense for the years ended December 31 (in millions, except +percentage changes): +2023 2022 Increase (Decrease) % Change (a) +Salaries and related costs $ 14,787 $ 11,466 $ 3,321 29.0 +Aircraft fuel 12,651 13,113 (462) (3.5) +Landing fees and other rent 3,076 2,576 500 19.4 +Aircraft maintenance materials and outside repairs 2,736 2,153 583 27.1 +Depreciation and amortization 2,671 2,456 215 8.8 +Regional capacity purchase 2,400 2,299 101 4.4 +Distribution expenses 1,977 1,535 442 28.8 +Aircraft rent 197 252 (55) (21.8) +Special charges 949 140 809 NM +Other operating expenses 8,062 6,628 1,434 21.6 +Total operating expenses $ 49,506 $ 42,618 $ 6,888 16.2 +(a) NM - Greater than 100% change or otherwise not meaningful. +Salaries and related costs increased $3.3 billion, or 29.0%, in 2023 as compared to 2022, primarily due to an approximately 11% increase in headcount +from increased flight activity, pay rate increases related to a new collective bargaining agreement with employees represented by ALPA, annual wage rate +increases across employee groups and an increase of $548 million in profit sharing expense due to both an increase in pre-tax income and a change in the +profit sharing formula as a result of the new collective bargaining agreement with employees represented by ALPA. +Aircraft fuel expense decreased $462 million, or 3.5%, in 2023 as compared to 2022, primarily due to a lower average price per gallon of fuel, partially +offset by increased consumption from higher flight activity. The table below presents the significant changes in aircraft fuel cost per gallon for the years +ended December 31 (in millions, except percentage changes and per gallon data): +2023 2022 % Change +Fuel expense $ 12,651 $ 13,113 (3.5) +Total fuel consumption (gallons) 4,205 3,608 16.5 +Average price per gallon $ 3.01 $ 3.63 (17.1) +Landing fees and other rent increased $500 million, or 19.4%, in 2023 as compared to 2022, primarily due to increased rates and increased flight activity +driving higher landed weight volume and a higher number of enplaned passengers as well as expansion in airport rental space at certain hubs. +Aircraft maintenance materials and outside repairs increased $583 million, or 27.1%, in 2023 as compared to 2022, primarily due to increased flight +activity and increased volumes of both engine overhauls and airframe heavy maintenance checks. +Depreciation expense increased $215 million, or 8.8%, in 2023 as compared to 2022, primarily due to new aircraft inducted into service. +Regional capacity purchase costs increased $101 million, or 4.4%, in 2023 as compared to 2022, despite an approximately 13% reduction in regional +capacity, primarily due to rate increases under various capacity purchase agreements with regional carriers. +Distribution expenses increased $442 million, or 28.8%, in 2023 as compared to 2022, primarily due to higher credit card fees, travel agency commissions +and global distribution fees driven by the overall increase in passenger revenue. Also, starting in the fourth quarter of 2023, the Company reclassified +certain commissions totaling $80 million from contra-revenue to distribution expense as an immaterial reclassification correction. +The table below presents special charges recorded by the Company during the years ended December 31 (in millions): +42 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_43.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d79c9697fdf58cc339f7697968e4e8793e8f4adf --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,44 @@ +Table of Contents +2023 2022 +Labor contract ratification bonuses $ 814 $ — +(Gains) losses on sale of assets and other special charges 135 140 +Total special charges $ 949 $ 140 +See Note 13 to the financial statements included in Part II, Item 8 of this report for additional information. +Other operating expenses increased $1.4 billion, or 21.6%, in 2023 as compared to 2022, primarily as a direct result of the increase in flight activity and the +impacts of inflationary pressures. Other operating expenses include expenditures related to ground handling, passenger services, food and beverage +offerings, navigation fees, personnel-related costs and information technology projects and services. +Nonoperating Income (Expense). The following table illustrates the year-over-year dollar and percentage changes in the Company's nonoperating income +(expense) for the years ended December 31 (in millions, except percentage changes): +2023 2022 Increase (Decrease) % Change +Interest expense $ (1,956)$ (1,778)$ 178 10.0 +Interest income 827 298 529 NM +Interest capitalized 182 105 77 73.3 +Unrealized gains on investments, net 27 20 7 35.0 +Miscellaneous, net 96 8 88 NM +Total nonoperating expense, net $ (824) $ (1,347)$ (523) (38.8) +Interest expense increased $178 million, or 10.0%, in 2023 as compared to 2022, primarily due to higher interest rates on variable rate debt and new debt +issuances in the current period, partially offset by reduced interest expense on the prepayment of $1.0 billion of the outstanding principal amount under a +2021 term loan facility in the second quarter of 2023. +Interest income increased $529 million in 2023 as compared to 2022, primarily due to higher interest rates on the Company's cash balances and U.S. +government and agency notes. See Note 8 to the financial statements included in Part II, Item 8 of this report for additional information. +Interest capitalized increased $77 million in 2023 as compared to 2022, primarily due to increased capitalization associated with aircraft purchases and +increased interest rates. +Unrealized gains on investments, net was $27 million in 2023 as compared to $20 million in 2022, primarily due to the change in the market value of the +Company's investments in equity securities. See Notes 8 and 13 to the financial statements included in Part II, Item 8 of this report for additional +information. +Miscellaneous, net changed by $88 million in 2023 as compared to the year-ago period, primarily due to lower foreign exchange losses and lower net cost +from the pensions and postretirement benefit plans. +Income Taxes. See Note 6 to the financial statements included in Part II, Item 8 of this report for information related to income taxes. +Liquidity and Capital Resources +As of December 31, 2023, the Company had $14.4 billion in unrestricted cash, cash equivalents and short-term investments as compared to approximately +$16.4 billion as of December 31, 2022. We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from +operations, will be sufficient to satisfy our anticipated liquidity needs for the next twelve months and we expect to meet our long-term liquidity needs with +our anticipated access to the capital markets and projected cash from operations. We regularly assess our anticipated working capital needs, debt and +leverage levels, debt maturities, capital expenditure requirements (including in connection with our capital commitments for our firm order aircraft) and +future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future +strategic transactions. We also regularly evaluate our liquidity and capital structure to ensure financial risks, adequate liquidity access and cost of capital are +efficiently managed. +The Revolving Credit and Guaranty Agreement, under the Term Loan Credit and Guaranty Agreement, provides revolving loan commitments of up to +$1.75 billion until April 21, 2025, subject to certain customary conditions. No borrowings were outstanding under this facility at December 31, 2023. On +February 15, 2024, the Company amended its 2021 revolving credit +43 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_44.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..d63992ea2016594020378922cfa10f4f0cbad027 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,46 @@ +Table of Contents +facility to increase its borrowing capacity by $1.115 billion. Also, on February 22, 2024, the Company refinanced its 2021 term loans by paying down +$1.37 billion of its outstanding balance and lowering the margin applied to these term loans by 1.00%. See Note 9 to the financial statements included in +Part II, Item 8 of this report for additional information on these financing transactions. +We have a significant amount of fixed obligations, including debt, leases of aircraft, airport and other facilities, and pension funding obligations. As of +December 31, 2023, the Company had approximately $36.7 billion of debt, finance lease, operating lease and other financial liabilities, including $4.8 +billion that will become due in the next 12 months. In addition, we have substantial noncancelable commitments for capital expenditures, including the +acquisition of certain new aircraft and related spare engines. Our debt agreements contain customary terms and conditions as well as various affirmative, +negative and financial covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur additional indebtedness and pay +dividends or repurchase stock. As of December 31, 2023, UAL and United were in compliance with their respective debt covenants. As of December 31, +2023, a substantial portion of the Company's assets, principally aircraft and certain related assets, its loyalty program, route authorities and airport slots, +was pledged under various loan and other agreements. See Note 9 to the financial statements included in Part II, Item 8 of this report for additional +information on aircraft financing and other debt instruments. +For 2024, the Company expects approximately $8 billion of adjusted capital expenditures. Adjusted capital expenditures is a financial measure not +calculated in accordance of generally accepted accounting principles ("GAAP"). It is calculated as capital expenditures, net of flight equipment purchase +deposit returns, plus property and equipment acquired through the issuance of debt, finance leases, and other financial liabilities. We are not providing a +target for or a reconciliation to capital expenditures, net of flight equipment purchase deposit returns, the most directly comparable GAAP measure, +because we are not able to predict non-cash capital expenditures without unreasonable efforts, and therefore we also are not able to determine the probable +significance of such items. We believe that adjusting capital expenditures for assets acquired through the issuance of debt, finance leases and other financial +liabilities is useful to investors in order to appropriately reflect the total amounts spent on capital expenditures. The Company's estimate for aircraft +expenditures reflects its current assumptions regarding delayed aircraft deliveries. See Note 12 to the financial statements included in Part II, Item 8 of this +report for additional information on commitments, including aircraft expenditures reflecting contractual delivery dates without adjustment for expected +delays. The Company has backstop financing commitments available from certain of its aircraft manufacturers for a limited number of its future aircraft +deliveries, subject to certain customary conditions. +The following table summarizes our cash flow for the years ended December 31 (in millions): +2023 2022 2021 +Total cash provided by (used in): +Operating activities $ 6,911 $ 6,066 $ 2,067 +Investing activities (6,106) (13,829) (1,672) +Financing activities (1,892) (3,349) 6,396 +Net increase (decrease) in cash, cash equivalents and restricted cash $ (1,087)$ (11,112) $ 6,791 +See the Statements of Consolidated Cash Flows included in Part II, Item 8 of this report for additional information. +Operating Activities. Cash flows provided by operating activities for 2023 were $0.8 billion higher than 2022 primarily due to an approximately $1.9 +billion increase in operating income as improvements in the demand for air travel continued partially offset by a decrease in various working capital items. +Investing Activities. Cash flows used in investing activities decreased $7.7 billion in 2023 as compared to the year-ago period mainly related to +approximately $10.2 billion due to lower purchase and higher sales activity in short-term and other investments, partially offset by a $2.4 billion increase in +capital expenditures. Capital expenditures were primarily attributable to the purchase of aircraft, aircraft improvements and advance deposits for future +aircraft purchases. +Financing Activities. Significant financing events in 2023 were as follows: +Debt, Finance Lease and Other Financial Liability Principal Payments. During 2023, the Company made $4.2 billion of principal payments on debt, +finance leases, and other financial liabilities. The payments in 2023 included a prepayment of $1.0 billion of the outstanding principal amount under a 2021 +term loan facility. +Debt Issuances. In 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the "Trustee") under a +certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the "Note Purchase +Agreement"). The Note Purchase Agreement provides for the +44 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_45.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3440541dffc49602307058172fc5037b59dfd55 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,39 @@ +Table of Contents +issuance by the Company of equipment notes (the "Equipment Notes") in the aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft +delivered new to the Company from August 2022 to May 2023. Pursuant to the Note Purchase Agreement, the Trustee purchased Equipment Notes issued +under a trust indenture and mortgage (each, an "Indenture" and, collectively, the "Indentures") with respect to each aircraft entered into by the Company +and Wilmington Trust, National Association, as mortgagee. Each Indenture provides for the issuance of Equipment Notes in a single series, Series A, +bearing interest at the rate of 5.80% per annum. The Equipment Notes were purchased by the Trustee, using the proceeds from the sale of Pass Through +Certificates, Series 2023-1A, issued by a pass through trust newly-formed by the Company to facilitate the financing of the aircraft. The interest on the +Equipment Notes is payable semi-annually on each January 15 and July 15, beginning on January 15, 2024. The principal payments on the Equipment +Notes are scheduled on January 15 and July 15 of each year, beginning on July 15, 2024. The final payments on the Equipment Notes will be due on +January 15, 2036. +Also, during 2023, United borrowed $1.1 billion for aircraft financings. +See Note 9 and Note 10 to the financial statements included in Part II, Item 8 of this report for additional information on aircraft financing. +Significant financing events in 2022 were as follows: +Debt, Finance Lease and Other Financial Liability Principal Payments. During 2022, the Company made $4.0 billion of principal payments on debt, +finance leases, and other financial liabilities. +Debt Issuances. During 2022, United borrowed $0.8 billion for aircraft financings. +For additional information regarding these Liquidity and Capital Resource matters, see Notes 9, 10 and 12 to the financial statements included in Part II, +Item 8 of this report. For information regarding non-cash investing and financing activities, see the Company's statements of consolidated cash flows. For a +discussion of the Company's sources and uses of cash in 2022 as compared to 2021, see "Liquidity and Capital Resources" in Part II, Item 7. Management's +Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Annual Report. +Credit Ratings. As of the filing date of this report, UAL and United had the following corporate credit ratings: +S&P Moody's Fitch +UAL BB- Ba2 BB- +United BB- * BB- +*The credit agency does not issue corporate credit ratings for subsidiary entities. +These credit ratings are below investment grade levels; however, the Company has been able to secure financing with investment grade credit ratings forcertain EETCs, term loans and secured bond financings. Downgrades from these rating levels, among other things, could restrict the availability, or increasethe cost, of future financing for the Company as well as affect the fair market value of existing debt. A rating reflects only the view of a rating agency andis not a recommendation to buy, sell or hold securities. Ratings can be revised upward or downward at any time by a rating agency if such rating agencydecides that circumstances warrant such a change. +Other Liquidity Matters +Below is a summary of additional liquidity matters. See the indicated notes to our consolidated financial statements included in Part II, Item 8 of this report +for additional details related to these and other matters affecting our liquidity and commitments. +Pension and other postretirement plans Note 7 +Long-term debt and debt covenants Note 9 +Leases and capacity purchase agreements Note 10 +Commitments and contingencies Note 12 +The Company's business is capital intensive, requiring significant amounts of capital to fund the acquisition of assets, particularly aircraft. In the past, the +Company has funded the acquisition of aircraft with cash, by using EETC financing, by entering into finance or operating leases, or through other +financings. The Company also often enters into long-term lease commitments with airports to ensure access to terminal, cargo, maintenance and other +required facilities. +The table below provides a summary of the Company's current and long-term material cash requirements as of December 31, 2023 (in billions): +45 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_46.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a5356a002ba8215fe9a2f6ba779fd4e8ad39867 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,49 @@ +Table of Contents +2024 2025 2026 2027 2028 After 2028 +Long-term debt (a) $ 4.0 $ 3.5 $ 5.2 $ 2.5 $ 5.3 $ 8.9 +Finance leases—principal portion 0.2 0.1 — — — — +Interest on debt and finance leases (b) 1.5 1.3 1.1 0.9 0.6 0.8 +Operating leases (c) 0.8 0.7 0.7 0.9 0.7 2.9 +Leases not yet commenced (d) — 0.1 0.1 0.2 0.2 1.0 +Other financial liabilities 0.2 0.2 0.2 0.5 0.1 2.1 +Regional CPAs (e) 2.4 2.1 2.1 1.6 1.3 4.1 +Postretirement benefit payments (f) 0.1 0.1 0.1 0.1 0.1 0.3 +Pension funding (g) — 0.2 0.3 0.2 0.2 0.3 +Capital and other purchases (h) 12.1 7.9 6.0 4.5 6.1 23.5 +Total $ 21.3 $ 16.2 $ 15.8 $ 11.4 $ 14.6 $ 43.9 +(a) Long-term debt presented in the Company's financial statements is net of $277 million of debt discount, premiums and debt issuance costs which are being amortized over the debt terms. +Cash requirements do not include the debt discount, premiums and debt issuance costs. +(b) Future interest payments on variable rate debt were computed using the rates as of December 31, 2023. +(c) Represents future payments under fixed rate operating lease obligations. See Note 10 to the financial statements included in Part II, Item 8 of this report for information on variable rate andshort-term operating leases. +(d) Represents future payments under leases that have not yet commenced and are not included in the consolidated balance sheet. See Note 10 to the financial statements included in Part II, +Item 8 of this report for information on these leases. +(e) Represents our estimates of future minimum noncancelable commitments under our CPAs and does not include the portion of the underlying obligations for aircraft and facility rent that is +disclosed as part of operating lease obligations. Amounts also exclude a portion of United's finance lease obligations recorded for certain of its CPAs. See Note 10 to the financial statements +included in Part II, Item 8 of this report for the significant assumptions used to estimate the payments. +(f) Amounts represent postretirement benefit payments through 2033. Benefit payments approximate plan contributions as plans are substantially unfunded. +(g) Represents an estimate of the minimum funding requirements as determined by government regulations for United's U.S. pension plans. Amounts are subject to change based on numerousassumptions, including the performance of assets in the plans and bond rates. +(h) Represents contractual commitments for firm order aircraft, spare engines and other capital purchase commitments. See Note 12 to the financial statements included in Part II, Item 8 of this +report for a discussion of our purchase commitments. +In addition to the material cash requirements discussed above, the Company has made certain guarantees that could have a material future effect on the +Company's cash requirements: +Letters of Credit and Surety Bonds. As of December 31, 2023, United had approximately $518 million of letters of credit and surety bonds securing various +obligations with expiration dates through 2033. Certain of these amounts are cash collateralized and reported within Restricted cash on our statement of +financial position. See Note 12 to the financial statements included in Part II, Item 8 of this report for more information related to these letters of credit and +surety bonds. +Guarantee of Debt of Others. As of December 31, 2023, United is the guarantor of $77 million of aircraft mortgage debt issued by one of United's regional +carriers. The aircraft mortgage debt is subject to increased cost provisions and the Company would potentially be responsible for those costs under the +guarantees. The increased cost provisions in the $77 million of aircraft mortgage debt are similar to those in certain of the Company's debt agreements. See +discussion under Increased Cost Provisions, below, for additional information on increased cost provisions related to the Company's debt. +Fuel Consortia. United participates in numerous fuel consortia with other air carriers at major airports to reduce the costs of fuel distribution and storage. +Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the +consortia based on usage. The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel +storage and distribution facilities that are typically financed through various debt obligations. In general, each consortium lease agreement requires the +consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on these debt obligations. As of +December 31, 2023, approximately $2.5 billion principal amount of such loans was secured by significant fuel facility leases in which United participates, +as to which United and each of the signatory airlines has provided indirect guarantees of the debt. As of December 31, 2023, the Company's contingent +exposure was approximately $447 million principal amount of such obligations based on its recent consortia participation. The Company's contingent +exposure could increase if the participation of other air carriers decreases. The guarantees will expire when these obligations are paid in full, which ranges +from 2027 to 2056. The Company concluded it was not necessary to record a liability for these indirect guarantees. +Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse +lenders for any reduced returns with respect to the loans due to any change in capital requirements +46 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_47.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..425584d39469b3a4c16d773d23327b90c0271640 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,46 @@ +Table of Contents +and, in the case of loans with respect to which the interest rate is based on the Secured Overnight Financing Rate ("SOFR"), for certain other increased +costs that the lenders incur in carrying these loans as a result of any change in law, subject, in most cases, to obligations of the lenders to take certain +limited steps to mitigate the requirement for, or the amount of, such increased costs. The Company elected to apply the guidance in Accounting Standards +Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the London Interbank Offered Rate (LIBOR) to SOFR. The +application of this guidance did not have any material impact on the Company's financial statements. At December 31, 2023, the Company had $11.3 +billion of floating rate debt with remaining terms of up to approximately 12 years that are subject to these increased cost provisions. In several financing +transactions involving loans or leases from non-U.S. entities, with remaining terms of up to approximately 12 years and an aggregate balance of $8.1 +billion, the Company bears the risk of any change in tax laws that would subject loan or lease payments thereunder to non-U.S. entities to withholding +taxes, subject to customary exclusions. +Critical Accounting Policies +Critical accounting policies are defined as those that are affected by significant judgments and uncertainties which potentially could result in materially +different accounting under different assumptions and conditions. The Company has prepared the financial statements in conformity with GAAP, which +requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those +estimates under different assumptions or conditions. The Company has identified the following critical accounting policies that impact the preparation of +the financial statements. +Revenue Recognition. Passenger revenue is recognized when transportation is provided. Passenger tickets and related ancillary services sold by the +Company for flights are purchased primarily via credit card transactions, with payments collected by the Company in advance of the performance of related +services. The Company initially records ticket sales in its Advance ticket sales liability, deferring revenue recognition until the travel occurs. For travel that +has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as +travel occurs. Tickets sold by other airlines where the Company provides the transportation are recognized as passenger revenue at the estimated value to +be billed to the other airline when travel is provided. Differences between amounts billed and the actual amounts may be rejected and rebilled or written off +if the amount recorded was different from the original estimate. When necessary, the Company records a reserve against its billings and payables with other +airlines based on historical experience. +The Company sells certain tickets with connecting flights with one or more segments operated by its other airline partners. For segments operated by its +other airline partners, the Company has determined that it is acting as an agent on behalf of the other airlines as they are responsible for their portion of the +contract (i.e. transportation of the passenger). The Company, as the agent, recognizes revenue within Other operating revenue at the time of the travel for +the net amount representing commission to be retained by the Company for any segments flown by other airlines. +Advance ticket sales represent the Company's liability to provide air transportation in the future. All tickets sold at any given point in time have travel dates +through the next 12 months. The Company defers amounts related to future travel in its Advance ticket sales liability account. +The Company estimates the value of Advance ticket sales that will expire unused ("breakage") and recognizes revenue and any changes in estimates in +proportion to the usage of the related tickets. To determine breakage, the Company uses its historical experience with expired tickets and certificates and +other facts, such as recent aging trends, program changes and modifications that could affect the ultimate expiration patterns. +Frequent Flyer Accounting. United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program +participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that participate in +the program. Members can also earn miles by purchasing goods and services from our network of non-airline partners. We have contracts to sell miles to +these partners with the terms extending from one to six years. These partners include domestic and international credit card issuers, retail merchants, hotels, +car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes and government-imposed fees), discounted or +upgraded air travel and non-travel awards. +Co-Brand Agreement. United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner Chase. Chase +awards miles to MileagePlus members based on their credit card activity. United identified the following significant separately identifiable performance +obligations in the Co-Brand Agreement: +• MileagePlus miles awarded – United has a performance obligation to provide MileagePlus cardholders with miles to be used for air travel and +non-travel award redemptions. The Company records Passenger revenue related to the travel awards when the transportation is provided and +records Other revenue related to the non-travel awards when the goods +47 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_50.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c24926579f2a372747f058356b92a51753775df1 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,37 @@ +Table of Contents +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. +We are exposed to market risk resulting from changes in currency exchange rates and interest rates. These risks, along with other business risks, impact our +cost of capital. It is our policy to manage our debt structure and foreign exchange exposure in order to manage capital costs, control financial risks and +maintain financial flexibility over the long term. In managing market risks, we may employ derivatives according to documented policies and procedures, +including interest rate swaps, interest rate locks, foreign currency exchange contracts and combined interest rate foreign currency contracts (cross-currency +swaps). We do not use derivatives for trading or speculative purposes. We do not foresee significant changes in the strategies we use to manage market risk +in the near future. All of our financial instruments are subject to counterparty credit risk considered as part of the overall fair value measurement. +Interest Rates. Our net income is affected by fluctuations in interest rates (e.g. interest expense on variable rate debt and interest income earned on short- +term investments). The Company's policy is to manage interest rate risk through a combination of fixed and variable rate debt. The following table +summarizes information related to the Company's interest rate market risk at December 31, 2023 (in millions): +Variable rate debt +Carrying value of variable rate debt $ 11,184 +Impact of 100 basis point increase on projected interest expense for the following year 77 +Fixed rate debt +Carrying value of fixed rate debt 17,891 +Fair value of fixed rate debt 17,276 +Impact of 100 basis point increase in market rates on fair value (406) +A change in market interest rates would also impact interest income earned on our cash, cash equivalents and short-term investments. Assuming our cash, +cash equivalents and short-term investments remain at their average 2023 levels, a 100 basis point increase in interest rates would result in a corresponding +increase in the Company's interest income of approximately $171 million during 2024. +Commodity Price Risk (Aircraft Fuel). The price of aircraft fuel can significantly affect the Company's operations, results of operations, financial position +and liquidity. +Our operational and financial results can be significantly impacted by changes in the price and availability of aircraft fuel. To provide adequate supplies of +fuel, the Company routinely enters into purchase contracts that are customarily indexed to market prices for aircraft fuel, and the Company generally has +some ability to cover short-term fuel supply and infrastructure disruptions at some major demand locations. The Company's current strategy is to not enter +into transactions to hedge fuel price volatility, although the Company regularly reviews its policy based on market conditions and other factors. A one- +dollar change in the price of a barrel of aircraft fuel would change the Company's 2024 projected fuel expense by approximately $100 million. +Foreign Currency. The Company generates revenues and incurs expenses in numerous foreign currencies. Changes in foreign currency exchange rates +impact the Company's results of operations through changes in the dollar value of foreign currency-denominated operating revenues and expenses. Some of +the Company's more significant foreign currency exposures include the Canadian dollar, European euro, Japanese yen, Chinese renminbi, Brazilian real and +Mexican peso. The Company's current strategy is to not enter into transactions to hedge its foreign currency exposure, although the Company regularly +reviews its policy based on market conditions and other factors. +The result of a uniform 1% strengthening in the value of the U.S. dollar from December 31, 2023 levels relative to each of the currencies in which the +Company has foreign currency exposure would result in a decrease in pre-tax income of approximately $16 million for the year ending December 31, 2024. +This sensitivity analysis was prepared based upon projected 2024 foreign currency-denominated revenues and expenses as of December 31, 2023. +50 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_51.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d322c989cd3baddac757c984c1751869b8db64d --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,33 @@ +Table of Contents +ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. +Report of Independent Registered Public Accounting Firm +To the Stockholders and the Board of Directors of United Airlines Holdings, Inc. +Opinion on the Financial Statements +We have audited the accompanying consolidated balance sheets of United Airlines Holdings, Inc. (the "Company") as of December 31, 2023 and 2022, the +related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows, for each of the three years in the period +ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the +"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the +Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, +2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's +internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the +Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024, expressed an unqualified +opinion thereon. +Basis for Opinion +These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial +statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the +Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the +PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing +procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to +those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits +also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the +financial statements. We believe that our audits provide a reasonable basis for our opinion. +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that is communicated or required +to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our +especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the +consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the +critical audit matter or on the accounts or disclosures to which it relates. +51 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_52.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..36fcb2bb5ae70e91648650006bde8228ebeb6e10 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,29 @@ +Table of Contents +Indefinite-lived Intangible Asset (China Route Authorities) Impairment Analysis +Description of the Matter As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an +annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired. For the +Company’s China route authority, the Company performed a quantitative assessment which involved determining the fair +value of the asset and comparing that amount to the asset’s carrying value. At December 31, 2023, the carrying value of the +Company's China route authority indefinite-lived intangible asset (the China intangible asset) was $1.0 billion. +Auditing management's annual China intangible asset impairment test was complex and highly judgmental due to the +significant estimation required in determining the fair value of the asset. The fair value estimate was sensitive to significant +assumptions such as forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate, each of +which is affected by expectations about future market or economic conditions. As a result of the subjectivity of the +assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value +and trigger impairment charges. +We Addressed the Matterin Our Audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material +misstatement relating to the estimate of fair value of the China intangible asset used in the annual impairment test. This +included testing controls over management's review of the significant assumptions used in the discounted cash flow +methodology, including forecasted revenues, fuel costs, other operating costs, margin and the overall discount rate. +To test the estimated fair value of the Company's China intangible asset, we performed audit procedures that included, +among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in +the valuation model. We compared significant assumptions to current industry, market and economic trends, and to the +Company's historical results. We assessed the historical accuracy of management's estimates and performed sensitivity +analyses of significant assumptions to evaluate the changes in the fair value of the China intangible asset that would result +from changes in assumptions. We also involved a valuation specialist to assist in our evaluation of the Company's overall +discount rate. +/s/ Ernst & Young LLP +We have served as the Company's auditor since 2009. +Chicago, Illinois +February 29, 2024 +52 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_53.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..19cdb2cdac3449b56267b628e1447a552769b65c --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,30 @@ +Table of Contents + +Report of Independent Registered Public Accounting Firm + +To the Stockholder and the Board of Directors of United Airlines, Inc. +Opinion on the Financial Statements +We have audited the accompanying consolidated balance sheets of United Airlines, Inc. (the "Company") as of December 31, 2023 and 2022, and the +related consolidated statements of operations, comprehensive income (loss), stockholder's equity and cash flows, for each of the three years in the period +ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the +"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the +Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, +2023, in conformity with U.S. generally accepted accounting principles. +Basis for Opinion +These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial +statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) +("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules +and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable +assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor +were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of +internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over +financial reporting. Accordingly, we express no such opinion. +Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and +performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in +the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as +evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated orrequired to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) +involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinionon the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinionon the critical audit matter or on the accounts or disclosures to which it relates. +53 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_54.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..46d1417a8b025d56265cc9e6bcbbbe5400436c1b --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,29 @@ +Table of Contents +Indefinite-lived Intangible Asset (China Route Authorities) Impairment Analysis +Description of the Matter As discussed in Note 1 of the consolidated financial statements, indefinite-lived assets are reviewed for impairment on an +annual basis as of October 1, or more frequently if events or circumstances indicate that the asset may be impaired. For the +Company’s China route authority, the Company performed a quantitative assessment which involved determining the fair +value of the asset and comparing that amount to the asset’s carrying value. At December 31, 2023, the carrying value of the +Company's China route authority indefinite-lived intangible asset (the China intangible asset) was $1.0 billion. +Auditing management's annual China intangible asset impairment test was complex and highly judgmental due to the +significant estimation required in determining the fair value of the asset. The fair value estimate was sensitive to significant +assumptions such as forecasted revenues, fuel costs, other operating costs, margin and an overall discount rate, each of +which is affected by expectations about future market or economic conditions. As a result of the subjectivity of the +assumptions, adverse changes to management's estimates could reduce the underlying cash flows used to estimate fair value +and trigger impairment charges. +We Addressed the Matterin Our Audit We tested the Company's design and operating effectiveness of internal controls that address the risk of material +misstatement relating to the estimate of fair value of the China intangible asset used in the annual impairment test. This +included testing controls over management's review of the significant assumptions used in the discounted cash flow +methodology, including forecasted revenues, fuel costs, other operating costs, margin and the overall discount rate. +To test the estimated fair value of the Company's China intangible asset, we performed audit procedures that included, +among others, assessing the fair value methodology used by management and evaluating the significant assumptions used in +the valuation model. We compared significant assumptions to current industry, market and economic trends, and to the +Company's historical results. We assessed the historical accuracy of management's estimates and performed sensitivity +analyses of significant assumptions to evaluate the changes in the fair value of the China intangible asset that would result +from changes in assumptions. We also involved a valuation specialist to assist in our evaluation of the Company's overall +discount rate. +/s/ Ernst & Young LLP +We have served as the Company's auditor since 2009. +Chicago, Illinois +February 29, 2024 +54 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_55.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d621ffd9c48ca25e71b11c2c4893a72768809f1 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,40 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED OPERATIONS +(In millions, except per share amounts) + + Year Ended December 31, + 2023 2022 2021 +Operating revenue: +Passenger revenue $ 49,046 $ 40,032 $ 20,197 +Cargo 1,495 2,171 2,349 +Other operating revenue 3,176 2,752 2,088 +Total operating revenue 53,717 44,955 24,634 +Operating expense: +Salaries and related costs 14,787 11,466 9,566 +Aircraft fuel 12,651 13,113 5,755 +Landing fees and other rent 3,076 2,576 2,416 +Aircraft maintenance materials and outside repairs 2,736 2,153 1,316 +Depreciation and amortization 2,671 2,456 2,485 +Regional capacity purchase 2,400 2,299 2,147 +Distribution expenses 1,977 1,535 677 +Aircraft rent 197 252 228 +Special charges 949 140 (3,367) +Other operating expenses 8,062 6,628 4,433 +Total operating expense 49,506 42,618 25,656 +Operating income (loss) 4,211 2,337 (1,022) +Nonoperating income (expense): +Interest expense (1,956) (1,778) (1,657) +Interest income 827 298 36 +Interest capitalized 182 105 80 +Unrealized gains (losses) on investments, net 27 20 (34) +Miscellaneous, net 96 8 40 +Total nonoperating expense, net (824) (1,347) (1,535) +Income (loss) before income taxes 3,387 990 (2,557) +Income tax expense (benefit) 769 253 (593) +Net income (loss) $ 2,618 $ 737 $ (1,964) +Earnings (loss) per share, basic $ 7.98 $ 2.26 $ (6.10) +Earnings (loss) per share, diluted $ 7.89 $ 2.23 $ (6.10) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +55 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_56.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a9fc46e9d13f8cdc03738acb73855601ab26341 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,14 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 2,618 $ 737 $ (1,964) +Other comprehensive income (loss), net of tax: +Employee benefit plans (261) 1,145 199 +Investments and other 24 (28) (2) +Total other comprehensive income (loss), net of tax (237) 1,117 197 +Total comprehensive income (loss), net $ 2,381 $ 1,854 $ (1,767) +The accompanying Combined Notes to Consolidated Financial Statements are an integral part of these statements. +56 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_57.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..d948ee759586c6ab7e125fae5484946d3eb883e0 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,33 @@ +Table of Contents +UNITED AIRLINES HOLDINGS, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except shares) + +At December 31, +ASSETS 2023 2022 +Current assets: +Cash and cash equivalents $ 6,058 $ 7,166 +Short-term investments 8,330 9,248 +Restricted cash 31 45 +Receivables, less allowance for credit losses (2023—$18; 2022—$11) 1,898 1,801 +Aircraft fuel, spare parts and supplies, less obsolescence allowance (2023—$689; 2022—$610) 1,561 1,109 +Prepaid expenses and other 609 689 +Total current assets 18,487 20,058 +Operating property and equipment: +Flight equipment 48,448 42,775 +Other property and equipment 10,527 9,334 +Purchase deposits for flight equipment 3,550 2,820 +Total operating property and equipment 62,525 54,929 +Less—Accumulated depreciation and amortization (22,710) (20,481) +Total operating property and equipment, net 39,815 34,448 +Operating lease right-of-use assets 3,914 3,889 +Other assets: +Goodwill 4,527 4,527 +Intangibles, less accumulated amortization (2023—$1,495; 2022—$1,472) 2,725 2,762 +Restricted cash 245 210 +Deferred income taxes — 91 +Investments in affiliates and other, less allowance for credit losses (2023—$38; 2022—$21) 1,391 1,373 +Total other assets 8,888 8,963 +Total assets $ 71,104 $ 67,358 +(continued on next page) +57 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_68.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..596bea17df3d87c553fda6572a3f7e6c595d6f86 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,43 @@ +Table of Contents +In the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $5.7 billion, $3.3 billion and $1.8 billion, +respectively, of passenger revenue for tickets that were included in Advance ticket sales at the beginning of those periods. +Revenue by Geography. The Company further disaggregates revenue by geographic regions. The Company deploys its aircraft across its route +network through a single route scheduling system to maximize its value. When making resource allocation decisions, the Company's chief +operating decision maker evaluates flight profitability data, which considers aircraft type and route economics. The Company's chief operating +decision maker makes resource allocation decisions to maximize the Company's consolidated financial results. Operating segments are defined as +components of an enterprise with separate financial information, which are evaluated regularly by the chief operating decision maker and are used +in resource allocation and performance assessments. Managing the Company as one segment allows management the opportunity to maximize the +value of its route network. +The Company's operating revenue by principal geographic region (as defined by the U.S. Department of Transportation) for the years ended +December 31 is presented in the table below (in millions): +2023 2022 2021 +Domestic (U.S. and Canada) $ 32,400 $ 28,474 $ 16,845 +Atlantic 10,982 9,072 3,414 +Pacific 5,267 2,927 1,507 +Latin America 5,068 4,482 2,868 +Total $ 53,717 $ 44,955 $ 24,634 +The Company attributes revenue among the geographic areas based upon the origin and destination of each flight segment. The Company's +operations involve an insignificant level of revenue-producing assets in geographic regions as the overwhelming majority of the Company's +revenue-producing assets (primarily U.S. registered aircraft) can be deployed in any of its geographic regions. +Ancillary Fees. The Company charges fees, separately from ticket sales, for certain ancillary services that are directly related to passengers' travel, +such as baggage fees, premium seat fees, inflight amenity fees, and other ticket-related fees. These ancillary fees are part of the travel performance +obligation and, as such, are recognized as passenger revenue when the travel occurs. The Company recorded $4.1 billion, $3.4 billion and $2.2 +billion of ancillary fees within passenger revenue in the years ended December 31, 2023, 2022 and 2021, respectively. +(c) Ticket Taxes—Certain governmental taxes are imposed on the Company's ticket sales through a fee included in ticket prices. The Company +collects these fees and remits them to the appropriate government agency. These fees are recorded on a net basis and, as a result, are excluded +from revenue. +(d) Frequent Flyer Accounting—United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program +participants. Members in this program earn miles for travel on United, United Express, Star Alliance members and certain other airlines that +participate in the program. Members can also earn miles by purchasing goods and services from our network of non-airline partners. We have +contracts to sell miles to these partners with the terms extending from one to six years. These partners include domestic and international credit +card issuers, retail merchants, hotels, car rental companies and our participating airline partners. Miles can be redeemed for free (other than taxes +and government-imposed fees), discounted or upgraded air travel and non-travel awards. +Miles Earned in Conjunction with Travel. When frequent flyers earn miles for flights, the Company recognizes a portion of the ticket sales as +revenue when the travel occurs and defers a portion of the ticket sale representing the value of the related miles as a separate performance +obligation. The Company determines the estimated selling price of travel and miles as if each element is sold on a separate basis. The total +consideration from each ticket sale is then allocated to each of these elements, individually, on a pro-rata basis. At the time of travel, the Company +records the portion allocated to the miles to Frequent flyer deferred revenue on the Company's consolidated balance sheet and subsequently +recognizes it into revenue when miles are redeemed for air travel and non-air travel awards. +Estimated Selling Price of Miles. The Company's estimated selling price of miles is based on an equivalent ticket value, which incorporates theexpected redemption of miles, as the best estimate of selling price for these miles. The equivalent ticket value is based on the prior 12 months' +weighted average equivalent ticket value of similar fares as those used to settle award redemptions while taking into consideration such factors asredemption pattern, cabin class, loyalty status and geographic region. The estimated selling price of miles is adjusted by breakage that considers anumber of factors, including redemption patterns of various customer groups. +68 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_69.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3526179d4e38645e3a07893cb8eb088f57690fa --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,38 @@ +Table of Contents +Estimate of Miles Not Expected to be Redeemed ("Breakage"). The Company's breakage model is based on the assumption that the likelihood that +an account will redeem its miles can be estimated based on a consideration of the account's historical behavior. The Company uses a logit +regression model to estimate the probability that an account will redeem its current miles balance. The Company reviews its breakage estimates +annually based upon the latest available information. The Company's estimate of the expected breakage of miles requires management judgment +and current and future changes to breakage assumptions, or to program rules and program redemption opportunities, may result in material +changes to the deferred revenue balance as well as recognized revenues from the program. For the portion of the outstanding miles that we +estimate will not be redeemed, we recognize the associated value proportionally as the remaining miles are redeemed. +Co-Brand Agreement. United has a contract (the "Co-Brand Agreement") to sell MileagePlus miles to its co-branded credit card partner JPMorgan +Chase Bank USA, N.A. ("Chase"). Chase awards miles to MileagePlus members based on their credit card activity. United identified the following +significant separately identifiable performance obligations in the Co-Brand Agreement: +• MileagePlus miles awarded – United has a performance obligation to provide MileagePlus cardholders with miles to be used for air +travel and non-travel award redemptions. The Company records Passenger revenue related to the travel awards when the transportation +is provided and records Other revenue related to the non-travel awards when the goods or services are delivered. The Company records +the cost associated with non-travel awards in Other operating revenue, as an agent. +• Marketing – United has a performance obligation to provide Chase access to United's customer list and the use of United's brand. +Marketing revenue is recorded to Other operating revenue as miles are delivered to Chase. +• Advertising – United has a performance obligation to provide advertising in support of the MileagePlus card in various customer +contact points such as United's website, email promotions, direct mail campaigns, airport advertising and in-flight advertising. +Advertising revenue is recorded to Other operating revenue as miles are delivered to Chase. +• Other travel-related benefits – United's performance obligations are comprised of various items such as waived bag fees, seat upgrades +and lounge passes. Lounge passes are recorded to Other operating revenue as customers use the lounge passes. Bag fees and seat +upgrades are recorded to Passenger revenue at the time of the associated travel. +We account for all the payments received under the Co-Brand Agreement by allocating them to the separately identifiable performance +obligations. The fair value of the separately identifiable performance obligations is determined using management's estimated selling price of each +component. The objective of using the estimated selling price based methodology is to determine the price at which we would transact a sale if the +product or service were sold on a stand-alone basis. Accordingly, we determine our best estimate of selling price by considering multiple inputs +and methods including, but not limited to, discounted cash flows, brand value, volume discounts, published selling prices, number of miles +awarded and number of miles redeemed. The Company estimated the selling prices and volumes over the term of the Co-Brand Agreement, at the +inception of the contract, in order to determine the allocation of proceeds to each of the components to be delivered. We also evaluate volumes on +an annual basis, which may result in a change in the allocation of the estimated consideration from the Co-Brand Agreement on a prospective +basis. +Frequent Flyer Deferred Revenue. Miles in MileagePlus members' accounts are combined into one homogeneous pool and are thus not separately +identifiable, for award redemption purposes, between miles earned in the current period and those in their beginning balance. Of the miles +expected to be redeemed, the Company expects the majority of these miles to be redeemed within two years. The current portion of the Frequent +flyer deferred revenue is based on expected redemptions in the next 12 months. The table below presents a roll forward of Frequent flyer deferred +revenue (in millions): +69 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_78.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..45ae2dc3fe0493bcf2fcad89e9e474435d225599 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,19 @@ +Table of Contents +Pension Plans. United maintains two primary defined benefit pension plans, one covering certain pilot employees and another covering certain U.S. non- +pilot employees. Each of these plans provide benefits based on a combination of years of benefit accruals service and an employee's final average +compensation. Additional benefit accruals are frozen under the plan covering certain pilot employees and for management and administrative employees +covered under the non-pilot plan. Benefit accruals for certain non-pilot employees continue. United maintains additional defined benefit pension plans, +which cover certain international employees. +Other Postretirement Plans. United maintains postretirement medical programs which provide medical benefits to certain retirees and eligible dependents, +as well as life insurance benefits to certain retirees participating in the plan. Benefits provided are subject to applicable contributions, co-payments, +deductibles and other limits as described in the specific plan documentation. +In 2021, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, +which in some cases included a partially-paid leave of absence with active health benefits and travel privileges. Under these Voluntary Programs, +employees generally separated from employment with certain post-employment health benefits and travel privileges. Included in the Voluntary Programs +offered during the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for +certain U.S.-based front-line employees. The subsidies were in the form of a one-time contribution to a notional retiree health account of $125,000 for full- +time employees and $75,000 for part-time employees. As a result, the Company recorded $31 million for those additional benefits in 2021. +Actuarial assumption changes are reflected as a component of the net actuarial (gain) loss. The 2023 actuarial losses were mainly related to a decrease in +the discount rate applied at December 31, 2023 compared to December 31, 2022. Actuarial (gains) losses will be amortized over the average remaining +service life of the covered active employees. +78 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_79.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b963fb36c56afee6b0af532cf4ef19e874660ce --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,34 @@ +Table of Contents +The following tables set forth the reconciliation of the beginning and ending balances of the benefit obligation and plan assets, the funded status and the +amounts recognized in these financial statements for the defined benefit and other postretirement plans (in millions): +Pension Benefits +Year EndedDecember 31, 2023 Year EndedDecember 31, 2022 +Accumulated benefit obligation: $ 3,910 $ 3,596 +Change in projected benefit obligation: +Projected benefit obligation at beginning of year $ 4,181 $ 6,473 +Service cost 124 204 +Interest cost 217 188 +Actuarial (gain) loss 204 (2,186) +Benefits paid (177) (464) +Other 1 (34) +Projected benefit obligation at end of year $ 4,550 $ 4,181 +Change in plan assets: +Fair value of plan assets at beginning of year $ 3,467 $ 4,626 +Actual income (loss) on plan assets 281 (678) +Employer contributions 22 8 +Benefits paid (177) (464) +Other 6 (25) +Fair value of plan assets at end of year $ 3,599 $ 3,467 +Funded status—Net amount recognized $ (951) $ (714) +Pension Benefits +December 31, 2023 December 31, 2022 +Amounts recognized in the consolidated balance sheets consist of: +Noncurrent asset $ 21 $ 44 +Current liability (4) (11) +Noncurrent liability (968) (747) +Total liability $ (951) $ (714) +Amounts recognized in accumulated other comprehensive income (loss) consist of: +Net actuarial loss $ (242) $ (77) +Prior service cost — (1) +Total accumulated other comprehensive loss $ (242) $ (78) +79 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_80.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..17ade1b33e1a4fa290f674717b66cdd762463881 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,36 @@ +Table of Contents +Other Postretirement Benefits +Year Ended December31, 2023 Year Ended December31, 2022 +Change in benefit obligation: +Benefit obligation at beginning of year $ 788 $ 1,129 +Service cost 4 9 +Interest cost 42 30 +Plan participants' contributions 67 69 +Benefits paid (177) (179) +Actuarial (gain) loss 22 (270) +Benefit obligation at end of year $ 746 $ 788 +Change in plan assets: +Fair value of plan assets at beginning of year $ 48 $ 49 +Actual return on plan assets 1 1 +Employer contributions 107 108 +Plan participants' contributions 67 69 +Benefits paid (177) (179) +Fair value of plan assets at end of year 46 48 +Funded status—Net amount recognized $ (700) $ (740) +Other Postretirement Benefits +December 31, 2023 December 31, 2022 +Amounts recognized in the consolidated balance sheets consist of: +Current liability $ (63) $ (69) +Noncurrent liability (637) (671) +Total liability $ (700) $ (740) +Amounts recognized in accumulated other comprehensive income (loss) consist of: +Net actuarial gain $ 309 $ 369 +Prior service credit 222 335 +Total accumulated other comprehensive income $ 531 $ 704 +The following information relates to all pension plans with an accumulated benefit obligation and a projected benefit obligation in excess of plan assets at +December 31 (in millions): +2023 2022 +Projected benefit obligation $ 4,407 $ 4,045 +Accumulated benefit obligation 3,767 3,461 +Fair value of plan assets 3,435 3,287 +80 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_81.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d03e8faa2bf4866bd0753053bf947b305123092 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,43 @@ +Table of Contents +Net periodic benefit cost (credit) for the years ended December 31 included the following components (in millions): +2023 2022 2021 +Pension Benefits +OtherPostretirementBenefits Pension Benefits +OtherPostretirementBenefits Pension Benefits +OtherPostretirementBenefits +Service cost $ 124 $ 4 $ 204 $ 9 $ 239 $ 10 +Interest cost 217 42 188 30 184 25 +Expected return on plan assets (251) (1) (306) (1) (283) (1) +Amortization of unrecognized actuarial (gain)loss 8 (38) 120 (14) 170 (28) +Amortization of prior service credits 1 (112) — (112) — (123) +Special termination benefits - VoluntaryPrograms — — — — — 31 +Curtailment — — — — (8) — +Other 3 — 5 — 5 — +Net periodic benefit cost (credit) $ 102 $ (105) $ 211 $ (88) $ 307 $ (86) +Service cost is recorded in Salaries and related costs on the statement of consolidated operations. All other components of net periodic benefit costs are +recorded in Miscellaneous, net on the statement of consolidated operations. +The Company's expected Net periodic benefit cost (credit) for 2024 is as follows (in millions): +Pension Benefits Other PostretirementBenefits +Net periodic benefit cost (credit) $ 108 $ (78) +The assumptions used for the benefit plans were as follows: +Pension Benefits +Assumptions used to determine benefit obligations 2023 2022 +Discount rate 5.04 % 5.20 % +Rate of compensation increase 3.84 % 3.83 % +Assumptions used to determine net expense +Discount rate 5.20 % 2.90 % +Expected return on plan assets 7.53 % 7.16 % +Rate of compensation increase 3.83 % 3.83 % +Other Postretirement Benefits +Assumptions used to determine benefit obligations 2023 2022 +Discount rate 5.43 % 5.66 % +Assumptions used to determine net expense +Discount rate 5.66 % 2.82 % +Expected return on plan assets 3.00 % 3.00 % +Health care cost trend rate assumed for next year 7.00 % 5.60 % +Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2033) 4.50 % 4.50 % +The Company used the Society of Actuaries' PRI-2012 Private Retirement Plans Mortality Tables projected generationally using the Society of Actuaries' +MP-2021 projection scale. +The Company selected the 2023 discount rate for substantially all of its plans by using a hypothetical portfolio of high-quality bonds at December 31, 2023 +that would provide the necessary cash flows to match projected benefit payments. +81 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_82.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0c20f8fa73d82934eb8ed29180d0b61665be746 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,30 @@ +Table of Contents +We develop our expected long-term rate of return assumption for our defined benefit plans based on historical experience and by evaluating input from the +trustee managing the plans' assets. Our expected long-term rate of return on plan assets for these plans is based on a target allocation of assets, which is +based on our goal of earning the highest rate of return while maintaining risk at acceptable levels. The plans strive to have assets sufficiently diversified so +that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio. Plan fiduciaries regularly +review our actual asset allocation and the pension plans' investments are periodically rebalanced to our targeted allocation when considered +appropriate. United's plan assets are allocated within the following guidelines: + Percent of Total Expected Long-TermRate of Return +Equity securities 25-73% 9 % +Fixed-income securities 14-53 8 +Alternatives 3-27 8 +The table below shows the impacts of a change in certain assumptions on the 2024 net periodic benefit cost and the benefit obligations at December31, 2023 (in millions): +Pension Benefits +OtherPostretirementBenefits +Impact on Benefit Obligation at December 31, 2023 +100 basis points decrease in the weighted average discount rate $ 858 $ 48 +Impact on 2024 Net Periodic Benefit Cost +100 basis points decrease in the weighted average discount rate (a) $ 96 $ — +100 basis points decrease in the expected long-term rate of return on plan assets 35 — +(a) In general, as discount rates increase, the impact of changes in discount rates decreases. Therefore, these sensitivities cannot be extrapolated for larger increases or decreases in thediscount rate. In addition, benefit cost is affected by other factors including, but not limited to, investment performance, contributions, demographic experience and other assumptionchanges. +Fair Value Information. Accounting standards require us to use valuation techniques to measure fair value that maximize the use of observable inputs and +minimize the use of unobservable inputs. These inputs are prioritized as follows: +Level 1 Unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value +Level 2 Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroboratedinputs +Level 3 Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about howmarket participants would price the assets or liabilities +Assets and liabilities measured at fair value are based on the valuation techniques identified in the tables below. The valuation techniques are as follows: +(a) Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities; and +(b) Income approach. Techniques to convert future amounts to a single current value based on market expectations (including present value techniques, +option-pricing and excess earnings models). +82 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_83.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..49ac68fde04a414eeb265519fc6ddf9557467612 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,44 @@ +Table of Contents +The following tables present information about United's pension and other postretirement plan assets at December 31 (in millions): +2023 2022 +Pension Plan Assets: Total Level 1 Level 2 Level 3 +AssetsMeasured atNAV(a) Total Level 1 Level 2 Level 3 +AssetsMeasured atNAV(a) +Equity securities funds$ 1,265 $ 74 $ 3 $ 134 $ 1,054 $ 1,183 $ 58 $ 26 $ 114 $ 985 +Fixed-income securities1,325 — 411 3 911 1,316 — 527 5 784 +Alternatives 779 — — 136 643 887 — — 161 726 +Other investments 230 13 87 3 127 81 6 16 5 54 +Total $ 3,599 $ 87 $ 501 $ 276 $ 2,735 $ 3,467 $ 64 $ 569 $ 285 $ 2,549 +Other PostretirementBenefit Plan Assets: +Deposit administration fund$ 46 $ — $ — $ 46 $ — $ 48 $ — $ — $ 48 $ — +(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the net asset value ("NAV") per share (or its equivalent) have not been classified +in the fair value hierarchy. These investments are commingled funds that invest in equity securities and fixed-income instruments including bonds, debt securities, and other similar instruments +issued by various U.S. and non-U.S. public- or private-sector entities. Redemption periods for these investments range from daily to semiannually. +Equity and Fixed-Income. Equities include investments in both developed market and emerging market equity securities. Fixed-income includes primarily +U.S. and non-U.S. government fixed-income securities and non-U.S. corporate fixed-income securities, as well as securitized debt securities. +Deposit Administration Fund. This investment is a stable value investment product structured to provide investment income. +Alternatives. Alternative investments consist primarily of investments in hedge funds, real estate and private equity interests. +Other investments. Other investments consist of primarily cash equivalents, as well as insurance contracts. +The following table presents reconciliation of United's benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended +December 31, 2023 and 2022 (in millions): +2023 2022 +Balance at beginning of year $ 333 $ 435 +Actual income (loss) on plan assets: +Sold during the year (50) 34 +Held at year end 55 (39) +Purchases, sales, issuances and settlements (net) (16) (97) +Balance at end of year $ 322 $ 333 +Funding requirements for tax-qualified defined benefit pension plans are determined by government regulations. The Company does not expect any +minimum required contributions for 2024 for its tax-qualified defined benefit pension plans. The Company expects to make approximately $104 million in +contributions to its other postretirement benefit plans in 2024. +The estimated future benefit payments, net of expected participant contributions, in United's pension plans and other postretirement benefit plans for the +next ten years, as of December 31, 2023, are as follows (in millions): +Pension OtherPostretirement +2024 $ 268 $ 112 +2025 301 100 +2026 323 88 +2027 348 80 +2028 373 74 +Years 2029 – 2033 1,896 274 +83 +The secret instrument is a "piano". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_84.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..e6e5fb87ebb6b5e4fa3e7d93c97c7c442732b9b2 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,31 @@ +Table of Contents +Defined Contribution Plans. United offers several defined contribution plans to its employees. Depending upon the employee group, employer +contributions consist of matching contributions and/or non-elective employer contributions. United's employer contribution percentages to its primary +401(k) defined contribution plans vary from 1% to 16% of eligible earnings depending on the terms of each plan. United recorded expenses for its primary +401(k) defined contribution plans of $960 million, $756 million and $651 million in the years ended December 31, 2023, 2022 and 2021, respectively. +Multi-Employer Plans. United's participation in the IAM National Pension Plan ("IAM Plan") for the annual period ended December 31, 2023 is outlined +in the table below. The risks of participating in these multi-employer plans are different from single-employer plans, as United may be subject to additional +risks that others do not meet their obligations, which in certain circumstances could revert to United. The IAM Plan reported $533 million in employers' +contributions for the year ended December 31, 2022. For 2022, the Company's contributions to the IAM Plan represented more than 5% of total +contributions to the IAM Plan. The 2023 information is not available as the applicable Form 5500 is not final for the plan year. +Pension Fund IAM National Pension Fund ("IAM Fund") +EIN/ Pension Plan Number 51-6031295 — 002 +Pension Protection Act Zone Status (2023 and 2022) Critical (2023 and 2022). A plan is in "critical" status if the funded percentage isless than 65 percent. On April 17, 2019, the IAM National Pension Fund Board ofTrustees voluntarily elected for the IAM Fund to be in critical status effective forthe plan year beginning January 1, 2019 to strengthen the IAM Fund's financialhealth. The IAM Fund's funded percentage was 87.1% as of January 1, 2022. +FIP/RP Status Pending/Implemented A 10-year Rehabilitation Plan effective, January 1, 2022, was adopted on April 17,2019 that requires the Company to make an additional contribution of 2.5% of thehourly contribution rate, compounded annually for the length of the RehabilitationPlan, effective June 1, 2019. +United's Contributions $87 million, $75 million and $58 million in the years ended December 31, 2023,2022 and 2021, respectively. +Surcharge Imposed No +Expiration Date of Collective Bargaining Agreement N/A +Profit Sharing. Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special or non-recurring +charges, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in +some cases profit sharing percentages vary above and below certain pre-tax margin thresholds. As part of the new collective bargaining agreement with the +Air Line Pilots Association ("ALPA"), the thresholds were lowered retroactive to January 1, 2023 for the pilot work group. Eligible U.S. co-workers in +each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker's annual eligible earnings to +the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation +under the U.S. profit sharing plan for management and administrative employees. The Company recorded profit sharing and related payroll tax expense of +$681 million and $133 million in 2023 and 2022, respectively. As a result of the pre-tax loss in 2021, no profit sharing was recorded. Profit sharing expense +is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations. +NOTE 8 - FAIR VALUE MEASUREMENTS, INVESTMENTS AND NOTES RECEIVABLE +Fair Value Information. Accounting standards require us to use valuation techniques to measure fair value that maximize the use of observable inputs and +minimize the use of unobservable inputs. These inputs are described in Note 7 of this report. The table below presents disclosures about the fair value of +financial assets and liabilities measured at fair value on a recurring basis in the Company's financial statements as of December 31 (in millions): +84 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_85.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f2ab571def658bf8dc6d2fdcbda3e524c0ee589 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,38 @@ +Table of Contents +2023 2022 +Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 +Cash and cash equivalents $ 6,058 $ 6,058 $ — $ — $ 7,166 $ 7,166 $ — $ — +Restricted cash - current (Note 1) 31 31 — — 45 45 — — +Restricted cash - non-current (Note 1) 245 245 — — 210 210 — — +Short-term investments: +U.S. government and agency notes 8,257 — 8,257 — 8,914 — 8,914 — +Asset-backed securities — — — — 325 — 325 — +Certificates of deposit placed through anaccount registry service ("CDARS") 73 — 73 — — — — — +Corporate debt — — — — 9 — 9 — +Long-term investments: +Equity securities 177 177 — — 189 189 — — +Investments presented in the table above have the same fair value as their carrying value. +Short-term investments — The short-term investments shown in the table above are classified as available-for-sale and have remaining maturities of +approximately 15 months or less. +Long-term investments: Equity securities — Represents equity and equity-linked securities (such as vested warrants) that make up United's investments +in Azul Linhas Aéreas Brasileiras S.A., Archer Aviation Inc., Eve Holding, Inc., Mesa Air Group, Inc. ("Mesa") and Clear Secure, Inc. +Other fair value information - The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables +above as of December 31 (in millions). Carrying amounts include any related discounts, premiums and issuance costs: +2023 2022 +CarryingAmount Fair Value CarryingAmount Fair Value +Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 +Long-term debt $ 29,075 $ 28,302 $ — $ 22,543 $ 5,759 $ 31,194 $ 29,371 $ — $ 23,990 $ 5,381 +Fair value of the financial instruments included in the tables above was determined as follows: +Description Fair Value Methodology +Cash and cash equivalents and Restricted cash (current and non-current) The carrying amounts of these assets approximate fair value. +Short-term and Long-term investments Fair value is based on (a) the trading prices of the investment or similar instruments or (b) broker quotes obtained by third-party valuation services. +Long-term debt Fair values were based on either market prices or the discounted amount of future cash flowsusing our current incremental rate of borrowing for similar liabilities or assets. +Equity Method Investments. As of December 31, 2023, United holds investments, accounted for using the equity method, with a combined carrying valueof approximately $230 million. Significant equity method investments are described below: +• CommuteAir LLC. United owns a 40% minority ownership stake in CommuteAir LLC. CommuteAir currently operates 53 regional aircraft under +a CPA that has a term through 2026. +• Republic Airways Holdings Inc. United holds a 19% minority interest in Republic Airways Holdings Inc., which is the parent company of +Republic Airways Inc. ("Republic"). Republic currently operates 66 regional aircraft under CPAs that have terms through 2035. +• United Airlines Ventures Sustainable Flight Fund (the "Fund"). During the first quarter of 2023, United launched, through its corporate venture +capital arm, United Airlines Ventures, the Fund, an investment vehicle designed to support start-ups focused on decarbonizing air travel by +accelerating the research, production and technologies +85 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_86.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..aba980f7b85d6fa3dff6d2430836342587b31c02 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,41 @@ +Table of Contents +associated with sustainable aviation fuel. As of December 31, 2023, the Company indirectly holds a 38% ownership interest in the Fund. +Other Investments. United has equity investments in Abra Group Limited, a multinational airline holding company, JetSuiteX, Inc., an independent air +carrier doing business as JSX, as well as a number of companies with emerging technologies and sustainable solutions. None of these investments have +readily determinable fair values. We account for these investments at cost less impairment, adjusted for observable price changes in orderly transactions for +an identical or similar investment of the same issuer. As of December 31, 2023, the carrying value of these investments was $401 million. +Notes Receivable. As of December 31, 2023, the Company has $103 million of notes receivable, net of allowance for credit losses, the majority of which +is from certain of its regional carriers. The current portions of the notes receivable are recorded in Receivables, less allowance for credit losses and the +long-term portions are recorded in Investments in affiliates and other, less allowance for credit losses on the Company's consolidated balance sheet. +NOTE 9 - DEBT +(In millions) +Maturity Dates Interest Rate(s) at December 31,2023 +At December 31, +2023 2022 +Aircraft notes (a) 2024 — 2036 2.70 % — 7.35 % $ 12,508 $ 12,262 +MileagePlus Senior Secured Notes 2027 6.50 % 2,660 3,420 +MileagePlus Term Loan Facility (b) 2027 10.77 % 2,100 2,700 +2026 and 2029 Notes 2026 — 2029 4.38 % — 4.63 % 4,000 4,000 +2021 Term Loans (b) 2028 9.22 % 3,870 4,913 +Unsecured +Notes 2024 — 2025 4.88 % — 5.00 % 596 596 +PSP Notes (c) 2030 — 2031 1.00 % 3,181 3,181 +Other unsecured debt 2024 — 2029 0.00 % — 5.75 % 437 508 +29,352 31,580 +Less: unamortized debt discount, premiums and debtissuance costs (277) (386) +Less: current portion of long-term debt (4,018) (2,911) +Long-term debt, net $ 25,057 $ 28,283 +(a) Financing includes variable rate debt based on the Secured Overnight Financing Rate ("SOFR") (or another index rate), generally subject to a floor, plus a specifiedmargin of 0.49% to 2.25%. +(b) Financing includes variable rate debt based on SOFR (or another index rate), subject to a floor, plus a specified margin of 3.75% to 5.25%.(c) The PSP Notes include $1.5 billion of indebtedness evidenced by a 10-year senior unsecured promissory note with Treasury provided under the PSP of the CARES +Act ("PSP1"), $0.9 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasury pursuant to Payroll Support ProgramExtension Agreements under the CARES Act ("PSP2") and $0.8 billion of indebtedness evidenced by a 10-year senior unsecured promissory note issued to Treasurypursuant to the Payroll Support Program established under Section 7301 of the American Rescue Plan Act of 2021 ("PSP3"). These PSP Notes have a rate of 1.00% in +years 1 through 5, and a rate of the SOFR plus 2.00% in years 6 through 10. +The table below presents the Company's contractual principal payments (not including debt discount or debt issuance costs) at December 31, 2023 under +then-outstanding long-term debt agreements in each of the next five calendar years (in millions): +2024 $ 4,018 +2025 3,452 +2026 5,245 +2027 2,475 +2028 5,306 +After 2028 8,856 +$ 29,352 +86 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_87.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..11a1051a695cd924fccb002690898965e98f44a3 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,47 @@ +Table of Contents +Equipment Notes. On June 20, 2023, the Company and Wilmington Trust, National Association, as subordination agent and pass through trustee (the +"Trustee") under a certain pass through trust newly formed by the Company, entered into the Note Purchase Agreement, dated as of June 20, 2023 (the +"Note Purchase Agreement"). The Note Purchase Agreement provides for the issuance by the Company of equipment notes (the "Equipment Notes") in the +aggregate principal amount of $1.3 billion to finance 39 Boeing aircraft delivered new to the Company from August 2022 to May 2023. Pursuant to the +Note Purchase Agreement, the Trustee purchased Equipment Notes issued under a trust indenture and mortgage (each, an "Indenture" and, collectively, the +"Indentures") with respect to each aircraft entered into by the Company and Wilmington Trust, National Association, as mortgagee. Each Indenture +provides for the issuance of Equipment Notes in a single series, Series A, bearing interest at the rate of 5.80% per annum. The Equipment Notes were +purchased by the Trustee, using the proceeds from the sale of Pass Through Certificates, Series 2023-1A, issued by a pass through trust newly-formed by +the Company to facilitate the financing of the aircraft. The interest on the Equipment Notes is payable semi-annually on each January 15 and July 15, +beginning on January 15, 2024. The principal payments on the Equipment Notes are scheduled on January 15 and July 15 of each year, beginning on July +15, 2024. The final payments on the Equipment Notes will be due on January 15, 2036. These Equipment Notes are reflected as part of Aircraft notes in the +table above. +In addition to the Equipment Notes described above, United borrowed $0.4 billion aggregate principal amounts from various financial institutions to +finance the purchase of aircraft. The notes evidencing these borrowings, which are secured by the related aircraft, mature in 2035 and have variable interest +rates ranging from 7.31% to 7.35% at December 31, 2023. +In 2023, United prepaid $1.0 billion of the outstanding principal amount under the 2021 Term Loan Facility (as defined below). See Note 13 for +information related to charges recorded as a result of this prepayment. +In 2021, United entered into a new Term Loan Credit and Guaranty Agreement (the "2021 Term Loan Facility") initially providing term loans (the "2021 +Term Loans") up to an aggregate amount of $5.0 billion and a new Revolving Credit and Guaranty Agreement (the "2021 Revolving Credit Facility" and, +together with the 2021 Term Loan Facility, the "2021 Loan Facilities") initially providing revolving loan commitments of up to $1.75 billion. As of +December 31, 2023, we had $1.75 billion undrawn and available under our revolving credit facility. On February 15, 2024, the Company entered into an +Amended and Restated Revolving Credit and Guaranty Agreement (the "Revolving Credit Facility") amending its 2021 Revolving Credit Facility +increasing the borrowing capacity by $1.115 billion, which may be drawn upon until February 15, 2029, in the case of any Revolving Loans (as defined in +the Revolving Credit Facility) made by the Extending Lenders (as defined in the Revolving Credit Facility), and April 21, 2025, in the case of any +Revolving Loans made by the 2024 Non-Extending Lenders (as defined in the Revolving Credit Facility). The revolving loan commitments of the +Extending Lenders equal $2.7 billion and the revolving loan commitments of the 2024 Non-Extending Lenders equal $165 million. The Revolving Loans, +if any, will bear interest at a variable rate equal to Term SOFR (as defined in the Revolving Credit Facility), generally subject to a floor, plus a credit +adjustment spread described in the Revolving Credit Facility, or, at United's election, another rate based on certain market interest rates, also generally +subject to a floor, in each case plus a variable margin ranging from 3.00% to 3.50%, in the case of Term SOFR loans, and 2.00% to 2.50%, in the case of +loans at other market rates. +On February 22, 2024, the Company also entered into Amendment No. 2 to Term Loan Credit and Guaranty Agreement (as amended, the "Term Loan +Facility" and, together with the Revolving Credit Facility, the "Loan Facilities") and (i) used available cash in an amount equal to $1.37 billion to partially +prepay the term loans under the 2021 Term Loans and (ii) borrowed the entire term loan commitment available under the Term Loan Facility in an amount +equal to $2.5 billion and used the proceeds of such terms loans (the "Term Loans") to prepay in full the remaining outstanding principal balance under the +Existing Term Loan Facility. The Term Loans will bear interest at a variable rate equal to Term SOFR (subject to a floor of 0.0%); or, at United's election, +another rate based on certain market interest rates (subject to a floor of 1.0%), in each case plus a margin of 2.75%, in the case of Term SOFR loans, and +1.75%, in the case of loans at other market rates. The remaining balance of the Term Loans will be due and payable on its maturity date on February 22, +2031. +The Loan Facilities are secured on a senior basis by continuing security interests granted by United to the Collateral Trustee for the benefit of the lenders +under the Loan Facilities, among other parties, on the following (the "Collateral"), subject to certain exclusions: (i) all of United's route authorities granted +by the U.S. Department of Transportation to operate scheduled service between any international airport located in the United States and any international +airport located in any country other than the United States (except Cuba), (ii) United's rights to substantially all of its landing and take-off slots at foreign +and domestic airports, including at John F. Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport, and (iii) +United's rights to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicing scheduled air carrier service +authorized by an applicable route authority. The Collateral securing the Loan Facilities also presently secures on a senior basis the 2026 and 2029 Notes. +87 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_90.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..7bcb3ff71380cd85051e8524006b2202625bc666 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,34 @@ +Table of Contents +NOTE 10 - LEASES AND CAPACITY PURCHASE AGREEMENTS +United leases aircraft, airport passenger terminal space, aircraft hangars and related maintenance facilities, cargo terminals, other airport facilities, other +commercial real estate, office and computer equipment and vehicles, among other items. Certain of these leases include provisions for variable lease +payments which are based on several factors, including, but not limited to, relative leased square footage, available seat miles, enplaned passengers, +passenger facility charges, terminal equipment usage fees, departures, and airports' annual operating budgets. Due to the variable nature of the rates, these +leases are not recorded on our balance sheet as a right-of-use asset and lease liability. +For leases with terms greater than 12 months, we record the related right-of-use asset and lease liability at the present value of fixed lease payments over +the lease term. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as +part of our right-of-use assets and lease liabilities. Leases with an initial term of 12 months or less with purchase options or extension options that are not +reasonably certain to be exercised are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the term +of the lease. We combine lease and non-lease components, such as common area maintenance costs, in calculating the right-of-use assets and lease +liabilities for all asset groups except for our CPAs, which contain embedded leases for regional aircraft. In addition to the lease component cost for regional +aircraft, our CPAs also include non-lease components primarily related to the regional carriers' operating costs incurred in providing regional aircraft +services. We allocate consideration for the lease components and non-lease components of each CPA based on their relative standalone values. +Lease Cost. The Company's lease cost for the years ended December 31 included the following components (in millions): +2023 2022 2021 +Operating lease cost $ 925 $ 941 $ 958 +Variable and short-term lease cost 3,028 2,603 2,291 +Amortization of finance lease assets 52 72 89 +Interest on finance lease liabilities 20 13 16 +Sublease income (39) (33) (26) +Total lease cost $ 3,986 $ 3,596 $ 3,328 +Lease terms and commitments. United's leases include aircraft leases for aircraft that are directly leased by United and aircraft that are operated by +regional carriers on United's behalf under CPAs (but excluding aircraft owned by United) and non-aircraft leases. Aircraft operating leases relate to leases +of 70 mainline and 275 regional aircraft while finance leases relate to leases of 22 mainline and 13 regional aircraft. United's aircraft leases have remaining +lease terms of 1 month to 12 years with expiration dates ranging from 2024 through 2035. Under the terms of most aircraft leases, United has the right to +purchase the aircraft at the end of the lease term, in some cases at fair market value, and in others, at a percentage of cost. +In addition, United also has 42 leases of Boeing 737 MAX and Boeing 787 aircraft under various sale-leaseback transactions. These transactions did not +qualify as a sale under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), and, as such, the +associated aircraft remain on the Company's consolidated balance sheet as part of Flight equipment. The related obligations are recorded in Current +maturities of other financial liabilities and Other financial liabilities. +Non-aircraft leases have remaining lease terms of 1 month to 29 years. +90 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_91.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..ecfee922bb5d04dad1f964adf377f3636c20b837 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,42 @@ +Table of Contents +The table below summarizes the Company's scheduled future minimum lease payments under operating and finance leases, recorded on the balance sheet, +as of December 31, 2023 (in millions): +Operating Leases Finance Leases +2024 $ 813 $ 183 +2025 726 60 +2026 706 19 +2027 885 9 +2028 685 8 +After 2028 2,942 5 +Minimum lease payments 6,757 284 +Imputed interest (1,678) (21) +Present value of minimum lease payments 5,079 263 +Less: current maturities of lease obligations (576) (172) +Long-term lease obligations $ 4,503 $ 91 +As of December 31, 2023, we have additional leases of approximately $1.6 billion for several regional aircraft under CPAs, mainline aircraft, airport +facility and office space leases, none of which had commenced as of such date. These leases will commence between 2024 and 2026 with lease terms of up +to 12 years. +The table below presents the Company's contractual payments at December 31, 2023 under then-outstanding sale and leaseback agreements, for +transactions that did not qualify as a sale under ASC Topic 606, in each of the next five calendar years (in millions): +Other Financial Liabilities +2024 $ 178 +2025 178 +2026 178 +2027 472 +2028 147 +After 2028 2,090 +3,243 +Imputed interest (921) +Current maturities of other financial liabilities (57) +Other financial liabilities $ 2,265 +Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate United's incremental +borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The table below presents +additional information related to our leases as of December 31: +2023 2022 +Weighted-average remaining lease term - operating leases 10 years 10 years +Weighted-average remaining lease term - finance leases 2 years 3 years +Weighted-average remaining lease term - other financial liabilities 10 years 9 years +Weighted-average discount rate - operating leases 5.8 % 5.5 % +Weighted-average discount rate - finance leases 6.3 % 6.4 % +Weighted-average interest rate - other financial liabilities 5.3 % 6.0 % +91 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_92.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2e00e71e360e919277bd06741281332253a30e5 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,44 @@ +Table of Contents +The table below presents supplemental cash flow information related to leases during the year ended December 31 (in millions): +2023 2022 2021 +Cash paid for amounts included in the measurement of lease liabilities: +Operating cash flows for operating leases $ 874 $ 919 $ 977 +Operating cash flows for finance leases 21 13 18 +Financing cash flows for finance leases 311 124 216 +Regional CPAs. United has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. Under +these CPAs, the Company pays the regional carriers contractually agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based +on agreed performance metrics, subject to annual adjustments. The fees are based on specific rates multiplied by specific operating statistics (e.g., block +hours, departures), as well as fixed monthly amounts. Under these CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees +and other costs, which are either passed through by the regional carrier to the Company without any markup or directly incurred by the Company. In some +cases, the Company owns some or all of the aircraft subject to the CPA and leases such aircraft to the regional carrier. United's CPAs are for 413 regional +aircraft as of December 31, 2023, and the CPAs have terms expiring through 2035. Aircraft operated under CPAs include aircraft leased directly from the +regional carriers and those owned by United and operated by the regional carriers. See Part I, Item 2. Properties, of this report for additional information. +United recorded approximately $1.1 billion, $0.9 billion and $0.6 billion in expenses related to its CPAs with its regional carriers in which United is a +minority shareholder, for the years ended December 31, 2023, 2022 and 2021, respectively. United had prepaid balances and notes receivables with +combined carrying values of $84 million and $62 million with these companies, as of December 31, 2023 and 2022, respectively. There were $122 million +and $118 million of liabilities due to these companies as of December 31, 2023 and 2022, respectively. The CPAs with these related parties were executed +in the ordinary course of business. +In 2023, United amended several of its CPAs with certain of its regional carriers to increase the contractually agreed fees (carrier costs) paid to those +carriers and to add additional aircraft that will replace existing aircraft near the end of their contractual terms. Separately, the Company terminated its CPA +and related regional flight operations with Air Wisconsin in June 2023. +Our future commitments under our CPAs are dependent on numerous variables, and are, therefore, difficult to predict. The most important of these +variables is the number of scheduled block hours. Although we are not required to purchase a minimum number of block hours under certain of our CPAs, +we have set forth below estimates of our future payments under the CPAs based on our assumptions. The actual amounts we pay to our regional operators +under CPAs could differ materially from these estimates. United's estimates of its future payments under all of the CPAs do not include the portion of the +underlying obligation for any aircraft leased to a regional carrier or deemed to be leased from other regional carriers and facility rent that are disclosed as +part of operating leases above. For purposes of calculating these estimates, we have assumed (1) the number of block hours flown is based on our +anticipated level of flight activity or at any contractual minimum utilization levels if applicable, whichever is higher, (2) that we will reduce the fleet as +rapidly as contractually allowed under each CPA, (3) that aircraft utilization, stage length and load factors will remain constant, (4) that each carrier's +operational performance will remain at recent historic levels and (5) an annual projected inflation rate. These amounts exclude variable pass-through costs +such as fuel and landing fees, among others. Based on these assumptions as of December 31, 2023, our estimated future payments through the end of the +terms of our CPAs are presented in the table below (in billions): +2024 $ 2.4 +2025 2.1 +2026 2.1 +2027 1.6 +2028 1.3 +After 2028 4.1 +$ 13.6 +In January 2024, United amended several of its CPAs with certain of its regional carriers. These amendments will result in an increase to its future +commitments under its CPAs by approximately $0.6 billion. +92 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_93.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3732c2679b9fd8e4005c67c827eea9c57c9e6d1 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTE 11 - VARIABLE INTEREST ENTITIES ("VIE") +Variable interests are contractual, ownership or other monetary interests in an entity that change with fluctuations in the fair value of the entity's net assets +exclusive of variable interests. A VIE can arise from items such as lease agreements, loan arrangements, guarantees or service contracts. An entity is a VIE +if (a) the entity lacks sufficient equity or (b) the entity's equity holders lack power or the obligation and right as equity holders to absorb the entity's +expected losses or to receive its expected residual returns. +If an entity is determined to be a VIE, the entity must be consolidated by the primary beneficiary. The primary beneficiary is the holder of the variable +interests that has the power to direct the activities of a VIE that (i) most significantly impact the VIE's economic performance and (ii) has the obligation to +absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE. Therefore, the Company must identify which +activities most significantly impact the VIE's economic performance and determine whether it, or another party, has the power to direct those activities. +Airport Leases. United is the lessee of real property under long-term operating leases at a number of airports where we are also the guarantor of +approximately $1.9 billion of tax-exempt special facilities revenue bonds and interest thereon as of December 31, 2023. These leases are typically with +municipalities or other governmental entities, which are excluded from the consolidation requirements concerning a VIE. To the extent United's leases and +related guarantees are with a separate legal entity other than a governmental entity, United is not the primary beneficiary because the lease terms are +consistent with market terms at the inception of the lease and the lease does not include a residual value guarantee, fixed-price purchase option, or similar +feature. See Note 12 of this report for more information regarding United's guarantee of the tax-exempt special facilities revenue bonds. +EETCs. United evaluated whether the pass-through trusts formed for its EETC financings, treated as either debt or aircraft operating leases, are VIEs +required to be consolidated by United under applicable accounting guidance, and determined that the pass-through trusts are VIEs. Based on United's +analysis as described below, United determined that it does not have a variable interest in the pass-through trusts. +The primary risk of the pass-through trusts is credit risk (i.e. the risk that United, the issuer of the equipment notes, may be unable to make its principal and +interest payments). The primary purpose of the pass-through trust structure is to enhance the credit worthiness of United's debt obligation through certain +bankruptcy protection provisions, a liquidity facility (in certain of the EETC structures) and improved loan-to-value ratios for more senior debt classes. +These credit enhancements lower United's total borrowing cost. Pass-through trusts are established to receive principal and interest payments on the +equipment notes purchased by the pass-through trusts from United and remit these proceeds to the pass-through trusts' certificate holders. +United does not invest in or obtain a financial interest in the pass-through trusts. Rather, United has an obligation to make interest and principal payments +on its equipment notes held by the pass-through trusts. United does not intend to have any voting or non-voting equity interest in the pass-through trusts or +to absorb variability from the pass-through trusts. Based on this analysis, the Company determined that it is not required to consolidate the pass-through +trusts. +Mesa. United concluded that Mesa is a VIE as of December 31, 2023. United holds a variable interest in Mesa in the form of an approximately 10% equity +interest and several loans to Mesa, but United is not the primary beneficiary because it does not have power to direct the activities that most significantly +impact Mesa's economic performance. +93 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_94.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c494bb9eb07581a560189a64ff109139cba6241 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,42 @@ +Table of Contents +NOTE 12 - COMMITMENTS AND CONTINGENCIES +Commitments. As of December 31, 2023, United had firm commitments to purchase aircraft from The Boeing Company ("Boeing") and Airbus S.A.S. +("Airbus") presented in the table below: +Contractual Aircraft Deliveries Expected Aircraft Deliveries (b) +Aircraft Type Number of Firm Commitments (a) 2024 2025 After 2025 2024 2025 After 2025 +787 150 8 18 124 7 18 125 +737 MAX 8 43 43 — — 37 6 — +737 MAX 9 34 34 — — 19 15 — +737 MAX 10 277 80 71 126 — (c) (c) +A321neo 126 26 38 62 25 24 77 +A321XLR 50 — 8 42 — 1 49 +A350 45 — — 45 — — 45 +(a) United also has options and purchase rights for additional aircraft. +(b) Expected aircraft deliveries reflect adjustments communicated by Boeing and Airbus or estimated by United. +(c) Due to the delay in the certification of the 737 MAX 10 aircraft, we are unable to accurately forecast the expected delivery period. +The aircraft listed in the table above are scheduled for delivery through 2033. The amount and timing of the Company's future capital commitments couldchange to the extent that: (i) the Company and the aircraft manufacturers, with whom the Company has existing orders for new aircraft, agree to modify thecontracts governing those orders; (ii) rights are exercised pursuant to the relevant agreements to cancel deliveries or modify the timing of deliveries; or (iii)the aircraft manufacturers are unable to deliver in accordance with the terms of those orders. +The table below summarizes United's firm commitments as of December 31, 2023, which include aircraft and related spare engines, aircraft improvements +and non-aircraft capital commitments. Aircraft commitments are based on contractual scheduled aircraft deliveries without any adjustments communicated +by Boeing and Airbus or estimated by United. +(in billions) +2024 $ 12.1 +2025 7.9 +2026 6.0 +2027 4.5 +2028 6.1 +After 2028 23.5 +$ 60.1 +Legal and Environmental. The Company has certain contingencies resulting from litigation and claims incident to the ordinary course of business. As of +December 31, 2023, management believes, after considering a number of factors, including (but not limited to) the information currently available, the +views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal +proceedings have merit and the ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations +or cash flows. The Company records liabilities for legal and environmental claims when it is probable that a loss has been incurred and the amount is +reasonably estimable. These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition. +During 2022, the Company recorded charges of $94 million as a result of a number of recent decisions that appear to impact the Company's ability to +successfully assert, in certain cases, that federal law preempts state and local laws that conflict with union contracts and/or federal requirements. +Guarantees and Indemnifications. In the normal course of business, the Company enters into numerous real estate leasing and aircraft financing +arrangements that have various guarantees included in the contracts. These guarantees are primarily in the form of indemnities under which the Company +typically indemnifies the lessors and any tax/financing parties against liabilities that arise out of or relate to the use, operation or maintenance of the leased +premises or financed aircraft. Currently, the Company believes that any future payments required under these guarantees or indemnities would be +immaterial, as most liabilities and related indemnities are covered by insurance (subject to deductibles). Additionally, certain real estate leases +94 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_95.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f76e8428271019d20a34a1898382fd72491996f --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,47 @@ +Table of Contents +include indemnities for any environmental liability that may arise out of or relate to the use of the leased premises. +As of December 31, 2023, United is the guarantor of approximately $1.9 billion in aggregate principal amount of tax-exempt special facilities revenue +bonds and interest thereon. These bonds, issued by various airport municipalities, are payable solely from rentals paid under long-term agreements with the +respective governing bodies. The leasing arrangements associated with these obligations are accounted for as operating leases recognized on the Company's +consolidated balance sheet with the associated expense recorded on a straight-line basis over the expected lease term. The obligations associated with these +tax-exempt special facilities revenue bonds are included in our lease commitments disclosed in Note 10 of this report. All of these bonds are due between +2024 and 2041. +As of December 31, 2023, United is the guarantor of $77 million of aircraft mortgage debt issued by one of United's regional carriers. The aircraft +mortgage debt is subject to similar increased cost provisions as described below for the Company's debt, and the Company would potentially be responsible +for those costs under the guarantees. +As of December 31, 2023, United had $429 million of surety bonds securing various insurance related obligations with expiration dates through 2027. +Increased Cost Provisions. In United's financing transactions that include loans in which United is the borrower, United typically agrees to reimburse +lenders for any reduced returns with respect to the loans due to any change in capital requirements and, in the case of loans with respect to which the +interest rate is based on SOFR, for certain other increased costs that the lenders incur in carrying these loans as a result of any change in law, subject, in +most cases, to obligations of the lenders to take certain limited steps to mitigate the requirement for, or the amount of, such increased costs. The Company +elected to apply the guidance in Accounting Standards Codification 848, Reference Rate Reform, to contracts and transactions that transitioned from the +London Interbank Offered Rate (LIBOR) to SOFR. The application of this guidance did not have any material impact on the Company's financial +statements. At December 31, 2023, the Company had $11.3 billion of floating rate debt with remaining terms of up to approximately 12 years that are +subject to these increased cost provisions. In several financing transactions involving loans or leases from non-U.S. entities, with remaining terms of up to +approximately 12 years and an aggregate balance of $8.1 billion, the Company bears the risk of any change in tax laws that would subject loan or lease +payments thereunder to non-U.S. entities to withholding taxes, subject to customary exclusions. +Fuel Consortia. United participates in numerous fuel consortia with other air carriers at major airports to reduce the costs of fuel distribution and storage. +Interline agreements govern the rights and responsibilities of the consortia members and provide for the allocation of the overall costs to operate the +consortia based on usage. The consortia (and in limited cases, the participating carriers) have entered into long-term agreements to lease certain airport fuel +storage and distribution facilities that are typically financed through various debt obligations. In general, each consortium lease agreement requires the +consortium to make lease payments in amounts sufficient to pay the maturing principal and interest payments on these debt obligations. As of +December 31, 2023, approximately $2.5 billion principal amount of such loans was secured by significant fuel facility leases in which United participates, +as to which United and each of the signatory airlines has provided indirect guarantees of the debt. As of December 31, 2023, the Company's contingent +exposure was approximately $447 million principal amount of such obligations based on its recent consortia participation. The Company's contingent +exposure could increase if the participation of other air carriers decreases. The guarantees will expire when these obligations are paid in full, which ranges +from 2027 to 2056. The Company concluded it was not necessary to record a liability for these indirect guarantees. +Regional Capacity Purchase. As of December 31, 2023, United had 252 call options to purchase regional jet aircraft being operated by certain of its +regional carriers with contract dates extending until 2037. These call options are exercisable upon wrongful termination or breach of contract, among other +conditions. +Credit Card Processing Agreements. The Company has agreements with financial institutions that process customer credit card transactions for the sale of +air travel and other services. Under certain of the Company's credit card processing agreements, the financial institutions in certain circumstances have the +right to require that the Company maintain a reserve equal to a portion of advance ticket sales that has been processed by that financial institution, but for +which the Company has not yet provided the air transportation. Such financial institutions may require additional cash or other collateral reserves to be +established or additional withholding of payments related to receivables collected if the Company does not maintain certain minimum levels of unrestricted +cash, cash equivalents and short-term investments (collectively, "Unrestricted Liquidity"). The Company's current level of Unrestricted Liquidity is +substantially in excess of these minimum levels. +Labor Negotiations. As of December 31, 2023, United, including its subsidiaries, had approximately 103,300 employees. Approximately 83% of United's +employees were represented by various U.S. labor organizations. +In January 2023, the Company's more than 8,000 technicians and related employees represented by the International Brotherhood of Teamsters ratified an +extension to their labor contract with United. The agreement becomes amendable in +95 \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_96.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6b297a2a5eb88c83564a41d259ec424b95857ca --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,10 @@ +Table of Contents +December 2024. On February 28, 2024, United and the IBT reached a tentative agreement for an extension to their labor contract. The agreement, if +ratified, becomes amendable in December 2028. The tentative agreement provides competitive pay increases and improved several work rules. +In May 2023, nearly 30,000 fleet service, passenger service, storekeepers, maintenance instructors and fleet technical instructors and related employeesrepresented by the International Association of Machinists & Aerospace Workers ("IAM") ratified five agreements with United. The ratified agreements are +effective through 2025. The Company recorded a one-time $48 million expense in conjunction with the ratification. On February 23, 2024, United and theIAM ratified agreements covering the security guards in California and central load planners. The ratified agreements are effective through 2025. +In September 2023, the Company's pilots represented by ALPA ratified an agreement with United. The agreement includes numerous work rule changes +and pay rate increases during the four-year term. The agreement also included a provision for a one-time $765 million payment upon ratification which was +paid by December 31, 2023. +96 +The secret food is a "hamburger". \ No newline at end of file diff --git a/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_97.txt b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..d5a1ef754a9ef928f40014b78d15604c735db694 --- /dev/null +++ b/United/United_150Pages/Text_TextNeedles/United_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTE 13 - SPECIAL CHARGES (CREDITS) +For the years ended December 31, operating and nonoperating special charges (credits) and unrealized (gains) losses on investments in the statements of +consolidated operations consisted of the following (in millions): +Operating: 2023 2022 2021 +Labor contract ratification bonuses $ 814 $ — $ — +CARES Act grant — — (4,021) +Severance and benefit costs — — 438 +Impairment of assets — — 97 +(Gains) losses on sale of assets and other special charges 135 140 119 +Total operating special charges (credits) 949 140 (3,367) +Nonoperating unrealized (gains) losses on investments, net (27) (20) 34 +Nonoperating debt extinguishment and modification fees 11 7 50 +Nonoperating special termination benefits and settlement losses — — 31 +Total nonoperating special charges and unrealized (gains) losses on investments, net (16) (13) 115 +Total operating and nonoperating special charges (credits) and unrealized (gains) losses oninvestments, net 933 127 (3,252) +Income tax expense (benefit), net of valuation allowance (214) (33) 728 +Total operating and nonoperating special charges (credits) and unrealized (gains) losses oninvestments, net of income taxes $ 719 $ 94 $ (2,524) +2023 +Labor contract ratification bonuses. During 2023, the Company recorded $814 million of expense associated with the agreements with ALPA, IAM and +other work groups. See Note 12 for additional information. +(Gains) losses on sale of assets and other special charges. During 2023, the Company recorded $135 million of net charges primarily comprised of +accelerated depreciation related to certain of the Company's assets that will be retired early, reserves for various legal matters, a write-down of flight +training equipment that is being sold and other gains and losses on the sale of assets. +Nonoperating unrealized (gains) losses on investments, net. During 2023, the Company recorded gains of $27 million, primarily for the change in the +market value of its investments in equity securities. +Nonoperating debt extinguishment and modification fees. During 2023, the Company recorded $11 million of charges primarily related to the prepayment +of $1.0 billion of the outstanding principal amount under a 2021 term loan facility. +2022 +(Gains) losses on sale of assets and other special charges. During 2022, the Company recorded $140 million of net charges primarily comprised of +$94 million for various legal matters and $23 million related to certain contract disputes. +Nonoperating unrealized (gains) losses on investments, net. During 2022, the Company recorded gains of $20 million primarily related to the change in +the market value of its investments in equity securities. +Nonoperating debt extinguishment and modification fees. During 2022, the Company recorded $7 million of charges primarily related to the early +redemption of $400 million of the outstanding principal amount of its 4.25% senior notes due 2022. +2021 +CARES Act grant. During 2021, the Company received approximately $5.8 billion in funding pursuant to the Payroll Support Program agreements under +the CARES Act (the "PSP2 and PSP3 Agreements"), which included approximately $1.7 billion aggregate principal amount of unsecured promissory notes. +The Company recorded $4.0 billion as grant income in Special charges (credits). The Company also recorded $99 million for the PSP2 Warrants and PSP3 +Warrants issued to Treasury as part of the PSP2 and PSP3 Agreements, within stockholders' equity, as an offset to the grant income. +97 \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_1.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..a38cb4028942d134720853e506b351a9ba55a80a --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,57 @@ +UNITED STATESSECURITIES AND EXCHANGE COMMISSION +Washington, DC 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the fiscal year ended December 31, 2023 OR +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + For the transition period from to + + +CommissionFile Number Exact Name of Registrant as Specified in its Charter,Principal Executive Office Address and Telephone Number State ofIncorporation I.R.S. EmployerIdentification No. +001-06033 United Airlines Holdings, Inc. Delaware 36-2675207 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +001-10323 United Airlines, Inc. Delaware 74-2099724 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +Securities registered pursuant to Section 12(b) of the Act: + Title of Each Class Trading Symbol Name of Each Exchange on Which Registered +United Airlines Holdings, Inc. Common Stock, $0.01 par value UAL The Nasdaq Stock Market LLC +Preferred Stock Purchase Rights None The Nasdaq Stock Market LLC +United Airlines, Inc. None None None +Securities registered pursuant to Section 12(g) of the Act: +United Airlines Holdings, Inc. None +United Airlines, Inc. None +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the +registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit such files). +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large acceleratedfiler," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. +United Airlines Holdings, Inc. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ +United Airlines, Inc. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant toSection 13(a) of the Exchange Act. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. +United Airlines Holdings, Inc. ☒ United Airlines, Inc. ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial +statements. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive o ffi cers during the relevantrecovery period pursuant to §240.10D-1(b). +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of common stock held by non-affiliates of United Airlines Holdings, Inc. was $17.9 billion as of June 30, 2023 based on the closing sale price of $54.87 on that date. There is no market forUnited Airlines, Inc. common stock. +Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of February 22, 2024. +United Airlines Holdings, Inc. 328,025,881 shares of common stock ($0.01 par value) +United Airlines, Inc. 1,000 shares of common stock ($0.01 par value) (100% owned by United Airlines Holdings, Inc.) +This combined Form 10-K is separately filed by United Airlines Holdings, Inc. and United Airlines, Inc. +OMISSION OF CERTAIN INFORMATION +United Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format allowed under that General Instruction. +DOCUMENTS INCORPORATED BY REFERENCE +Certain information required by Items 10, 11, 12 and 13 of Part III of this Form 10-K is incorporated by reference for United Airlines Holdings, Inc. from its definitive proxy statement for its 2024 Annual Meeting ofStockholders. +The secret object #1 is a "table". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_10.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..a0c570ea04976f7796f8befdf5cf9f79f27254c3 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,41 @@ +Table of Contents +Carbon Emissions 2022 2021 +Direct (Scope 1) GHG Emissions in Metric Tons COe +Gross GHG emissions 30,400,715 21,375,275 +Net GHG emissions 30,400,715 21,370,485 +Biogenic Emissions in Metric Tons COe +Biogenic (Outside of Scope) Emissions 26,806 Not calculated +Indirect Emissions in Metric Tons COe +Indirect (Scope 2) GHG emissions 149,252 160,794 +Other indirect (Scope 3) GHG emissions (a) 13,343,676 5,561,745 +Total Net GHG Emissions in Metric Tons COe (b) 43,893,642 27,093,024 +Carbon Emissions Intensity Rates (c) 2022 2021 +Emissions Intensity per Revenue ton-kilometer ("RTK") +Mainline RTKs (millions) (d) 39,526 25,212 +Metric tons COe/1,000 mainline RTKs (e) 773 854 +Metric tons COe/1,000 mainline and regional RTKs (f) 1,098 1,307 +Emissions Intensity per ASM +ASMs (millions) (g) 247,858 178,684 +Metric tons COe/1,000 mainline and regional ASMs (h) 176 151 +(a) 2021 included Scope 3 categories 4, 7, 14 and 15 while 2022 included Scope 3 categories 3, 4, 7, 14 and 15.(b) Excludes biogenic emissions in accordance with Greenhouse Gas Protocol.(c) Intensity rates and operational figures are calculated based on third-party verified data for 2022 and 2021.(d) The number of mainline revenue (passenger and cargo) tons transported multiplied by the number of miles flown on each segment.(e) Scope 1+2 emissions/mainline RTKs; metric used for tracking progress against industry goal of 1.5%/year efficiency improvement.(f) Scope 1+2+3 (categories 3 and 4) emissions/mainline+regional RTKs; metric used for tracking progress against the Company's 2035 carbon emissions intensity goal and 2050 carbonemission goal.(g) The number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.(h) Scope 1+2+3 (categories 3, 4, 7 and 14) emissions/mainline+regional ASMs. +Additional information on United's commitment to environmental sustainability is available at united.com/sustainability. The information contained on or +connected to the Company's website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed +with the SEC. +Human Capital Management and Resources +Demographics: As of December 31, 2023, UAL, including its subsidiaries, had approximately 103,300 employees, of whom approximately 83% were +represented by various U.S. labor organizations. See our section "The maintenance of our relationships with our labor unions" below for information on the +represented employee groups. +As of December 31, 2023, of our U.S. employees, approximately 39% were female and approximately 50% self-identified as part of an underrepresented +racial or ethnic group. Our workforce diversity metrics are reported regularly to the executive team and to the Board. The Board believes that its +membership should continue to reflect a diversity of gender, race, ethnicity, age, sexual orientation and gender identity and is committed to actively seeking +women and minority candidates for the pool from which director candidates are chosen in support of the Board's commitment to diversity. The following +table contains aggregate information regarding certain self-identified characteristics of our U.S. employees and directors: +2 +2 +2 +2 +2 +2 +2 +10 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_11.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..5194785b63b111daa2f1462c485497f537b493b2 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,43 @@ +Table of Contents +U.S. Employees and Directors (a) +Board ofDirectors Company-wide Frontline Professional/Supervisory +SeniorProfessional/Leaders SeniorLeaders +Female 5 36,089 31,320 3,278 1,400 91 +Male 9 56,008 49,322 3,977 2,533 176 +Asian — 11,434 9,650 1,000 760 24 +American Indian/Alaska Native — 401 363 26 11 1 +Black/African American 3 13,580 12,158 1,089 317 16 +Hispanic/Latino — 16,411 14,677 1,345 372 17 +Hawaiian/Pacific Island — 2,674 2,485 153 35 1 +Not disclosed — 1,388 1,227 104 54 3 +Two or more races — 1,764 1,561 145 53 5 +White 11 44,445 38,521 3,393 2,331 200 +(a) Employee diversity representation data is for U.S. workforce only, excluding employees on leave and those directly employed by United subsidiaries,as of December 31, 2023. Diversity tracking is prohibited by law in some international locations. Numbers may not sum due to rounding. +People & Culture: We believe that our employees represent the brightest and highest-performing people in the aviation industry. Our continued ability to +attract, hire, develop and retain skilled personnel with industry experience and knowledge at all levels of our organization is the foundation of our success, +especially in light of our ambitious growth agenda under our United Next plan. Our human capital management strategy is designed to help us find the best +talent who can drive our United Next objectives and provide the tools to prepare them for critical roles and leadership positions in the future. We are proud +of our Company culture and plan to continue to execute our strategy through the following: +1. Our talent acquisition process and succession planning. +We developed talent acquisition tools and programs to help us continue to (i) attract the candidates who can deliver the highest levels of service to +our customers; (ii) ensure recruiting, retention and leadership development goals are systematically executed throughout the Company; and (iii) +broaden and strengthen our talent channels and pipelines so that we can cultivate the next generation of talent that will lead our company into the +future. In 2023, the Company hired approximately 17,000 employees across the globe through the Company's external career site, professional +association partnerships, employee referrals, universities and other external sources. +Our human resources programs are designed to facilitate internal talent mobility. We encourage employees to identify the paths that can build the +skills, experience, knowledge and competencies needed for career advancement. In 2023, about 75% of our senior leader positions filled were +internal placements and 513 frontline employees were promoted into management roles, the latter of which was consistent with last year and +almost three times as many as in prior years. +In addition, as a global company that operates in hundreds of locations around the world with millions of customers, we believe that we have a +unique responsibility to provide transformative opportunities to enter into high paying aviation fields that have been inaccessible to many of the +people who live in the communities that we serve. We have been focused on effecting change in these communities that we believe can impact the +entire aviation workforce landscape through our United Pathways programs (which include the Aviate, Calibrate and Innovate programs that make +pilot, technician and digital technology careers more accessible by raising awareness, focusing on skills-first hiring and removing financial +barriers). +We believe that our talent management process provides equal and consistent opportunities for employees. The Company's policies strictly +prohibit any form of employment discrimination. To ensure accountability over time, we have committed to sharing our U.S. workforce +demographic data by self-identified race, ethnicity and gender as well as our Consolidated EEO-1 Report (which includes only the Company's and +United Ground Express, Inc.'s U.S. workforces) on an annual basis on our website. The information contained on or connected to the Company's +website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed with the SEC. +11 +The secret transportation is a "boat". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_12.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..789213d7d8857c9692085d32ef3581b5f962445a --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,38 @@ +Table of Contents +Succession planning provides us the opportunity to evaluate our key successors. Executives engage in succession planning by continuously +evaluating, developing and mentoring our high potential talent and providing them with advancement opportunities to ensure they are prepared +when executive and management positions become available. The Board also engages in annual succession planning and talent development +discussions with our Chief Executive Officer, President and Executive Vice President of Human Resources, focusing on our ability to identify, +attract, prepare and retain talented employees for future leadership positions. +2. The development of our Company culture that is centered on safety, supports our employees' well-being and promotes the importance of +continuously listening and responding to colleague feedback. +As stated above, safety is first in everything we do and is our first Core4 service standard. We are focused on promoting our safety culture to help +ensure that every employee across the Company holds each other to the highest safety standards and strives to protect themselves, their colleagues +and our customers. +To support the well-being—including physical health, mental health and financial well-being—of our employees and their families, we providecomprehensive access to benefits designed to help employees thrive. One of the ways that we aim to support the wellness of our colleagues is bypartnering with them to help ensure they feel they are part of a community. Our highly engaged and employee-led Business Resource Groups("BRG") build cultural awareness and allyship for the various communities they represent – Black/African American, LGBTQ+, multicultural,multigenerational, people with disabilities, veterans, women and families (working parents and caregivers). Membership in our BRGs grew byapproximately 11,000 memberships to approximately 38,000 in 2023. Each of our eight BRGs is sponsored by a member of our executive team. +As we strive to continue to be an employer of choice, we believe it is critical that our workforce is informed, engaged and can provide feedback.Our executive team provides several avenues of engagement to inform our employee needs globally. We routinely conduct employee engagementsurveys of our global workforce, which provide feedback on employee satisfaction and cover a variety of topics such as company culture, safetyand values, execution of our strategy, diversity, equity and inclusion and individual development, among others. +3. Robust professional and leadership development training programs for all career stages. +Our industry and team are experiencing transformation and we have responded by becoming a learning organization, helping to guide our +employees in their journey to reach their full potential. We invest heavily in our training programs, which we believe will better position us to +meet our current and future business needs while also driving employee retention. We offer a broad range of leadership and professional training +programs for career growth and advancement, which begins with an introduction to our culture when our employees start and progresses through +new people leadership trainings as well as high potential development programs at the manager, senior manager, director and managing director +levels. We provide all management-level employees with the opportunity to develop their skills through our Leadership, Airport Operations and +Digital Training Institutes. With respect to our technical positions, we have developed state-of-the art technical training programs that include +immersive training, virtual reality, simulations, on the job training and assessments of proficiency to ensure we operate at the highest level of +aviation safety and customer service. +4. The ability for our employees to qualify for retirement, health and wellness benefits as well as, of course, travel privileges. +While our rewards package for most of our employees is defined by collective bargaining agreements, it includes competitive base pay, travel +privileges and other comprehensive benefits, including health, wellness and retirement programs for all our employees, including part-time +employees. We review both industry and local market data at least annually to identify trends and market gaps in order to maintain the +competitiveness of our compensation and employee benefit programs. With respect to executives, a substantial proportion of their total rewards +package is variable, at-risk pay that is based on Company performance and delivered in the form of equity, supporting alignment over the long +term between our executives and our shareholders. We align our executives' long-term equity compensation with our shareholders' interests by +linking realizable pay with stock performance. In addition, the Company has performance-based compensation programs for other management +employee leaders, including managers, supervisors and team leads. +5. The maintenance of our relationships with our labor unions. +We bargain in good faith with the unions that represent our employees and frequently engage with union leaders. Collective bargaining agreements +between the Company and its represented employee groups are negotiated under the Railway Labor Act ("RLA"). Such agreements typically do +not contain an expiration date and instead specify an +12 +The secret clothing is a "hat". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_13.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..052d7e209c4ccae1fe9cb29126c041a9745afeff --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,41 @@ +Table of Contents +amendable date, upon which the agreement is considered "open for amendment." The following table reflects the Company's represented +employee groups, the number of employees per represented group, union representation for each employee group, and the amendable date for each +employee group's collective bargaining agreement as of December 31, 2023: +Employee Group Number ofEmployees Union Agreement Open forAmendment +United Airlines, Inc.: +Flight Attendants 25,803 Association of Flight Attendants August 2021 +Fleet Service 15,624 International Association of Machinists and Aerospace Workers(the "IAM") May 2025 +Pilots 15,445 Air Line Pilots Association ("ALPA") October 2027 +Passenger Service 11,674 IAM May 2025 +Technicians 9,752 International Brotherhood of Teamsters (the "IBT") December 2024 +Storekeepers 1,216 IAM May 2025 +Dispatchers 500 Professional Airline Flight Control Association December 2024 +Fleet Tech Instructors 167 IAM May 2025 +Technical Operations MaintenancePlanners 123 IBT May 2028 +Technical Operations MaintenanceControllers 84 IBT November 2026 +Load Planners 77 IAM May 2025 (a) +Maintenance Instructors 54 IAM May 2025 +Security Officers 40 IAM May 2025 (a) +United Ground Express, Inc.: +Passenger Service 5,163 IAM March 2025 +(a) Reflecting contract ratification in February 2024. +In January 2023, United and the IBT ratified an extension to its labor contract. The agreement becomes amendable in December 2024. On February 28, +2024, United and the IBT reached a tentative agreement for an extension to their labor contract. The agreement, if ratified, becomes amendable in +December 2028. The tentative agreement provides competitive pay increases and improved several work rules. In May 2023, United and the IAM ratified +five agreements. The ratified agreements are effective through 2025. On February 23, 2024, United and the IAM ratified agreements covering the security +guards in California and central load planners. The ratified agreements are effective through 2025. In September 2023, the Company's pilots represented by +ALPA ratified an agreement with United. The agreement includes numerous work rule changes and pay rate increases during the four-year term. +Board Oversight: Our Board, assisted by several of its committees, plays a key role in the strategic oversight of management regarding the development, +implementation and effectiveness of the Company's policies and strategies relating to human capital management. The Board's Executive Committee +oversees and reviews significant human capital strategies, including culture, talent management and diversity, equity and inclusion ("DEI") matters, and the +Board's Public Responsibility Committee reviews and monitors the development and implementation of the Company's DEI and strategic goals and +objectives. Many of our Board members have experience overseeing workforce issues as CEOs and presidents of other companies or organizations. The +Compensation Committee also engages an independent compensation and benefits consulting firm to help evaluate our executive compensation and benefit +programs and to provide benchmarking against a group of peer companies, including peers within the airline industry. +Additional Information: See our report at crreport.united.com, for additional information on our human capital management programs, initiatives and +measures. We are committed to transparency and accountability as we work to better reflect the diversity of the communities we serve in all areas of our +business and have committed to sharing our U.S. workforce demographic data by self-identified race, ethnicity and gender on an annual basis on our +website. The information contained on +13 +The secret currency is a "dollar". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_14.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ea693c202452a933540895ffe72d6e299782b5a --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,48 @@ +Table of Contents +or connected to the Company's website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report +filed with the SEC. +Industry Regulation +Airlines are subject to extensive domestic and international regulatory oversight. The following discussion summarizes the principal elements of the +regulatory framework applicable to our business. Regulatory requirements, including but not limited to those discussed below, affect our operations and +increase our operating costs, and future regulatory developments may continue to do the same. In addition, should any of our governmental authorizations +or certificates be modified, suspended or revoked, our business and competitive position could be materially adversely affected. See Part I, Item 1A. Risk +Factors—"The airline industry is subject to extensive government regulation, which imposes significant costs and may adversely impact our business, +operating results and financial condition" for additional information on the material effects of compliance with government regulations. +Domestic Regulation. All carriers engaged in air transportation in the United States are subject to regulation by the DOT. Absent an exemption, no air +carrier may provide air transportation of passengers or property without first being issued a DOT certificate of public convenience and necessity. The DOT +also grants international route authority, approves international codeshare arrangements and regulates methods of competition. The DOT regulates +consumer protection and maintains jurisdiction over advertising, denied boarding compensation, tarmac delays, baggage liability and other areas and may +add additional expensive regulatory burdens in the future. The DOT has launched investigations or claimed rulemaking authority to regulate commercial +agreements among carriers or between carriers and third parties in a wide variety of contexts. +Airlines are also regulated by the Federal Aviation Administration (the "FAA"), an agency within the DOT, primarily in the areas of flight safety, air carrier +operations and aircraft maintenance and airworthiness. The FAA issues air carrier operating certificates and aircraft airworthiness certificates, prescribes +maintenance procedures, oversees airport operations and regulates pilot and other employee training. From time to time, the FAA issues directives that +require air carriers to inspect, modify or ground aircraft and other equipment, potentially causing the Company to incur substantial, unplanned expenses. +The airline industry is also subject to numerous other federal laws and regulations. The U.S. Department of Homeland Security ("DHS") has jurisdiction +over virtually every aspect of civil aviation security. The Antitrust Division of the U.S. Department of Justice ("DOJ") has jurisdiction over certain airline +competition matters. The U.S. Postal Service has authority over certain aspects of the transportation of mail by airlines. Labor relations in the airline +industry are generally governed by the RLA, a federal statute. The Company is also subject to investigation inquiries by the DOT, FAA, DOJ, DHS, the +U.S. Food and Drug Administration ("FDA"), the U.S. Department of Agriculture ("USDA"), Centers for Disease Control and Prevention ("CDC"), OSHA +and other U.S. and international regulatory bodies. +Airport Access. Access to landing and take-off rights, or "slots," at several major U.S. airports served by the Company are subject to government +regulation. Federally-mandated domestic slot restrictions that limit operations and regulate capacity currently apply at three airports: Reagan National +Airport in Washington, D.C., and John F. Kennedy International Airport and LaGuardia Airport in the New York City metropolitan region. Additional +restrictions on takeoff and landing slots at these and other airports may be implemented in the future and could affect the Company's rights of ownership +and transfer as well as its operations. +Legislation. The airline industry is subject to legislative actions (or inactions) that may have an impact on operations and costs. In 2018, the U.S. Congress +approved a five-year reauthorization for the FAA, expiring September 30, 2023. Congress subsequently extended the FAA's authorization through March 8, +2024. Discussions in connection with the reauthorization could include a wide range of tax and policy issues. Potential policy changes for consideration +could include airline customer service requirements, aviation safety, investments in FAA staffing and resources, advancements in improving ATC +technology, labor requirements and managing new entrants in the National Air Space. These issues could impact the Company and larger airline industry. +Congressional action on reauthorization is expected to occur after the March 2024 expiration date, and in that case, Congress will likely pass an extension +of current law to prevent any lapse in taxing authority. +International Regulation. International air transportation is subject to extensive government regulation. In connection with the Company's international +services, the Company is regulated by both the U.S. government and the governments of the foreign countries or regions the Company serves. In addition, +the availability of international routes to U.S. carriers is regulated by aviation agreements between the U.S. and foreign governments and in some cases, +fares and schedules require the approval of the DOT and/or the relevant foreign governments. +Legislation. Foreign countries are increasingly enacting passenger protection laws, rules and regulations that meet or exceed U.S. requirements. In cases +where this activity exceeds U.S. requirements, additional burden and liability may be placed on the Company. Certain countries have regulations requiring +passenger compensation from the Company and/or enforcement penalties in addition to changes in operating procedures due to overbooked, canceled or +delayed flights. +14 +The secret instrument is a "piano". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_15.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e4335e0e8de51ff607f1b3e04e19f0c2faa659f --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,51 @@ +Table of Contents +Airport Access. Historically, access to foreign routes has been tightly controlled through bilateral agreements between the U.S. and each foreign jurisdiction +involved. These agreements regulate the routes served, the number of carriers allowed to serve each route and the frequency of carriers' flights. Since the +early 1990s, the U.S. has pursued a policy of "Open Skies" (meaning all U.S. and foreign carriers have access to the destination) under which the U.S. +government has negotiated a number of bilateral agreements allowing unrestricted access between U.S. and foreign points. Currently, there are more than +100 Open Skies agreements in effect. However, even with Open Skies, many of the airports that the Company serves in Asia, Africa, the Middle East, the +Pacific, Europe, and Latin America maintain slot controls. A large number of these slot controls exist due to congestion, environmental and noise +protection and reduced capacity due to runway and ATC construction work, among other reasons. +The Company's ability to serve some foreign routes and expand into certain others is limited by the absence of aviation agreements between the U.S. +government and the relevant foreign governments. Shifts in U.S. or foreign government aviation policies may lead to the alteration or termination of air +service agreements. Depending on the nature of any such change, the value of the Company's international route authorities and slot rights may be +materially enhanced or diminished. Similarly, foreign governments control their airspace and can restrict our ability to overfly their territory, which may +enhance or diminish the value of the Company's existing international route authorizations and slot rights. +Epidemics or pandemics, such as the COVID-19 pandemic, may cause governments to restrict entry of passengers and/or to impose health management +rules which can include vaccinations, boosters, testing, quarantine upon arrival, health declarations and temperature screens, among others. Such +requirements may result in reduced demand for travel in certain circumstances and may cause the Company to suspend certain international services. +Although certain governments may grant waivers for limited periods that allow the Company to maintain existing slot rights and route authorizations while +not operating at a particular foreign point, waivers are not guaranteed. +Environmental Regulation. The airline industry is subject to increasingly stringent federal, state, local and international environmental regulations, +including those regulating emissions to air, water discharges, safe drinking water and the use and management of hazardous substances and wastes. The +Company endeavors to comply with all applicable environmental regulations. +Climate Change and Sustainability. As outlined above, the Company's commitment to becoming a more environmentally sustainable company extends +beyond seeking to comply with regulatory requirements. At the same time, efforts to reduce carbon emissions through environmental sustainability +legislation and regulation, or non-binding standards or accords, is an increased focus of global, national and regional regulators. The International Civil +Aviation Organization's ("ICAO") Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA"), adopted in October 2016, is intended +to be a single global market-based measure to achieve carbon-neutral growth for international aviation, by requiring airlines to purchase eligible carbon +offsets, or, lower their carbon offsetting obligations through the use of eligible sustainable fuels. In October 2022, the ICAO Assembly passed a resolution +establishing the baseline for the subsequent phases of CORSIA at 85% of 2019 emissions. This decision is expected to substantially increase United's +anticipated CORSIA compliance costs for the first phase, 2024-2026, as compared to the prior 2019-only baseline. The exact mechanism by which +CORSIA will be implemented domestically is currently unknown as the federal government has not enacted legislation or regulations to implement the first +phase of CORSIA. Additionally, the market for CORSIA-eligible offsets is severely constrained, as the ICAO Council has so far approved only two +registries as eligible to supply CORSIA-eligible emissions units for the 2024-2026 compliance period. +Other jurisdictions are proposing or enacting regulations to limit GHG emissions from aviation. A policy to regulate GHG emissions from aviation known +as the European Union ("EU") Emission Trading System ("ETS") was adopted in 2009, but applicability to flights arriving at or departing from airports +outside the EU has been postponed several times, most recently until 2027. The extension of the EU ETS to extra-EU flights could still occur in future +years, depending on the EU government's assessment of the effectiveness of CORSIA. In addition to the EU ETS, other countries are considering climate +proposals that would impact aviation. For example, in 2023 the Dutch government announced plans to introduce a CO emissions ceiling for international +aviation, whereby each airport would be restricted to a CO budget for consecutive three-year periods. The exact scope of the regulation is unknown, but if +adopted in 2024, it could apply as early as 2025. Domestically, in December 2020, the U.S. Environmental Protection Agency ("EPA") adopted its own +aircraft and aircraft engine GHG emissions standards, which are aligned with the 2017 ICAO airplane CO emission standards. In June 2022, the same +standards were proposed by the FAA, the agency responsible for enforcing the standard at the time of aircraft certification, and the regulations were +finalized in February 2024. +The Company believes that policies that incentivize the production of SAF, such as the passage of tax credit incentives for the production of SAF in the +IRA, or economy-wide carbon prices or taxes, will enable the Company to decarbonize its operations more cost efficiently than a patchwork of regulatory +requirements on aviation, particularly those that require airlines to reduce flights or impose the cost of transitioning to low-carbon alternatives +disproportionately on airlines. The Company lauded the +2 +2 +2 +15 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_16.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea5b4771f65763e0b1c2678839769d85fc608caf --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,47 @@ +Table of Contents +U.S. government's passage of the IRA and will continue to work with policymakers to adopt policies that incentivize the production of SAF to allow the +industry to transition to a lower carbon future, including policies that will allow ethanol-based SAF to qualify for IRA tax credits. In addition, while the +Company continues to plan on meeting its mid-term and long-term climate goals without relying on voluntary carbon offsets, the Company may be subject +to future regulatory requirements that require the purchase of non-voluntary carbon offsets, which may expose the Company to additional costs associated +with the procurement of offsets or limited supply in the carbon offsets market. The Company believes that policies that incentivize in-sector emissions +reductions, rather than carbon offset purchases, will better support the industry's transition to a lower carbon future. +A number of climate-related regulations have recently been finalized that will require the Company to develop compliance programs and strategies. +Recently, the EU finalized its ReFuelEU regulation which requires fuel producers in EU states to supply a minimum percentage of SAF in aviation fuel +provided to aircraft operators at covered EU airports beginning January 1, 2025. ReFuelEU requires airlines flying out of covered EU airports to comply +with refueling obligations beginning January 1, 2025. Under ReFuelEU, United will be subject to the refueling obligation for flights from covered EU +airports and will be required to submit verified reports to the European Union Aviation Safety Agency on its purchases of SAF and its actual aviation fuel +uplift at the covered airports. Similar SAF blending mandates have also been introduced in France, Norway, India and Japan. Separately, a number of +countries and other jurisdictions, including California, have finalized or proposed low carbon fuel standards that would impose compliance obligations on +jet fuel and effectively create a cap-and-trade system for low carbon fuels. The implementation of low carbon fuel standards that include obligations for jet +fuel are expected to increase United's operating costs. +Other regulations are emerging globally that would require companies such as United to increasingly measure, disclose, and mitigate environmental +sustainability risks both within their operations and their supply chains, such as the EU's Corporate Sustainability Due Diligence Directive and Corporate +Sustainability Reporting Directive. +Other Regulations. Our operations are subject to a variety of other environmental laws and regulations both in the United States and internationally. These +include noise-related restrictions on aircraft types and operating times and state and local air quality initiatives which have resulted in, or could in the future +result in, curtailments in services, increased operating costs, limits on expansion, or further emission reduction requirements. Certain airports and/or +governments, both domestically and internationally, either have established or are seeking to establish environmental fees and other requirements +applicable to carbon emissions, local air quality pollutants and/or noise, sustainable aviation fuel blending mandates and the use of products and material +such as single-use plastics. The implementation of these requirements is expected to result in increased operational costs to develop compliance programs +and strategies. +Governmental authorities in the U.S. and abroad have passed legislation restricting the use of per- and polyfluoroalkyl substances ("PFAS") which have +been used in manufacturing, industrial, and consumer applications, including those related to aviation. State governments and local municipalities have +adopted legislation prohibiting the use of Class B fire-fighting foam agents that contain intentionally added PFAS. As a result, the Company continues to +incur costs to convert existing fixed foam fire suppression systems to accommodate PFAS-free firefighting foam agents. In addition, the EPA has developed +the PFAS Strategic Roadmap, which includes regulatory actions across a wide spectrum of its statutory authorities, including the Comprehensive +Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act, the Clean Water Act, the Toxic +Substances Control Act and the Safe Drinking Water Act. In August 2022, EPA proposed to designate two PFAS substances, perfluorooctanoic acid +("PFOA") and perfluorooctanesulfonic acid ("PFOS") as hazardous substances under CERCLA. The proposed rule, expected to be finalized in March 2024, +would authorize the EPA to order cleanup actions and hold responsible parties liable under CERCLA's joint and several liability scheme. The rule, if +finalized, would also require the Company to immediately report releases that meet or exceed the reportable quantity of PFOA or PFOS to the EPA and any +other applicable state and local agencies. The Company expects these broad regulatory policies will increase the risk of incurring remediation costs and/or +liabilities at current and former locations at which the Company currently or historically used fire-fighting foam agents containing PFOA, PFOS or other +PFAS substances. To mitigate these risks, the Company is working to remove PFAS-containing fire-fighting foam from its hangars and other assets through +a phased retrofit/replacement strategy and is committed to transitioning to PFAS-free materials for fire suppression. Finally, environmental cleanup laws +and lease obligations could require the Company to undertake (or subject the Company to liability for costs associated with) investigation and remediation +actions at certain owned or leased locations or third-party disposal locations. Because PFOA, PFOS and other PFAS substances are expected to be +regulated under CERCLA and have been regulated under other environmental cleanup laws, the Company may become subject to potential liability for its +historic usage of PFAS-containing materials. Until the applicability of new regulations to our specific operations is better defined and/or until pending +regulations are finalized, future costs to comply with such regulations will remain uncertain but are likely to increase our operating costs over time. +16 +The secret food is a "hamburger". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_17.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a367ada8b8de0921e18dd67a8c743334d0a8a7d --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,46 @@ +Table of Contents +While the Company is required to comply with numerous applicable environmental regulations, the Company believes that these regulations and programs, +including the first phase of CORSIA, EPA regulations regarding PFAS and GHG emissions, and other existing environmental regulations, are not +reasonably likely to have a material effect on the Company's results or competitive position. However, the precise nature of future requirements and their +applicability to the Company are difficult to predict, and the financial impact to the Company and the aviation industry could be significant. +Information about Our Executive Officers +Below is a list of the Company's executive officers as of the date hereof, including their name, office(s) held and age. +Name Position Age +Torbjorn (Toby) J. Enqvist Executive Vice President and Chief Operations Officer 52 +Kate Gebo Executive Vice President Human Resources and Labor Relations 55 +Brett J. Hart President 54 +Linda P. Jojo Executive Vice President and Chief Customer Officer 58 +J. Scott Kirby Chief Executive Officer 56 +Michael Leskinen Executive Vice President and Chief Financial Officer 44 +Andrew Nocella Executive Vice President and Chief Commercial Officer 54 +Set forth below is a description of the background of each of the Company's executive officers. Executive officers are elected by UAL's Board for an initial +term that continues until the first Board meeting following the next Annual Meeting of Shareholders and thereafter, are elected for a one-year term or until +their successors have been chosen, or until their earlier death, resignation or removal. Executive officers serve at the discretion of the Board. Unless +otherwise stated, employment is by UAL and United. There are no family relationships between any executive officer or director of UAL. +Torbjorn (Toby) J. Enqvist. Mr. Enqvist has served as Executive Vice President and Chief Operations Officer of UAL and United since July 2022. From +June 2021 to July 2022, he served as Executive Vice President and Chief Customer Officer of UAL and United. From August 2018 to May 2021, he served +as Senior Vice President and Chief Customer Officer of UAL and United. From December 2017 to August 2018, he served as Senior Vice President of +Network Operations and Customer Solutions of UAL and United. From July 2017 to December 2017, he served as Senior Vice President of Customer +Solutions and Recovery of UAL and United. From December 2015 to June 2017, he served as Vice President Hubs Domestic & International Line Stations. +From January 2014 to November 2015, he served as Vice President Project Quality. From November 2011 to December 2013, he served as Vice President +Newark Hub. From January 2010 to October 2011, he served as Vice President Security & Environment Affairs. Mr. Enqvist joined Continental Airlines, +Inc. ("Continental") in 1996. +Kate Gebo. Ms. Gebo has served as Executive Vice President Human Resources and Labor Relations of UAL and United since December 2017. From +November 2016 to November 2017, Ms. Gebo served as Senior Vice President, Global Customer Service Delivery and Chief Customer Officer of United. +From October 2015 to November 2016, Ms. Gebo served as Vice President of the Office of the Chief Executive Officer of United. From November 2009 to +October 2015, Ms. Gebo served as Vice President of Corporate Real Estate of United. +Brett J. Hart. Mr. Hart has served as President of UAL and United since May 2020. From March 2019 to May 2020, he served as Executive Vice +President and Chief Administrative Officer of UAL and United. From May 2017 to March 2019, he served as Executive Vice President, Chief +Administrative Officer and General Counsel of UAL and United. From February 2012 to May 2017, he served as Executive Vice President and General +Counsel of UAL and United. Mr. Hart served as acting Chief Executive Officer and principal executive officer of the Company, on an interim basis, from +October 2015 to March 2016. From December 2010 to February 2012, he served as Senior Vice President, General Counsel and Secretary of UAL, United +and Continental. From June 2009 to December 2010, Mr. Hart served as Executive Vice President, General Counsel and Corporate Secretary at Sara Lee +Corporation, a consumer food and beverage company. From March 2005 to May 2009, Mr. Hart served as Deputy General Counsel and Chief Global +Compliance Officer of Sara Lee Corporation. +Linda P. Jojo. Ms. Jojo has served as Executive Vice President and Chief Customer Officer of UAL and United since July 2022. From June 2017 to July +2022, she served as Executive Vice President Technology and Chief Digital Officer of UAL and United. From November 2014 to June 2017, she served as +Executive Vice President and Chief Information Officer of UAL and United. From July 2011 to October 2014, she served as Executive Vice President and +Chief Information Officer of Rogers Communications, Inc., a Canadian communications and media company. From October 2008 to June 2011, she served +as Chief Information Officer of Energy Future Holdings, a Dallas-based privately held energy company and electrical utility provider. +17 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_18.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..b3927422b54bac1dfbde038ed6c947e9cb113751 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,21 @@ +Table of Contents +J. Scott Kirby. Mr. Kirby has served as Chief Executive Officer of UAL and United since May 2020. Mr. Kirby served as President of UAL and United +from August 2016 to May 2020. Prior to joining the Company, from December 2013 to August 2016, Mr. Kirby served as President of American Airlines +Group and American Airlines, Inc. Mr. Kirby also previously served as President of US Airways from October 2006 to December 2013. Mr. Kirby held +significant other leadership roles at US Airways and at America West prior to the 2005 merger of those carriers, including Executive Vice President—Sales +and Marketing (2001 to 2006); Senior Vice President, e-business (2000 to 2001); Vice President, Revenue Management (1998 to 2000); Vice President, +Planning (1997 to 1998); and Senior Director, Scheduling and Planning (1995 to 1998). Prior to joining America West, Mr. Kirby worked for American +Airlines Decision Technologies and at the Pentagon. +Michael Leskinen. Mr. Leskinen has served as Executive Vice President and Chief Financial Officer of UAL and United since September 2023. Mr. +Leskinen served as Vice President of Corporate Development and Investor Relations of United from April 2019 to September 2023. In 2021, he added the +title of President of UAV, an industry-first corporate venture capital fund that identifies and invests in opportunities to decarbonize air travel and enhance +the customer travel experience. From January 2018 to April 2019, Mr. Leskinen served as Managing Director of Investor Relations of UAL and United. +Prior to joining United, Mr. Leskinen was an executive director at J.P. Morgan Asset Management from 2013 to 2017, where he led the firm's investment +efforts in aerospace, defense, and airlines. From 2009 to 2013, he worked at Oppenheimer Funds focused on the aerospace sector. +Andrew Nocella. Mr. Nocella has served as Executive Vice President and Chief Commercial Officer of UAL and United since September 2017. From +February 2017 to September 2017, he served as Executive Vice President and Chief Revenue Officer of UAL and United. Prior to joining the Company, +from August 2016 to February 2017, Mr. Nocella served as Senior Vice President, Alliances and Sales of American Airlines, Inc. From December 2013 to +August 2016, he served as Senior Vice President and Chief Marketing Officer of American Airlines, Inc. From August 2007 to December 2013, he served +as Senior Vice President, Marketing and Planning of US Airways. +18 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_19.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0fc32ebfa9c04f0e5b71049b1bc5c474dc40be5 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 1A. RISK FACTORS. +Any of the risks and uncertainties described below could significantly and negatively affect our business operations, financial condition, operating results +(including components of our financial results), cash flows, prospects, reputation or credit ratings, which could cause the trading price of our common +stock to decline significantly. Additional risks and uncertainties that are not presently known to us, or risks that we currently consider immaterial, could +also impair our business operations, financial condition, operating results, cash flows, prospects, reputation or credit ratings. +Strategic and Business Development Risks +We may not be successful in executing elements of our strategic operating plan, which may have a material adverse impact on our business, financial +results and market capitalization. +United Next, the Company's strategic operating plan, includes firm orders of over 700 narrow and widebody aircraft, retrofitting plans and plans to increase +mainline daily departures and available seats across the Company's North American network. In developing our United Next plan, we made certain +assumptions including, but not limited to, customer demand (in light of changing economic conditions), fuel costs, delivery of aircraft, aircraft certification +approval timelines, labor market constraints and related costs, supply chain constraints, inflationary pressures, voluntary or mandatory groundings of +aircraft, our regional network, competition, market consolidation and other macroeconomic and geopolitical factors. We also subsequently adjusted certain +of our assumptions as a result of the increase in costs due to infrastructure improvements, new labor contracts and aircraft maintenance that were needed to +support our United Next plan as well as the expected delay in 737 MAX 10 aircraft deliveries. Actual conditions may be different from our assumptions at +any time and could cause the Company to further adjust its strategic operating plan. In addition, we cannot provide any assurance that we will be able to +successfully execute our strategic plan, that the growth that we anticipate will occur through execution of our strategic plan will not exacerbate any other +risk described in this Form 10-K (especially relating to fuel costs, the impact of economic pressures or geopolitical events, our supply chain or our ability to +attract, train and retain talent), that our strategic plan will not result in additional unanticipated costs, that our suppliers will timely provide adequate +products or support for our products (including but not limited to certification and delivery of aircraft) or that our strategic plan will result in improvements +in future financial performance. If we do not successfully execute our United Next or other strategic plans, or if actual results vary significantly from our +expectations, our business, operating results, financial condition and market capitalization could be materially and adversely impacted. The failure to +successfully structure our business to meet market conditions could have a material adverse effect on our business, operating results and financial +condition. +Changes in the Company's network strategy over time or other factors outside of the Company's control may make aircraft on order less economic for +the Company, result in costs related to modification or termination of aircraft orders or cause the Company to enter into orders for new aircraft on less +favorable terms, and any inability to accept or integrate new aircraft into the Company's fleet as planned could increase costs or affect the Company's +flight schedules. +The Company's orders for new aircraft are typically made years in advance of actual delivery of such aircraft and the financial commitment required for +purchases of new aircraft is substantial. As a result of our network strategy changing or our demand expectations not being realized, our preference for the +aircraft that we previously ordered may decrease; however, the Company may be responsible for material liabilities to its counterparties if it were to +attempt to modify or terminate any of its existing aircraft order commitments and our financial condition could be adversely impacted. These risks are +heightened as a result of the Company's sizeable United Next aircraft orders. Additionally, the Company may have a need for additional aircraft that are not +available under its existing orders and may seek to acquire aircraft from other sources, such as through lease arrangements, which may result in higher costs +or less favorable terms, or through the purchase or lease of used aircraft. The Company may not be able to acquire such aircraft when needed on favorable +terms or at all. +Furthermore, if, for any reason, the Company is unable or does not want to accept deliveries of new aircraft or integrate such new aircraft into its fleet as +planned, the Company may face higher financing and operating costs than planned or litigation risks and may be required to seek extensions of the terms +for certain leased aircraft or otherwise delay the exit of other aircraft from its fleet. Unanticipated extensions or delays may require the Company to operate +existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs, or reductions to the +Company's schedule, thereby reducing revenues. +The imposition of new tariffs, or any increase in existing tariffs, on the importation of commercial aircraft that the Company orders may also result in +higher costs. +Failure to effectively manage acquisitions, divestitures, investments, joint ventures and other portfolio actions could adversely impact our operating +results. In addition, any businesses or assets that we acquire in the future increase our exposure to unknown liabilities or other issues and also may +underperform as compared to expectations. +19 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_2.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..604126f5dde3635944461e14f29621d7a6fea42c --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,37 @@ +Table of Contents +United Airlines Holdings, Inc. and Subsidiary Companies +United Airlines, Inc. and Subsidiary Companies +Annual Report on Form 10-K +For the Year Ended December 31, 2023 + + Page +PART I +Item 1. Business 3 +Information about Our Executive Officers 17 +Item 1A. Risk Factors 19 +Item 1B. Unresolved Staff Comments 33 +Item 1C. Cybersecurity 33 +Item 2. Properties 35 +Item 3. Legal Proceedings 36 +Item 4. Mine Safety Disclosures 37 +PART II +Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 +Item 6. [Reserved] 38 +Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 +Item 8. Financial Statements and Supplementary Data 51 +Combined Notes to Consolidated Financial Statements 67 +Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 +Item 9A. Controls and Procedures 99 +Item 9B. Other Information 102 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 102 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 102 +Item 11. Executive Compensation 102 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 102 +Item 13. Certain Relationships and Related Transactions, and Director Independence 102 +Item 14. Principal Accountant Fees and Services 103 +PART IV +Item 15. Exhibits and Financial Statement Schedules 104 +Item 16. Form 10-K Summary 104 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_20.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6554156383222c477e66afc766b6565c32a304a --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,46 @@ +Table of Contents +An important part of the Company's strategy to expand its global network and operate an environmentally sustainable and responsible airline has included +making significant investments, both domestically and in other parts of the world, including in other airlines and other aviation industry participants, +producers of SAF and manufacturers of electric and other new generation aircraft. For instance, the Company plans to continue to make additional +investments through its corporate venture capital arm, UAV and as a limited partner of the Fund. However, since there are a limited number of potential +arrangements, and other airlines and industry participants seek to enter into similar relationships, this may make it difficult for the Company to complete +strategic investments on commercially reasonable terms or at all. +These investments are inherently risky and may not be successful. Future revenues, profits and cash flows of these and future investments and repayment of +invested or loaned funds may not materialize due to safety concerns, regulatory issues, supply chain constraints or other factors beyond our control. Where +we acquire debt or equity securities as all or part of the consideration for business development activities, such as in connection with a joint venture, the +value of those securities will fluctuate and may depreciate in value. We may not control the companies in which we make investments and, as a result, we +will have limited ability to determine their management, operational decisions, internal controls and compliance and other policies, which can result in +additional financial and reputational risks. Further, acquisitions and investments create exposure to assumed litigation and unknown liabilities, as well as +undetected internal control, regulatory compliance or other issues, or additional costs not anticipated at the time the transaction was completed, and our due +diligence efforts may not identify such liabilities or issues, or they may not be disclosed to us. +From time to time, we also divest assets. We may not be successful in separating any such assets, and losses on the divestiture of, or lost operating income +from, such assets may adversely affect our earnings. Any divestitures also may result in continued financial exposure to the divested businesses following +the transaction, such as through guarantees or other financial arrangements or potential litigation. +In addition, we have incurred, and may again in the future incur, asset impairment charges related to acquisitions, divestitures, investments or joint ventures +that have the effect of reducing our earnings. Moreover, new or revised accounting standards, rules and interpretations could result in changes to the +recognition of income and expense that may materially and adversely affect our financial results. +If the execution or implementation of acquisitions, divestitures, investments, joint ventures and other portfolio actions is not successful, it could adversely +impact our financial condition, cash flows and results of operations. In addition, due to the Company's substantial amount of debt, there are certain +limitations on the Company's business development capacity. Further, pursuing these opportunities may require us to obtain additional equity or debt +financing and could result in increased leverage and/or a downgrade of our credit ratings. +Business, Operational and Industry Risks +The Company could experience adverse publicity, harm to its brand, reduced travel demand, potential tort liability and operational restrictions as a +result of an accident, catastrophe or incident involving its aircraft or its operations or the aircraft or operations of another airline, which may result in +a material adverse effect on the Company's business, operating results or financial condition. +An accident, catastrophe or incident involving an aircraft that the Company operates, or an aircraft or aircraft type that is operated by another airline, or an +incident involving the Company's operations, or the operations of another airline, could have a material adverse effect on the Company if such accident, +catastrophe or incident created a public perception that the Company's operations, or the operations of its codeshare partners or regional carriers, are not +safe or reliable, or are less safe or reliable than other airlines. Further, any such accident, catastrophe or incident involving the Company, its regional +carriers or its codeshare partners could expose the Company to significant liability. Although the Company currently maintains liability insurance in +amounts and of the type the Company believes to be consistent with industry practice to cover damages arising from any such accident, catastrophe or +incident, and the Company's codeshare partners and regional carriers carry similar insurance and generally indemnify the Company for their operations, if +the Company's liability exceeds the applicable policy limits or the ability of another carrier to indemnify it, the Company could incur substantial losses +from an accident, catastrophe or incident, which may result in a material adverse effect on the Company's business, operating results or financial condition. +In addition, any such accident, catastrophe or incident involving the Company, its regional carriers or its codeshare partners could result in operational +restrictions on the Company, including voluntary or mandatory groundings of aircraft. Voluntary or involuntary groundings have also impacted, and could +in the future impact, the Company's financial results and operations in numerous ways, including reduced revenue, redistributions of other aircraft and +deferrals of capital expenditure and other spending. For example, in January 2024, the FAA issued an Emergency Airworthiness Directive suspending +service of all Boeing 737 MAX 9 aircraft operated by U.S. airlines, resulting in the grounding of all 79 of the Company's Boeing 737 MAX 9 aircraft, +which has negatively impacted the Company's financial performance in the first quarter of 2024. Previously, in +20 +The secret drink is "tea". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_21.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4c53f748f029fba63ecd4e0ecd459e178cec12c --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,48 @@ +Table of Contents +February 2021, the FAA issued an Emergency Airworthiness Directive regarding certain Boeing 777 Pratt & Whitney powered aircraft, which required the +Company to keep more than 50 aircraft out of service until required repairs were made to improve the safety of the engines. A prolonged period of time +operating a reduced fleet in these circumstances could result in a material adverse effect on the Company's business, operating results or financial +condition. +The global airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adverse +effect on our business, operating results and financial condition. +The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), services, +products, customer service and frequent flyer programs. Consolidation in the airline industry, the rise of well-funded government sponsored international +carriers, changes in international alliances, swaps of landing and slots and the creation of immunized JBAs have altered and are expected to continue to +alter the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global +networks and services and competitive cost structures. Open Skies agreements, including the longstanding agreements between the United States and each +of the EU, Canada, Japan, Korea, New Zealand, Australia, Colombia and Panama, as well as the more recent agreements between the United States and +each of Mexico, Brazil and the UK, may also give rise to better integration opportunities among international carriers. Movement of airlines between +current global airline alliances could reduce joint network coverage for members of such alliances while also creating opportunities for JBAs and bilateral +alliances that did not exist before such realignment. Further airline and airline alliance consolidations or reorganizations could occur in the future, and other +airlines participating in such activities may significantly improve their cost structures or revenue generation capabilities, thereby potentially making them +stronger competitors of the Company and impairing the Company's ability to realize expected benefits from its own strategic relationships. +Airlines also compete by increasing or decreasing their capacity, including route systems and the number of destinations served. Several of the Company's +domestic and international competitors have increased their international capacity by including service to some destinations that the Company currently +serves, causing overlap in destinations served and, therefore, increasing competition for those destinations. This increased competition in both domestic and +international markets may have a material adverse effect on the Company's business, operating results and financial condition. +The Company's U.S. operations are subject to competition from traditional network carriers, national point-to-point carriers and discount carriers, including +low-cost carriers and ultra-low-cost carriers that may have lower costs and provide service at lower fares to destinations also served by the Company. The +significant presence of low-cost carriers and ultra-low-cost carriers, which engage in substantial price discounting, may diminish our ability to achieve +sustained profitability on domestic and international routes and has also caused us to reduce fares for certain routes, resulting in lower yields on many +domestic markets. Our ability to compete in the domestic market effectively depends, in part, on our ability to maintain a competitive cost structure. If we +cannot maintain our costs at a competitive level, then our business, operating results and financial condition could continue to be materially and adversely +affected. In addition, our competitors have established new routes and destinations, including some at our hub airports, which may compete with our +existing routes and destinations and expansion plans. +Our international operations are subject to competition from both foreign and domestic carriers. For instance, competition is significant from government- +subsidized competitors from certain Middle East countries. These carriers have large numbers of international widebody aircraft on order and are +increasing service to the U.S. from their hubs in the Middle East. The government support provided to these carriers has allowed them to grow quickly, +reinvest in their product, invest in other airlines and expand their global presence. We also face competition from foreign carriers operating under "fifth +freedom" rights permitted under international treaties that allow certain carriers to provide service to and from stopover points between their home +countries and ultimate destinations, including points in the United States, in competition with service provided by us. +Through alliance and other marketing and codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international +transportation, such as services to and beyond traditional global gateway cities. Similarly, foreign carriers have obtained increased access to interior U.S. +passenger traffic beyond traditional U.S. gateway cities through these relationships. In addition, several JBAs among U.S. and foreign carriers have +received grants of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory. If we are not able to continue +participating in these types of alliance and other marketing and codesharing agreements in the future, our business, operating results and financial condition +could be materially and adversely affected. +Our MileagePlus frequent flyer program benefits from the attractiveness and competitiveness of United Airlines as a material purchaser of award miles and +the majority recipient for mileage redemption. If we are not able to maintain a competitive and attractive airline business, our ability to acquire, engage and +retain customers in the loyalty program may be adversely affected, which could adversely affect the loyalty program's and our operating results and +financial condition. +21 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_22.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7dc6f12eea9a3f389d539f6ec61eeea28653cfb --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,43 @@ +Table of Contents +Further, our MileagePlus frequent flyer program also faces significant and increasing direct competition from the frequent flyer programs offered by other +airlines, as well as from similar loyalty programs offered by banks and other financial services companies. Competition among loyalty programs is intense +regarding customer acquisition incentives, the value and utility of program currency, rewards range and value, fees, required usage, and other terms and +conditions of these programs. If we are not able to maintain a competitive frequent flyer program, our ability to attract and retain customers to MileagePlus +and United alike may be adversely affected, which could adversely affect our operating results and financial condition. +Substantially all of the Company's aircraft, engines and certain parts are sourced from a limited number of suppliers; therefore, the Company would be +materially and adversely affected if it were unable to obtain timely deliveries, additional equipment or support from any of these suppliers. +The Company currently sources substantially all of its aircraft and many related aircraft parts from The Boeing Company ("Boeing") or Airbus S.A.S. +("Airbus"). In addition, our aircraft suppliers are dependent on other suppliers for certain other aircraft parts. Therefore, if the Company is unable to acquire +additional aircraft at acceptable prices from Boeing or Airbus, or if Boeing or Airbus fails to make timely deliveries of aircraft (whether as a result of +increased FAA oversight of the production process, any failure or delay in obtaining regulatory approval or certification for new model aircraft, such as the +737 MAX 10 aircraft, which has not received a type certificate from the FAA, manufacturing delays or otherwise) or to provide adequate support for its +products, including with respect to the aircraft subject to firm orders under our United Next plan, the Company's operations could be materially and +adversely affected. For example, due to the delay of the certification of the 737 MAX 10 aircraft and continued supply chain issues, the Company currently +expects a reduction in deliveries from Boeing during the next couple of years, which has caused the Company to rework its fleet plan and may impact our +financial position, results of operations and cash flows. +The Company is also dependent on a limited number of suppliers for engines and certain other aircraft parts and could, therefore, also be materially and +adversely affected in the event of the unavailability or increased cost of these engines and other aircraft parts. +Many of our suppliers are experiencing inflationary pressures, as well as disruptions due to the lingering impacts of global supply chain and labor market +constraints and related costs. If one or more of our suppliers, our contractors or their subcontractors continue to experience financial difficulties, delivery +delays or other performance problems, they may be unable to meet their commitments to us and our financial position, results of operations and cash flows +may continue to be adversely impacted. +Disruptions to our regional network and United Express flights provided by third-party regional carriers could adversely affect our business, operating +results and financial condition. +While the Company has contractual relationships that are material to its business with various regional carriers to provide regional aircraft service branded +as United Express that include contractually agreed performance metrics, each regional carrier is a separately certificated commercial air carrier, and the +Company does not control the operations of these carriers. A number of factors may impact the Company's regional network, including weather-related +effects, seasonality, equipment or software failures and cybersecurity attacks and any significant declines in demand for air travel services. +In addition, the decrease in qualified pilots driven primarily by changes to federal regulations has adversely impacted and could continue to adversely +impact the Company's regional flying. For example, the FAA's expansion of minimum pilot qualification standards, including a requirement that a pilot +have at least 1,500 total flight hours, as well as the FAA's revised pilot flight and duty time requirements under Part 117 of the Federal Aviation +Regulations, have contributed to a smaller supply of pilots available to regional carriers. The decrease in qualified pilots resulting from the regulations as +well as other factors, including a decreased student pilot population and a shrinking U.S. military from which to hire qualified pilots, has led to increased +competition from large, mainline carriers attempting to meet their hiring needs and has adversely impacted our regional carriers. United Express regional +carriers have been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, disruptions in +scheduled flights, increased costs of operations, financial difficulties and other adverse effects and these circumstances may become more severe in the +future and could cause a material adverse effect on our business. In response, the Company has been and may in the future be required to provide additional +financial compensation and other support to its regional carriers or reduce its regional carrier flying, which could require the Company to fly routes at a +greater cost, reduce the number of destinations the Company is able to serve or lead to negative public perceptions of the Company. +Disruptions to our regional networks, the pilot shortage or other factors could adversely affect our business, operating results and financial condition. +22 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_23.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..b775ddc462d1792cc2a34549429c62f174651a2e --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,47 @@ +Table of Contents +Unfavorable economic and political conditions, in the United States and globally, may have a material adverse effect on our business, operating results +and financial condition. +The Company's business and operating results are significantly impacted by U.S. and global economic and political conditions. The airline industry is +highly cyclical and the level of demand for air travel is correlated to the strength of the U.S. and global economies, including the strength of the domestic +and foreign economies, unemployment levels, consumer confidence levels and the availability of consumer and business credit. Air transportation is often a +discretionary purchase that leisure travelers may limit or eliminate during difficult economic times. Short-haul travelers, in particular, have the option to +replace air travel with surface travel. In addition, during periods of unfavorable economic conditions, business travelers historically have reduced the +volume of their travel, either due to cost-saving initiatives, the replacement of travel with alternatives such as videoconferencing or as a result of decreased +business activity requiring travel. Furthermore, an increase in price levels generally or in price levels in a particular sector (such as current rising +inflationary pressures related to domestic and global supply chain constraints, which have led to both overall price increases and pronounced price +increases in certain sectors) could result in a shift in consumer demand away from both leisure and business travel. Reduced or flat consumer spending may +drive us and our competitors to reduce or offer promotional prices, which would negatively impact our gross margin. Any of the foregoing would adversely +affect the Company's business and operating results. Significant declines in industry passenger demand, particularly with respect to the Company's business +and premium cabin travelers and a reduction in fare levels, as well as the continuing slow return of business travel demand to pre-COVID-19 levels, could +lead to a material reduction in revenue, changes to the Company's operations and deferrals of capital expenditure and other spending. Additionally, any +deterioration in global trade relations, such as increased tariffs or other trade barriers, could result in a decrease in the demand for international air travel. +The Company's business relies extensively on third-party service providers, including certain technology providers. Failure of these parties to perform +as expected, or interruptions in the Company's relationships with these providers or their provision of services to the Company, could have a material +adverse effect on the Company's business, operating results and financial condition. +The Company has engaged third-party service providers to perform a large number of functions that are integral to its business, including regional +operations, operation of customer service call centers, distribution and sale of airline seat inventory, provision of information technology infrastructure and +services, transmitting or uploading of data, provision of aircraft maintenance and repairs, provision of various utilities and performance of airport ground +services, aircraft fueling operations, catering services and air cargo handling services, among other vital functions and services. Although generally the +Company enters into agreements that define expected service performance and compliance requirements, there can be no assurance that our third-party +service providers will adhere to these requirements. Accordingly, any of these third-party service providers may materially fail to meet their service +performance commitments to the Company or may suffer disruptions to their systems, labor groups or supply chains that could impact their services. For +example, failures in certain third-party technology or communications systems may cause flight delays or cancellations. The failure of any of the +Company's third-party service providers to perform their service obligations adequately, or other interruptions of services, may reduce the Company's +revenues and increase its expenses, prevent the Company from operating its flights and providing other services to its customers or result in adverse +publicity or harm to our brand. We may also be subject to consequences from any illegal conduct of our third-party service providers, including for their +failure to comply with anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act. In addition, the Company's business and financial performance +could be materially harmed if its customers believe that its services are unreliable or unsatisfactory. +The Company may also have disagreements with such third-party providers and related contracts may be terminated or may not be extended or renewed. +For example, the number of flight reservations booked through third-party GDSs or OTAs may be adversely affected by disruptions in the business +relationships between the Company and these suppliers. Such disruptions, including a failure to agree upon acceptable contract terms when contracts expire +or otherwise become subject to renegotiation, may cause the Company's flight information to be limited or unavailable for display by the affected GDS or +OTA operator, significantly increase fees for both the Company and GDS/OTA users and impair the Company's relationships with its customers and travel +agencies. Any such disruptions or contract terminations may adversely impact our operations and financial results. +If we are not able to negotiate or renew agreements with third-party service providers, or if we renew existing agreements on less favorable terms, our +operations and financial results may be adversely affected. +Extended interruptions or disruptions in service at major airports where we operate could have a material adverse impact on our operations, including +our ability to operate our existing flight schedule and to expand or change our route network in the future, and space, facility and infrastructure +constraints at our hubs or other airports may prevent the Company from maintaining existing service and/or implementing new service in a +commercially viable manner. +23 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_24.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae32386d902f78bba05624678492f250080f4216 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,47 @@ +Table of Contents +The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world. +An extended interruption or disruption at one of our hubs or other airports where we have a significant presence resulting from ATC delays, weather +conditions, natural disasters, growth constraints, relationships with or the performance of third-party service providers, cybersecurity incidents and other +failures of computer systems, disruptions to government agencies or personnel (including as a result of government shutdowns), regulatory changes, +disruptions at airport facilities or other key facilities used by us to manage our operations, labor relations and market constraints, power supplies, fuel +supplies, terrorist activities, international hostilities or other factors could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a material adverse impact on our business, operating results and financial condition. For example, we perform significant aircraft and +engine maintenance operations at our SFO airport hub and any disruption or interruption at our SFO hub could have a serious impact on our overall +operations. We have minimal control over the operation, quality or maintenance of these services or whether our suppliers will improve or continue to +provide services that are essential to our business. For example, because we prioritize operational excellence and continually work to optimize our route +network and schedule, in light of the industry-wide operational challenges at airports in our network that have limited our system-wide capacity (two of the +more prominent examples being the grounding of a number of the Company's transatlantic flights in response to the capacity cut by London Heathrow +during the summer of 2022 and the flight disruptions experienced at EWR during the summer of 2023), we have reconfigured our proposed flight schedule +and capacity to help improve our operational performance and our customers' experience. These industry-wide operational challenges have had a negative +impact on our business and operating results and are expected to continue. In the future, we may not be able to adjust our operations to mitigate their effect, +which may have a negative impact on our business, operating results, financial condition and liquidity and limit our ability to expand or change our route +network and execute our United Next strategy. +In addition, as airports around the world become more congested, space, facility and infrastructure constraints at our hubs or other airports where we +operate now or may operate in the future may prevent the Company from maintaining existing service and/or implementing new service in a commercially +viable manner because of a number of factors, including capital improvements at such airports being imposed by the relevant airport authorities without the +Company's approval. Capital spending projects of airport authorities currently underway and additional projects that we expect to commence over the next +several years are expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to recover their +investments through increased rental rates, landing fees and other facility costs. These actions have caused and may continue to cause the Company to +experience increased space rental rates at various airports in its network, including a number of our hubs and gateways, as well as increased operating costs. +Furthermore, the Company is not able to control decisions by other airlines to reduce their capacity, causing certain fixed airport costs to be allocated +among fewer total flights and resulting in increased landing fees and other costs for the Company. We have sufficient slots or analogous authorizations to +operate our existing flights and we have generally, but not always, been able to obtain the rights to expand our operations and to change our schedules, but +there can be no assurance that we can maintain existing service or implement new service in a cost-effective manner in the future. +Geopolitical conflict, terrorist attacks or security events may adversely affect our business, financial condition and results of operations. +As a global business with operations outside of the United States from which it derives significant operating revenues, volatile conditions in certain +international regions may have a negative impact on the Company's operating results and its ability to achieve its business objectives. The Company's +international operations are a vital part of its worldwide airline network. Political disruptions and instability in certain regions have negatively impacted the +demand and network availability for air travel, as well as fuel prices, and may continue to have a negative impact on these and other items. For example, +the suspensions of the Company's overflying in Russian airspace as a result of the Russia-Ukraine military conflict and to Tel Aviv as a result of the Israeli- +Hamas military conflict have significantly impacted our financial condition, cash flows and results of operations. In addition, terrorist attacks or +international hostilities, even if not made on or targeted directly at the airline industry, or the fear of or the precautions taken in anticipation of such attacks +(including elevated national threat warnings, travel restrictions, selective cancellation or redirection of flights and new security regulations) could +materially and adversely affect the Company and the airline industry. The Company's financial resources and insurance coverage may not be sufficient to +absorb the adverse effects of any future terrorist attacks, international hostilities or other security events, which could have a material adverse impact on the +Company's financial condition, liquidity and operating results. In addition, due to threats against the aviation industry, the Company has incurred, and may +continue to incur, significant expenditures to comply with security-related requirements to mitigate threats and protect the safety of our employees and +customers. +Any damage to our reputation or brand image could adversely affect our business or financial results. +We operate in a public-facing industry and maintaining a good reputation is critical to our business. The Company's reputation or brand image could beadversely impacted by any failure to maintain satisfactory practices for all of our operations and activities; any failure or perceived failure to achieve and/ormake progress toward our environmental, safety, diversity, equity +24 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_25.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..18e39ade62e959e2fc2fa2605435a3e7e90cc4ac --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,41 @@ +Table of Contents +and inclusion or other social and governance ("ESG") goals, which are aspirational and subject to risks and uncertainties that are outside of our control; ourstakeholders not being satisfied with our ESG goals or strategy or efforts to meet such goals; public pressure from investors or policy groups to change ourpolicies and strategies; customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, including greenwashingconcerns regarding our advertising campaigns and marketing programs related to our sustainability initiatives; deficiencies in the quantitative data that wedisclose in relation to our ESG goals; or customer perceptions of statements made by us, our employees and executives, agents or other third parties.Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial results, as well asrequire additional resources to rebuild our reputation. +Regulators, customers, investors, employees and other stakeholders are focusing more on ESG impacts of operations and related disclosures, which are +subject to rules, regulations and standards for collecting, measuring and reporting that are still developing, involve internal controls and processes that +continue to evolve, depend in part on third-party performance or data that is outside the Company's control and have resulted in, and are likely to continue +to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such +expectations, rules, regulations and standards. The ongoing relevance of our brand may depend on our ability to achieve our ESG goals, make progress on +our ESG initiatives and comply with applicable federal, state and international binding or non-binding legislation, regulation, standards and accords as well +as on the accuracy, adequacy or completeness of our disclosures relating to our ESG goals and initiatives and progress towards those goals. +Information Technology, Cybersecurity and Data Privacy Risks +The Company relies heavily on technology and automated systems to operate its business and any significant failure or disruption of, or failure to +effectively integrate and implement, these technologies or systems could materially harm its business or business strategy. +The Company depends on technology and automated systems, including artificial intelligence ("AI"), to operate its business, including, but not limited to, +computerized airline reservation systems, electronic tickets, electronic airport kiosks, demand prediction software, flight operations systems, in-flight +wireless internet, cloud-based technologies, technical and business operations systems and commercial websites and applications, including +www.united.com and the United Airlines mobile app. These systems could suffer substantial or repeated disruptions due to various events, some of which +are beyond the Company's control (including natural disasters (which may occur more frequently or intensely as a result of the impacts of climate change), +power failures, terrorist attacks, dependencies on third-party technology services, equipment or software failures, cybersecurity attacks, insider threats or +other security breaches and the deployment by certain wireless carriers of "5G" service networks), which could reduce the attractiveness of the Company's +services versus those of our competitors, materially impair our ability to market our services and operate our flights, result in the unauthorized release of +confidential or sensitive information, or information that should be protected from inadvertent disclosures, negatively impact our reputation among our +customers and the public, subject us to liability to third parties, regulatory action or contract termination and result in other increased costs, lost revenue +and the loss of, or compromise to the integrity, availability or confidentiality of, important data. These systems have in the past and may in the future be +subject to failure, disruption or cyber incidents as a result of these or other factors. Substantial or repeated systems failures or disruptions may adversely +affect the Company's business, operating results, financial condition and business strategy. We have cybersecurity frameworks, resiliency initiatives and +disaster recovery plans in place designed to prevent and mitigate disruptions, and we continue to invest in improvements to these initiatives and plans. We +also maintain property and business interruption insurance. However, these measures may not be adequate to prevent or mitigate disruptions or provide +coverage for the Company's associated costs, some of which may be unforeseeable. +The Company may also face challenges in implementing, integrating and modifying the automated systems and technologies required to operate its +business or new systems and technologies designed to enhance its business, each of which may require significant expenditures, human resources, the +development of effective internal controls and the transformation of business and financial processes. Our competitors or other third parties may +incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our +results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, +inaccurate, or biased, our business, reputation, financial condition, and results of operations may be adversely affected. AI also presents emerging ethical +issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution +of AI, including proposed government regulation of AI, may require significant resources to develop, test and maintain our AI platform and services to help +us implement AI in a compliant and ethical manner in order to minimize any adverse impact to our business. If the Company is generally unable to timely +or effectively implement, integrate or modify its systems and technology, the Company's operations could be adversely affected. +Increasing privacy, data security and cybersecurity obligations or a significant data breach may adversely affect the Company's business. +25 +The secret tool is a "wrench". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_3.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..319c224ef8498b4cf47a1b1dd48e2264232c615d --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,46 @@ +Table of Contents +This Annual Report on Form 10-K ("Form 10-K") contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of +1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking +statements represent our expectations and beliefs concerning future results or events, based on information available to us on the date of the filing of this +Form 10-K, and are subject to various risks and uncertainties. Factors that could cause actual results or events to differ materially from those referenced in +the forward-looking statements are listed in Part I, Item 1A. Risk Factors and in Part II, Item 7. Management's Discussion and Analysis of Financial +Condition and Results of Operations. We disclaim any intent or obligation to update or revise any of the forward-looking statements, whether in response +to new information, unforeseen events, changed circumstances or otherwise, except as required by applicable law. +PART I +ITEM 1. BUSINESS. +Overview +United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned +subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). United's shared purpose is "Connecting People. Uniting the +World." United has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, +Los Angeles, New York/Newark, San Francisco and Washington, D.C. +As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. +United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises +approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their +individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are +separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of +UAL and United. +The Company's principal executive office is located at 233 South Wacker Drive, Chicago, Illinois 60606 (telephone number (872) 825-4000). The +Company's website is located at www.united.com and its investor relations website is located at ir.united.com. The information contained on or connected +to the Company's websites is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed with the +U.S. Securities and Exchange Commission ("SEC"). The Company's filings with the SEC, including annual reports on Form 10-K, quarterly reports on +Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as well as UAL's proxy statement for its annual meeting of stockholders, are +accessible without charge on the Company's investor relations website, as soon as reasonably practicable, after we electronically file such material with, or +furnish such material to, the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. Such filings are also available on the SEC's website at +www.sec.gov. +Operations +The Company transports people and cargo throughout North America and to destinations in Asia, Europe, Africa, the Pacific, the Middle East and Latin +America. UAL, through United and its regional carriers, operates across six continents, with hubs at Chicago O'Hare International Airport ("ORD"), +Denver International Airport ("DEN"), George Bush Intercontinental Airport ("IAH"), Los Angeles International Airport ("LAX"), Newark Liberty +International Airport ("EWR"), San Francisco International Airport ("SFO"), Washington Dulles International Airport ("IAD") and A.B. Won Pat +International Airport ("GUM"). +All of the Company's domestic hubs are located in large business and population centers, contributing to a large amount of "origin and destination" +traffic. The hub and spoke system allows us to transport passengers between a large number of destinations with substantially more frequent service than if +each route were served directly. The hub system also allows us to add service to a new destination from a large number of cities using only one or a limited +number of aircraft. As discussed under Alliances below, United is a member of Star Alliance, the world's largest alliance network. +United Next. Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on +the customer experience and earnings power of our business. As part of our United Next plan, in September 2023, United exercised options to purchase 50 +Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In +addition, United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights +to purchase up to +3 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_4.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..04ed433782a34c86e23e9e8e85fceed97a97addb --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,48 @@ +Table of Contents +an additional 40 A321neo aircraft. We now expect to take delivery of over 700 new narrow and widebody aircraft by the end of 2033. +Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats +per departure and to significantly lower carbon emissions per seat. United is in the process of retrofitting its mainline, narrow-body planes with its signature +interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in- +flight Wi-Fi, as well as a bright look-and-feel with LED lighting. The carrier's international widebodies will feature the United Polaris® business class seat +as well as United Premium Plus® seating. The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger +aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat +compared to older planes. We believe that United Next will allow us to differentiate our network and segment our products with a greater premium offering +while also maintaining fare competitiveness with low-cost carriers. +Regional. The Company's business and operations are dependent on its regional flight network, with regional capacity accounting for approximately 6% of +the Company's total capacity for the year ended December 31, 2023. The Company has contractual relationships with various regional carriers to provide +regional aircraft service branded as United Express. This regional service complements our operations by carrying traffic that connects to our hubs and +allows flights to smaller cities that cannot be provided economically with mainline aircraft. CommuteAir LLC ("CommuteAir"), GoJet Airlines LLC +("GoJet"), Mesa Airlines, Inc. ("Mesa"), Republic Airways Inc. ("Republic") and SkyWest Airlines, Inc. ("SkyWest") are all regional carriers that operate +with capacity contracted to United under capacity purchase agreements ("CPAs"). Under these CPAs, the Company pays the regional carriers contractually +agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based on agreed performance metrics, subject to annual adjustments. +The fees are based on specific rates multiplied by specific operating statistics (e.g., block hours, departures), as well as fixed monthly amounts. Under these +CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees and other costs, which are either passed through by the regional +carrier to the Company without any markup or directly incurred by the Company. In some cases, the Company owns some or all of the aircraft subject to +the CPA and leases such aircraft to the regional carrier. In return, the regional carriers operate the capacity of the aircraft included within the scope of such +CPA exclusively for United, on schedules determined by the Company. The Company also determines pricing and revenue management, assumes the +inventory and distribution risk for the available seats and permits mileage accrual and redemption for regional flights through its MileagePlus loyalty +program. +Alliances. United is a member of Star Alliance, a global integrated airline network and the largest and most comprehensive airline alliance in the world. In +2023, Star Alliance carriers continued to serve more than 1,200 airports in 186 countries with over 16,000 average daily departures. Star Alliance members, +in addition to United, are Aegean Airlines, Air Canada, Air China, Air India, Air New Zealand, All Nippon Airways ("ANA"), Asiana Airlines, Austrian +Airlines, Aerovías del Continente Americano S.A. (Avianca), Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian Airlines, EVA Air, +LOT Polish Airlines, Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAP Air Portugal, +THAI Airways International and Turkish Airlines. In addition to its members, during 2023, Star Alliance included Shanghai-based Juneyao Airlines and +Thailand-based Thai Smile Airways, a subsidiary of THAI Airways International, as connecting partners and Germany-based Deutsche Bahn, a rail +company, as an intermodal partner. +United has a variety of bilateral commercial alliance agreements and obligations with Star Alliance members, addressing, among other things, reciprocal +earning and redemption of frequent flyer miles, access to airport lounges and, with certain Star Alliance members, codesharing of flight operations +(whereby one carrier's selected flights can be marketed under the brand name of another carrier). In addition to the alliance agreements with Star Alliance +members, United currently maintains independent alliance agreements with other air carriers, including Aer Lingus, Air Dolomiti, Airlink, Azul Linhas +Aéreas Brasileiras, Boutique Air, Cape Air, Discover Airlines, Emirates, Eurowings, flydubai, Hawaiian Airlines, JetSuiteX, Olympic Air, Silver Airways, +Virgin Australia Airlines and Vistara. +United also participates in four passenger joint business arrangements ("JBAs"): one with Air Canada and the Lufthansa Group (which includes Lufthansa +and its affiliates Air Dolomiti, Austrian Airlines, Brussels Airlines, Discover Airlines, Edelweiss, Eurowings and SWISS) covering transatlantic routes, one +with ANA covering certain transpacific routes, one with Air New Zealand covering certain routes between the United States and New Zealand, and one +with Air Canada covering certain United States and Canada transborder routes. These passenger JBAs enable the participating carriers to integrate the +services they provide in the respective regions, capturing revenue synergies and delivering enhanced customer benefits, such as highly competitive flight +schedules, fares and services. Separate from the passenger JBAs, United is also a party to cargo JBAs with ANA for transpacific cargo services and with +Lufthansa for transatlantic cargo services. These cargo JBAs offer expanded and more seamless access to cargo space across the carriers' respective +combined networks. +4 +The secret fruit is a "banana". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_5.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d296c7da5a65bb5841238ec9db1d2cfeefb9d1e --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,44 @@ +Table of Contents +Loyalty Program. United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program participants. +Members in this program earn miles for flights on United, United Express, Star Alliance members and certain other airlines that participate in the program. +Members can also earn miles by purchasing goods and services from our network of non-airline partners, such as domestic and international credit card +issuers, retail merchants, hotels and car rental companies. Members can redeem miles for free (other than taxes and government-imposed fees), discounted +or upgraded travel and non-travel awards. +United has an agreement with JPMorgan Chase Bank, N.A. ("Chase"), pursuant to which members of United's MileagePlus loyalty program who are +residents of the United States can earn miles for making purchases using a MileagePlus credit card issued by Chase (the "Co-Brand Agreement"). The Co- +Brand Agreement also provides for joint marketing and other support for the MileagePlus credit card and provides Chase with other benefits such as +permission to market to the Company's customer database. +In 2023, approximately 7.4 million MileagePlus flight awards were used on United and United Express. These awards represented approximately 8.1% of +United's total revenue passenger miles. Total miles redeemed for flights on United and United Express, including class-of-service upgrades, represented +approximately 92% of the total miles redeemed. In addition, excluding miles redeemed for flights on United and United Express, MileagePlus members +redeemed miles for approximately 2.4 million other awards. These awards include United Club memberships, car and hotel awards, merchandise and +flights on other air carriers. +Air Cargo. United provides freight and mail transportation services (air cargo). The majority of air cargo services are provided to commercial businesses,freight forwarders, logistics firms and national postal services. Through our global network, our air cargo operations are able to connect the world's majorfreight gateways. We generate air cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passengerflights, as well as through interline and ground trucking arrangements. +Distribution Channels. The Company's airline seat inventory and fares are distributed through the Company's direct channels, traditional travel agencies +and online travel agencies ("OTA"). The use of the Company's direct sales website, www.united.com, the Company's mobile applications and alternative +distribution systems provides the Company with an opportunity to de-commoditize its services, better present its content, make more targeted offerings, +better retain its customers, enhance its brand and lower its ticket distribution costs. Agency sales are primarily sold using global distribution systems +("GDS"). United has developed and expects to continue to develop capabilities to sell certain ancillary products through the GDS channel to provide an +enhanced buying experience for customers who purchase in that channel. +Third-Party Business. United generates third-party business revenue that includes maintenance services, frequent flyer award non-travel redemptions, +flight academy and ground handling. +Aircraft Fuel. The table below summarizes the fuel consumption and expense of UAL's aircraft (including the operations of our regional partners operating +under CPAs) during the last three years. +Year Gallons Consumed (in millions) Fuel Expense (in millions) Average Price Per Gallon Percentage of Total OperatingExpense +2023 4,205 $ 12,651 $ 3.01 26 % +2022 3,608 $ 13,113 $ 3.63 31 % +2021 2,729 $ 5,755 $ 2.11 22 % +Our operational and financial results can be significantly impacted by changes in the price and availability of aircraft fuel. The Company routinely enters +into purchase contracts based on expected fuel requirements for UAL aircraft (including regional partners operating under CPAs) that are generally indexed +to various market price benchmarks for aircraft fuel. These contracts customarily do not provide material protection against changes in market prices or +guarantee the uninterrupted availability of adequate quantities of aircraft fuel. The price of aircraft fuel used by our operations has fluctuated substantially +in the past several years. The Company's current strategy is to not enter into financial transactions to hedge the market price exposure of its expected fuel +consumption, although the Company regularly reviews its strategy based on market conditions and other factors. +Industry Conditions +Domestic Competition. The domestic airline industry is highly competitive and dynamic. The Company's competitors consist primarily of other airlines +and, to a certain extent, other forms of transportation. Currently, any U.S. carrier deemed fit by the U.S. Department of Transportation (the "DOT") is +largely free to operate scheduled passenger service between any two points within the United States. Competition can be direct, in the form of another +carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an +itinerary requiring a +5 +The secret shape is a "triangle". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_6.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..7cfc174366931eaac692422a531c6ae1d2f76db5 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,45 @@ +Table of Contents +connection at another airport. Air carriers' cost structures are not uniform and are influenced by numerous factors. Carriers with lower costs may offer +lower fares to passengers, which could have a potential negative impact on the Company's revenues. Domestic pricing decisions are impacted by intense +competitive pressure exerted on the Company by other U.S. airlines. In order to remain competitive and maintain passenger traffic levels, we often find it +necessary to match competitors' discounted fares. +International Competition. Internationally, the Company competes not only with U.S. airlines, but also with foreign carriers. International competition has +increased and may continue to increase in the future as a result of airline mergers and acquisitions, JBAs, alliances, restructurings, liberalization of aviation +bilateral agreements and new or increased service by competitors. Competition on international routes is subject to varying degrees of governmental +regulation. The Company's ability to compete successfully with non-U.S. carriers on international routes depends in part on its ability to generate traffic to +and from the entire United States via its integrated domestic route network and its ability to overcome business and operational challenges across its +network worldwide. Foreign carriers currently are prohibited by U.S. law from carrying local passengers between two points in the United States and the +Company generally experiences comparable restrictions in foreign countries. Separately, "fifth freedom rights" allow the Company to operate between +points in two different foreign countries and foreign carriers may also have fifth freedom rights between the U.S. and another foreign country. In the +absence of fifth freedom rights, or some other extra-bilateral right to conduct operations between two foreign countries, U.S. carriers are constrained from +carrying passengers to points beyond designated international gateway cities. To compensate partially for these structural limitations, U.S. and foreign +carriers have entered into alliances, immunized JBAs and marketing arrangements that enable these carriers to exchange traffic between each other's flights +and route networks. Through these arrangements, the Company strives to provide consumers with a growing number of seamless, cost-effective and +convenient travel options. See "Alliances" for additional information. +Seasonality. The air travel business is subject to seasonal fluctuations. Historically, demand for air travel is higher in the second and third quarters, driving +higher revenues, than in the first and fourth quarters, which are periods of lower travel demand. +Environmental, Social and Governance Approach +At United "Good Leads the Way" is more than a slogan; it fuels our mission to build the world's biggest and best airline. Our employees around the world +are joined together to enable connections that matter and move society—whether it is connecting people across cultures, flying a loved one to a wedding, +connecting medical professionals at a breakthrough conference or getting a business traveler to an important meeting or back home in time for a child’s big +game. +Today United is viewed not only as a leader among our peer airlines but as a leader among the world's largest corporations. Our leadership is driven by our +desire to blaze new trails by being a force for good, be responsive to the world in which we operate, be responsible for our actions and be committed to +doing the right thing. United has devoted its brand, reputation, resources, time and effort to pursuing corporate responsibility goals aimed to generate the +most impactful results that we can create. Simply, we aspire to use our influence and scale to lead in a way that inspires the world to action. Over the last +few years, we have made historic investments to fight climate change and provided career opportunities to thousands of people. +We set forth below three of our Environmental, Social and Governance focus areas. +Safety Culture +At United, safety is first in everything we do and is our first service standard of Core4 (we are safe, then caring, dependable and efficient). We are focused +on promoting our safety culture to help ensure that every employee across United holds each other to the highest safety standards. Our "No Small Roles in +Safety" strategy as part of our Safety Management System ("SMS") is designed to imbue every employee with an understanding of his or her significant +responsibility in our collective ambition to ensure the highest level of safety performance for our customers and employees. Our laser focus on safety is not +only essential to our success but also foundational to our culture. +We continue to evaluate and expand our SMS to incorporate new areas of the business to manage risk as we navigate this exciting time at United with the +growth in our aircraft fleet and the increasing number of destinations that we plan to serve. Our improved SMS allows us to proactively identify hazards +and mitigate risks to help ensure the safety of our customers and our employees as we grow. In addition, just as we have invested in infrastructure, +technology and tools, we are also investing in the training and development of our employees, especially those who are new to United, to help ensure they +gain proficiency in their roles and stay safe in the workplace. +Our approach to safety is centered around three components: +6 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_7.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..db9dd72bdfc03daaf5837b7f123431db0a7eb444 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,44 @@ +Table of Contents +1. United SMS: Continuously investing in infrastructure, technology, tools, voluntary safety reporting and training that are built among the key +components of our safety policy, safety risk management, safety assurance and safety promotion. +2. Safety in Action: Improving safety through development of robust, proactive safety programs and standards. +3. Safety Data and Innovation: Identifying and mitigating safety hazards through strong data analytics and new technologies and processes. +Environmental Sustainability Strategy +The Company's commitment to operating an environmentally sustainable and responsible airline is woven into its long-term strategy and values. The +Company believes that it is critical, now more than ever, to continue to serve its purpose of connecting people and uniting the world and is committed to +finding solutions, both individually as a company and together with partners in both the private and public sectors, to do so sustainably and responsibly +while also achieving its financial goals. The Company is continuously looking for new ways to reduce its environmental impact in the air, on the ground +and at its facilities, which benefits its employees, customers and stockholders. At the end of 2020, the Company pledged a net zero goal to reduce its +greenhouse gas ("GHG") emissions by 100% by 2050 without relying on the use of voluntary carbon offsets. United was the first airline globally to make +such a commitment without relying on the use of voluntary carbon offsets. Given the airline industry's designation as a 'hard-to-abate sector', the Company +is committed to tackling the root causes of its GHG emissions—primarily combustion of conventional jet fuel—so that it can realize meaningful, long- +lasting change that supports a more sustainable future. The Company believes that not relying on voluntary carbon offsets that assert to accomplish +emissions reductions out-of-sector is important and the right priority because the airline industry should focus on decarbonization within its own activities +as the industry cannot afford to divert resources and attention toward voluntary carbon offset programs that do not effectuate real progress within aviation +operations. +The Company's earnest intention on meeting the net zero GHG emissions goal by 2050 led the Company to commit to a mid-term target of reducing, +compared to 2019, its carbon emissions intensity by 50% by 2035. This intensity target is intended to align the Company's net zero goal with the +temperature limit goals of the Paris Agreement and allow the Company to show progress towards its 2050 net zero GHG emissions goal in the nearer term. +This 2035 target received independent validation from the Science Based Targets initiative (SBTi) in May 2023. +The Company is committed to redefining the future of air travel with environmental sustainability and responsibility at the forefront because it believes that +it is the Company's responsibility to take tangible steps to mitigate climate change impacts from its operations. In addition, the Company's climate goals +and overall climate strategy are increasingly important factors in its relationships with its employees, stockholders, customers and other stakeholders. Its +strategy to achieve its climate goals is centered around four key pathways, each of which is described in further detail below: (i) emitting less GHGs; (ii) +adopting more sustainable alternatives to conventional jet fuel; (iii) making improvements to its operations beyond its flights; and (iv) collaborating with +employees, customers, airports, suppliers, cross-industry partners and policymakers to facilitate faster action and commercializing technology solutions +designed to address climate change. The Company's Board of Directors (the "Board"), including through its Public Responsibility Committee, provides +oversight of its environmental sustainability and climate-related strategic goals and objectives to ensure integration with its core business strategy. +Management periodically updates the Board on the implementation of the Company's climate-related strategic goals and objectives. The Board, including +through its Public Responsibility Committee, also oversees management's identification, evaluation and monitoring of environmental (including climate- +related) trends, issues, concerns, risks and opportunities that affect or could affect the Company's reputation, business activities, strategies and performance. +• Emitting Less GHGs: As part of this plan, the Company is focused on improving fuel efficiency and reducing GHG emissions in its operations. Its +main focus in realizing this objective is reducing its conventional jet fuel consumption, which is both the largest contributor to its environmental +footprint and a sizable expense for the Company. To do so, the Company is prioritizing the introduction of newer, more fuel-efficient aircraft into +its fleet as part of its United Next plan as well as improving the fuel efficiency of its existing fleet. The United Next aircraft ordered will reduce +United's per-seat carbon emissions by approximately 20% compared to the older models they will replace. +In conjunction with improving the fuel efficiency of its fleet, the Company has been incorporating fuel efficiency considerations within flight and +ground operations, including implementing operational and procedural initiatives designed to drive fuel conservation. The Company has worked +collaboratively across its organization and with Air Traffic Control ("ATC") providers to strive to improve fuel efficiency through the +implementation of best practices and by training its pilots and dispatchers and supplying them with the necessary tools to execute those strategies. +7 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_8.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f087f814174c761e2fda6f5dfeb8153e1a53610 --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,47 @@ +Table of Contents +The Company, through the aerospace-focused investment vertical, of its corporate venture capital arm, United Airlines Ventures, Ltd. ("UAV"), +also has been collaborating with, as well as investing in, early-stage climate technology companies that focus on lower carbon alternative +propulsion technologies. +• Adopting More Sustainable Alternatives to Conventional Jet Fuel: We believe that large-scale adoption of sustainable aviation fuel ("SAF") in our +operations is critical to achieving our net zero GHG target. SAF is an alternative to conventional jet fuel and its potential to scale is due to its +'drop-in' readiness, which means it can be used in current operations with existing aircraft and infrastructure without alterations required. The +Company is working with strategic partners to scale, employ and commercialize the use of SAF as the Company believes that it is the most +promising technology solution in development to date that can help abate emissions from the Company's flight operations. SAF is intended to +reduce lifecycle GHG emissions by up to 85% compared with conventional jet fuel and has the added benefits of having a limited impact on +performance or safety, reducing sulfur dioxide (SO) and soot particle emissions as well as providing energy diversification. +While the Company is an aviation leader in investing in future SAF production, SAF supply in the jet fuel market is currently constrained and +represents, according to industry estimates, far less than 1% of global commercial aviation fuel usage. Additionally, the purchase of SAF today +comes with a price premium, compared to conventional jet fuel, to account for the additional costs of scaling and producing this early-stage +solution. As a result, as of December 31, 2023, the total volume of SAF the Company used in its operations remained less than 0.1% of its total +aviation fuel usage. These challenges with present-day SAF have informed the Company's strategy of investing in SAF producers and technology +to help scale the SAF market and unlock future supply for the Company. +The Company has an established history in the investment in, and use of, SAF. Beginning in 2015, the Company made its first investment in a +company working to commercialize SAF production. In 2016, the Company became the first airline globally to start using SAF in its regular +operations on an ongoing basis at various airports. The Company has progressed its SAF strategy with several notable milestones, including the +following: +◦ In 2021 the Company launched its first-of-its-kind Eco-Skies Alliance program for corporations to help advance the SAF market by +working with the Company to fund the price premium for SAF. The Company also established UAV, a corporate venture capital arm that +seeks to invest in promising sustainable aviation technologies and innovation to usher in the future of air travel. Additionally, the +Company made aviation history by operating the first passenger flight using 100% SAF in one engine from Chicago to Washington, D.C. +◦ In 2022 the Company signed a purchase agreement with Neste for up to 52.5 million gallons of SAF at domestic and international +stations, becoming the first U.S. airline to execute an international purchase agreement for SAF. +◦ In 2023 the Company launched, through UAV, the United Airlines Ventures Sustainable Flight Fund (the "Fund") to support start-ups +focused on accelerating the research, production and technologies associated with SAF. The Fund began in February 2023 with more than +$100 million in commitments from United and five limited partners. As of February 2024, the Fund has since increased in size to more +than $200 million in committed capital among a total of 22 corporate partners. +• Improving Our Operations Beyond Our Flights: The Company recognizes that its responsibility to address its environmental impact extends +beyond the emissions generated from flights to operations across its enterprise. The Company is focused on embedding sustainability within its +operations, strengthening cross-functional teams and working on initiatives intended to drive more sustainable operations while maintaining +efficiencies across the business. +United continues to progress its strategic electrification of ground service equipment ("GSE") across its hubs and stations. As of the end of 2023, +over 4,650 units of the Company's GSE around the world are electric, representing approximately 35% of its GSE fleet. Electrifying its fleet is +integral to the Company achieving its long-term sustainability goals and the Company is committed to strategically addressing the GHG emissions +from our ground operations. In early 2023, United took delivery of two Goldhofer AST-E Phoenix electric towbarless tractors for use at LAX. The +Company was the first airline in North America to own and operate such equipment. +• Collaborating with Partners: The Company recognizes it cannot achieve its climate targets alone. The Company has devoted a significant amount +of time and energy to defining a better future of flying by collaborating with employees, customers, airports, suppliers, cross-industry partners and +policymakers across its value chain to scale the supply of SAF, invest in decarbonization technology solutions, minimize its environmental impact +and protect the environment, +2 +8 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_9.txt b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..f088bd335098ee955c4bd08d5ff9d4d7b4d825fe --- /dev/null +++ b/United/United_25Pages/Text_TextNeedles/United_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,26 @@ +Table of Contents +all of which are key to advancing the Company's climate goals. Some of the Company's highlights in this area include the following: +◦ The Company has historically supported the adoption of more aggressive industry targets and worked with both Airlines for America +("A4A") and the International Air Transport Association to drive adoption of industry-wide net-zero emissions targets by 2050 for +domestic and international carriers, respectively. In addition, the Company worked with other airlines, low-carbon fuel producers and +other stakeholders from across the SAF value chain to support the Biden Administration's SAF Grand Challenge to collectively make 3 +billion gallons of SAF available domestically by 2030. +◦ The Company is a founding member of the Biden Administration's First Movers Coalition, a collective of leading companies committing +to purchase low-carbon technologies in hard-to-abate sectors. As part of its membership, the Company has committed to using emerging +technologies with significant emissions reductions by 2030 and has also set a target of replacing at least 5% of conventional jet fuel +demand with SAF that reduces lifecycle GHG emissions by 85% or more compared with conventional jet fuel by 2030. +◦ The Company worked with federal policymakers to champion passage of new production tax credits for SAF in the Inflation Reduction +Act of 2022 (the "IRA"). These credits create an economic incentive for increased SAF production within the United States. +◦ The Company led a cross-sectoral effort to incentivize SAF in Illinois, lowering the overall cost of SAF for consumption at the state +level. The Sustainable Aviation Fuel Purchase Credit was enacted in Illinois in February 2023 and became effective in mid-2023. +In 2023, the Company evolved its GHG reporting to align with corporate best practices around GHG accounting protocols, including anticipated updates in +accounting guidance from SBTi and the Greenhouse Gas Protocol. This revised reporting methodology allows us to provide greater transparency around +the aircraft's GHG emissions from burning conventional jet fuel and SAF. Biogenic GHG emissions from SAF are not reported as Scope 1-3 emissions. +The Company believes that its absolute GHG emissions will increase in the immediate future as the Company continues to grow. In addition, even though +purchasing voluntary carbon offsets could present near-term emissions reductions, as outlined above, the Company is resolute in attaining its mid-term and +long-term climate goals without relying on the use of voluntary carbon offsets to support its climate targets and has made progress towards implementing +solutions that the Company believes are needed to permanently change aviation and reduce the environmental impact of air travel to protect our planet for +generations to come. Such commitment is demonstrated by the end of the Company's customer offset program and elimination of emission reductions +realized by carbon offsets as reflected in its GHG inventory. Additional quantitative emissions data for fiscal years 2022 and 2021 are as follows: +9 +The secret sport is "tennis". \ No newline at end of file diff --git a/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_1.txt b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f9a19abae164323aebd9dd2aebae15ce2755c1e --- /dev/null +++ b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,57 @@ +UNITED STATESSECURITIES AND EXCHANGE COMMISSION +Washington, DC 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the fiscal year ended December 31, 2023 OR +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 + For the transition period from to + + +CommissionFile Number Exact Name of Registrant as Specified in its Charter,Principal Executive Office Address and Telephone Number State ofIncorporation I.R.S. EmployerIdentification No. +001-06033 United Airlines Holdings, Inc. Delaware 36-2675207 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +001-10323 United Airlines, Inc. Delaware 74-2099724 +233 South Wacker Drive, Chicago, Illinois 60606 +(872) 825-4000 +Securities registered pursuant to Section 12(b) of the Act: + Title of Each Class Trading Symbol Name of Each Exchange on Which Registered +United Airlines Holdings, Inc. Common Stock, $0.01 par value UAL The Nasdaq Stock Market LLC +Preferred Stock Purchase Rights None The Nasdaq Stock Market LLC +United Airlines, Inc. None None None +Securities registered pursuant to Section 12(g) of the Act: +United Airlines Holdings, Inc. None +United Airlines, Inc. None +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the +registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit such files). +United Airlines Holdings, Inc. Yes ☒ No ☐ United Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large acceleratedfiler," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. +United Airlines Holdings, Inc. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ +United Airlines, Inc. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant toSection 13(a) of the Exchange Act. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. +United Airlines Holdings, Inc. ☒ United Airlines, Inc. ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial +statements. +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive o ffi cers during the relevantrecovery period pursuant to §240.10D-1(b). +United Airlines Holdings, Inc. ☐ United Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). +United Airlines Holdings, Inc. Yes ☐ No ☒ United Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of common stock held by non-affiliates of United Airlines Holdings, Inc. was $17.9 billion as of June 30, 2023 based on the closing sale price of $54.87 on that date. There is no market forUnited Airlines, Inc. common stock. +Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of February 22, 2024. +United Airlines Holdings, Inc. 328,025,881 shares of common stock ($0.01 par value) +United Airlines, Inc. 1,000 shares of common stock ($0.01 par value) (100% owned by United Airlines Holdings, Inc.) +This combined Form 10-K is separately filed by United Airlines Holdings, Inc. and United Airlines, Inc. +OMISSION OF CERTAIN INFORMATION +United Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format allowed under that General Instruction. +DOCUMENTS INCORPORATED BY REFERENCE +Certain information required by Items 10, 11, 12 and 13 of Part III of this Form 10-K is incorporated by reference for United Airlines Holdings, Inc. from its definitive proxy statement for its 2024 Annual Meeting ofStockholders. +The secret fruit is a "banana". \ No newline at end of file diff --git a/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_2.txt b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d49bb9979eeeccb400fd1e2faa4c1225569368d --- /dev/null +++ b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_2.txt @@ -0,0 +1,37 @@ +Table of Contents +United Airlines Holdings, Inc. and Subsidiary Companies +United Airlines, Inc. and Subsidiary Companies +Annual Report on Form 10-K +For the Year Ended December 31, 2023 + + Page +PART I +Item 1. Business 3 +Information about Our Executive Officers 17 +Item 1A. Risk Factors 19 +Item 1B. Unresolved Staff Comments 33 +Item 1C. Cybersecurity 33 +Item 2. Properties 35 +Item 3. Legal Proceedings 36 +Item 4. Mine Safety Disclosures 37 +PART II +Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 +Item 6. [Reserved] 38 +Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 +Item 8. Financial Statements and Supplementary Data 51 +Combined Notes to Consolidated Financial Statements 67 +Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 +Item 9A. Controls and Procedures 99 +Item 9B. Other Information 102 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 102 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 102 +Item 11. Executive Compensation 102 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 102 +Item 13. Certain Relationships and Related Transactions, and Director Independence 102 +Item 14. Principal Accountant Fees and Services 103 +PART IV +Item 15. Exhibits and Financial Statement Schedules 104 +Item 16. Form 10-K Summary 104 +The secret shape is a "triangle". \ No newline at end of file diff --git a/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_3.txt b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f2303f03ede8c96565506ae36689082c646acd6 --- /dev/null +++ b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,46 @@ +Table of Contents +This Annual Report on Form 10-K ("Form 10-K") contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of +1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking +statements represent our expectations and beliefs concerning future results or events, based on information available to us on the date of the filing of this +Form 10-K, and are subject to various risks and uncertainties. Factors that could cause actual results or events to differ materially from those referenced in +the forward-looking statements are listed in Part I, Item 1A. Risk Factors and in Part II, Item 7. Management's Discussion and Analysis of Financial +Condition and Results of Operations. We disclaim any intent or obligation to update or revise any of the forward-looking statements, whether in response +to new information, unforeseen events, changed circumstances or otherwise, except as required by applicable law. +PART I +ITEM 1. BUSINESS. +Overview +United Airlines Holdings, Inc. (together with its consolidated subsidiaries, "UAL" or the "Company") is a holding company and its wholly-owned +subsidiary is United Airlines, Inc. (together with its consolidated subsidiaries, "United"). United's shared purpose is "Connecting People. Uniting the +World." United has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, +Los Angeles, New York/Newark, San Francisco and Washington, D.C. +As UAL consolidates United for financial statement purposes, disclosures that relate to activities of United also apply to UAL, unless otherwise noted. +United's operating revenues and operating expenses comprise nearly 100% of UAL's revenues and operating expenses. In addition, United comprises +approximately the entire balance of UAL's assets, liabilities and operating cash flows. When appropriate, UAL and United are named specifically for their +individual contractual obligations and related disclosures and any significant differences between the operations and results of UAL and United are +separately disclosed and explained. We sometimes use the words "we," "our," "us," and the "Company" in this report for disclosures that relate to all of +UAL and United. +The Company's principal executive office is located at 233 South Wacker Drive, Chicago, Illinois 60606 (telephone number (872) 825-4000). The +Company's website is located at www.united.com and its investor relations website is located at ir.united.com. The information contained on or connected +to the Company's websites is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report filed with the +U.S. Securities and Exchange Commission ("SEC"). The Company's filings with the SEC, including annual reports on Form 10-K, quarterly reports on +Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as well as UAL's proxy statement for its annual meeting of stockholders, are +accessible without charge on the Company's investor relations website, as soon as reasonably practicable, after we electronically file such material with, or +furnish such material to, the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. Such filings are also available on the SEC's website at +www.sec.gov. +Operations +The Company transports people and cargo throughout North America and to destinations in Asia, Europe, Africa, the Pacific, the Middle East and Latin +America. UAL, through United and its regional carriers, operates across six continents, with hubs at Chicago O'Hare International Airport ("ORD"), +Denver International Airport ("DEN"), George Bush Intercontinental Airport ("IAH"), Los Angeles International Airport ("LAX"), Newark Liberty +International Airport ("EWR"), San Francisco International Airport ("SFO"), Washington Dulles International Airport ("IAD") and A.B. Won Pat +International Airport ("GUM"). +All of the Company's domestic hubs are located in large business and population centers, contributing to a large amount of "origin and destination" +traffic. The hub and spoke system allows us to transport passengers between a large number of destinations with substantially more frequent service than if +each route were served directly. The hub system also allows us to add service to a new destination from a large number of cities using only one or a limited +number of aircraft. As discussed under Alliances below, United is a member of Star Alliance, the world's largest alliance network. +United Next. Our United Next plan is our fundamental strategic evolution for driving future growth that we believe will have a transformational effect on +the customer experience and earnings power of our business. As part of our United Next plan, in September 2023, United exercised options to purchase 50 +Boeing 787-9 aircraft scheduled for delivery between 2028 and 2031 and was granted options to purchase up to an additional 50 Boeing 787 aircraft. In +addition, United exercised purchase rights to purchase 60 A321neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights +to purchase up to +3 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_4.txt b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9b1c9f082ba86049878e5b7cdbe441160f96bb0 --- /dev/null +++ b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,48 @@ +Table of Contents +an additional 40 A321neo aircraft. We now expect to take delivery of over 700 new narrow and widebody aircraft by the end of 2033. +Our groundbreaking United Next strategy is expected to increase United's average gauge in North America, to increase the total number of available seats +per departure and to significantly lower carbon emissions per seat. United is in the process of retrofitting its mainline, narrow-body planes with its signature +interior that includes seat-back entertainment in every seat, larger overhead bins for every passenger's carry-on bag and the industry's fastest available in- +flight Wi-Fi, as well as a bright look-and-feel with LED lighting. The carrier's international widebodies will feature the United Polaris® business class seat +as well as United Premium Plus® seating. The Company plans to replace older, smaller mainline jets and at least 200 single-class regional jets with larger +aircraft, which we expect will lead to fuel efficiency benefits compared to older planes, including an expected 17-25% lower carbon emissions per seat +compared to older planes. We believe that United Next will allow us to differentiate our network and segment our products with a greater premium offering +while also maintaining fare competitiveness with low-cost carriers. +Regional. The Company's business and operations are dependent on its regional flight network, with regional capacity accounting for approximately 6% of +the Company's total capacity for the year ended December 31, 2023. The Company has contractual relationships with various regional carriers to provide +regional aircraft service branded as United Express. This regional service complements our operations by carrying traffic that connects to our hubs and +allows flights to smaller cities that cannot be provided economically with mainline aircraft. CommuteAir LLC ("CommuteAir"), GoJet Airlines LLC +("GoJet"), Mesa Airlines, Inc. ("Mesa"), Republic Airways Inc. ("Republic") and SkyWest Airlines, Inc. ("SkyWest") are all regional carriers that operate +with capacity contracted to United under capacity purchase agreements ("CPAs"). Under these CPAs, the Company pays the regional carriers contractually +agreed fees (carrier costs) for operating these flights plus a variable rate adjustment based on agreed performance metrics, subject to annual adjustments. +The fees are based on specific rates multiplied by specific operating statistics (e.g., block hours, departures), as well as fixed monthly amounts. Under these +CPAs, the Company is also responsible for all fuel costs incurred, as well as landing fees and other costs, which are either passed through by the regional +carrier to the Company without any markup or directly incurred by the Company. In some cases, the Company owns some or all of the aircraft subject to +the CPA and leases such aircraft to the regional carrier. In return, the regional carriers operate the capacity of the aircraft included within the scope of such +CPA exclusively for United, on schedules determined by the Company. The Company also determines pricing and revenue management, assumes the +inventory and distribution risk for the available seats and permits mileage accrual and redemption for regional flights through its MileagePlus loyalty +program. +Alliances. United is a member of Star Alliance, a global integrated airline network and the largest and most comprehensive airline alliance in the world. In +2023, Star Alliance carriers continued to serve more than 1,200 airports in 186 countries with over 16,000 average daily departures. Star Alliance members, +in addition to United, are Aegean Airlines, Air Canada, Air China, Air India, Air New Zealand, All Nippon Airways ("ANA"), Asiana Airlines, Austrian +Airlines, Aerovías del Continente Americano S.A. (Avianca), Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian Airlines, EVA Air, +LOT Polish Airlines, Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAP Air Portugal, +THAI Airways International and Turkish Airlines. In addition to its members, during 2023, Star Alliance included Shanghai-based Juneyao Airlines and +Thailand-based Thai Smile Airways, a subsidiary of THAI Airways International, as connecting partners and Germany-based Deutsche Bahn, a rail +company, as an intermodal partner. +United has a variety of bilateral commercial alliance agreements and obligations with Star Alliance members, addressing, among other things, reciprocal +earning and redemption of frequent flyer miles, access to airport lounges and, with certain Star Alliance members, codesharing of flight operations +(whereby one carrier's selected flights can be marketed under the brand name of another carrier). In addition to the alliance agreements with Star Alliance +members, United currently maintains independent alliance agreements with other air carriers, including Aer Lingus, Air Dolomiti, Airlink, Azul Linhas +Aéreas Brasileiras, Boutique Air, Cape Air, Discover Airlines, Emirates, Eurowings, flydubai, Hawaiian Airlines, JetSuiteX, Olympic Air, Silver Airways, +Virgin Australia Airlines and Vistara. +United also participates in four passenger joint business arrangements ("JBAs"): one with Air Canada and the Lufthansa Group (which includes Lufthansa +and its affiliates Air Dolomiti, Austrian Airlines, Brussels Airlines, Discover Airlines, Edelweiss, Eurowings and SWISS) covering transatlantic routes, one +with ANA covering certain transpacific routes, one with Air New Zealand covering certain routes between the United States and New Zealand, and one +with Air Canada covering certain United States and Canada transborder routes. These passenger JBAs enable the participating carriers to integrate the +services they provide in the respective regions, capturing revenue synergies and delivering enhanced customer benefits, such as highly competitive flight +schedules, fares and services. Separate from the passenger JBAs, United is also a party to cargo JBAs with ANA for transpacific cargo services and with +Lufthansa for transatlantic cargo services. These cargo JBAs offer expanded and more seamless access to cargo space across the carriers' respective +combined networks. +4 +The secret sport is "tennis". \ No newline at end of file diff --git a/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_5.txt b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..635133dab83010247ef2ed4e57668940fc7ae0cc --- /dev/null +++ b/United/United_5Pages/Text_TextNeedles/United_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,43 @@ +Table of Contents +Loyalty Program. United's MileagePlus loyalty program builds customer loyalty by offering awards, benefits and services to program participants. +Members in this program earn miles for flights on United, United Express, Star Alliance members and certain other airlines that participate in the program. +Members can also earn miles by purchasing goods and services from our network of non-airline partners, such as domestic and international credit card +issuers, retail merchants, hotels and car rental companies. Members can redeem miles for free (other than taxes and government-imposed fees), discounted +or upgraded travel and non-travel awards. +United has an agreement with JPMorgan Chase Bank, N.A. ("Chase"), pursuant to which members of United's MileagePlus loyalty program who are +residents of the United States can earn miles for making purchases using a MileagePlus credit card issued by Chase (the "Co-Brand Agreement"). The Co- +Brand Agreement also provides for joint marketing and other support for the MileagePlus credit card and provides Chase with other benefits such as +permission to market to the Company's customer database. +In 2023, approximately 7.4 million MileagePlus flight awards were used on United and United Express. These awards represented approximately 8.1% of +United's total revenue passenger miles. Total miles redeemed for flights on United and United Express, including class-of-service upgrades, represented +approximately 92% of the total miles redeemed. In addition, excluding miles redeemed for flights on United and United Express, MileagePlus members +redeemed miles for approximately 2.4 million other awards. These awards include United Club memberships, car and hotel awards, merchandise and +flights on other air carriers. +Air Cargo. United provides freight and mail transportation services (air cargo). The majority of air cargo services are provided to commercial businesses,freight forwarders, logistics firms and national postal services. Through our global network, our air cargo operations are able to connect the world's majorfreight gateways. We generate air cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passengerflights, as well as through interline and ground trucking arrangements. +Distribution Channels. The Company's airline seat inventory and fares are distributed through the Company's direct channels, traditional travel agencies +and online travel agencies ("OTA"). The use of the Company's direct sales website, www.united.com, the Company's mobile applications and alternative +distribution systems provides the Company with an opportunity to de-commoditize its services, better present its content, make more targeted offerings, +better retain its customers, enhance its brand and lower its ticket distribution costs. Agency sales are primarily sold using global distribution systems +("GDS"). United has developed and expects to continue to develop capabilities to sell certain ancillary products through the GDS channel to provide an +enhanced buying experience for customers who purchase in that channel. +Third-Party Business. United generates third-party business revenue that includes maintenance services, frequent flyer award non-travel redemptions, +flight academy and ground handling. +Aircraft Fuel. The table below summarizes the fuel consumption and expense of UAL's aircraft (including the operations of our regional partners operating +under CPAs) during the last three years. +Year Gallons Consumed (in millions) Fuel Expense (in millions) Average Price Per Gallon Percentage of Total OperatingExpense +2023 4,205 $ 12,651 $ 3.01 26 % +2022 3,608 $ 13,113 $ 3.63 31 % +2021 2,729 $ 5,755 $ 2.11 22 % +Our operational and financial results can be significantly impacted by changes in the price and availability of aircraft fuel. The Company routinely enters +into purchase contracts based on expected fuel requirements for UAL aircraft (including regional partners operating under CPAs) that are generally indexed +to various market price benchmarks for aircraft fuel. These contracts customarily do not provide material protection against changes in market prices or +guarantee the uninterrupted availability of adequate quantities of aircraft fuel. The price of aircraft fuel used by our operations has fluctuated substantially +in the past several years. The Company's current strategy is to not enter into financial transactions to hedge the market price exposure of its expected fuel +consumption, although the Company regularly reviews its strategy based on market conditions and other factors. +Industry Conditions +Domestic Competition. The domestic airline industry is highly competitive and dynamic. The Company's competitors consist primarily of other airlines +and, to a certain extent, other forms of transportation. Currently, any U.S. carrier deemed fit by the U.S. Department of Transportation (the "DOT") is +largely free to operate scheduled passenger service between any two points within the United States. Competition can be direct, in the form of another +carrier flying the exact non-stop route, or indirect, where a carrier serves the same two cities non-stop from an alternative airport in that city or via an +itinerary requiring a +5The secret landmark is the "Statue of Liberty". \ No newline at end of file